Economy of Argentina
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2008-07-14T03:05:20Z
Ground Zero
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{{Infobox Economy
|image = Buenos_Aires-2672f-Banco_de_la_Naci%C3%B3n_Argentina.jpg
|country = Argentina
|width = 250
|currency = [[Argentine Peso]] ([[Argentine Peso|ARS]])
|year = Calendar year
|organs = [[World Trade Organization|WTO]], [[Mercosur]], [[Union of South American Nations|Unasur]]
|rank = 19th
|gdp = $523.7 billion (2007)<ref>[https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html#Econ Economy]. Argentina. CIA Factbook</ref>
|growth = 8.7% (2007)
|per capita = $13,307 (2007) ([[List of countries by GDP (PPP) per capita|57th]])<ref>[http://www.imf.org/external/pubs/ft/weo/2008/01/weodata/weorept.aspx?pr.x=57&pr.y=13&sy=2006&ey=2013&scsm=1&ssd=1&sort=country&ds=.&br=1&c=213%2C273%2C228%2C298%2C299&s=PPPPC&grp=0&a= IMF estimates for 2007 GDP PPP per capita</ref>
|sectors = [[Agriculture]], 9.4%; [[mining]], 4.8%; [[manufacturing]], 21.5%; [[construction]], 6.3%; [[commerce]] and [[tourism]], 14.4%; [[transport]], [[communications]] and [[utilities]], 10.0%; [[finance]], [[real estate]] and [[business]] services, 16.8%; [[government]], [[social services]] and other, 16.8%. ([[2007]])<ref>[http://www.mecon.gov.ar/download/infoeco/actividad_ied.xls]</ref>
|inflation = 8.8% (2007) ''Privately estimated at about 18% in 2007''<ref>[http://www.lanacion.com.ar/edicionimpresa/economia/nota.asp?nota_id=988333]</ref>
|poverty = 20.6% (March, 2008)<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/74/lineas1.xls]</ref>
|gini = 0,483 (2006)
|labor = 15.35 million (2006)
|occupations = Agricultural, 8.3%; manufacturing, 11.4%; construction, 5.9%; retail trade, wholesale trade and tourism, 20.3%; government administration and defense, 8.9%; education, 8.5%; financial, social and other services, 36.7%. (2001)<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/4/cuadro14_1.xls]</ref>
|
|unemployment = 8.4% (March, 2008)
|industries = [[Food processing]], [[motor vehicles]] (545,000 in 2007), consumer durables, [[textiles]], [[chemicals]] and [[petrochemicals]], [[printing]], [[metallurgy]], [[steel]].
|exports = US$56 billion (2007)
|export-partners = [[Brazil]], 15.8%; [[United States|US]], 11.4%; [[Chile]], 11.2%; [[China]], 7.9%. (2005)
|export-goods = Soybeans and byproducts, 24.1%; motor vehicles and parts, 9.6%; cereals (mostly maize and wheat), 8.3%; refined fuels, 6.9%; chemicals, 5.3%; aluminum and steel, 5.1%; natural gas and petroleum, 4.6%; other industrial products, 11.1%; all other (mostly processed agricultural products), 25.0%. (2007)<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/19/ica_01_08.pdf]</ref>
|imports = US$45 billion (2007)
|import-partners = [[Brazil]], 35.9%; [[United States|US]], 14.1%; [[China]], 7.8%; [[Germany]], 4.5%. (2005)
|import-goods = Industrial machinery and parts, 41.3%; industrial supplies, 34.6%; automobiles and other consumer durables, 12.4%; refined fuels and lubricants, 6.3%; all other (mostly textiles, food and drinks), 5.4%. (2007)<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/19/ica_01_08.pdf]</ref>
|
|debt = 50.2% of GDP, US$144.7 billion (Treasury securities, 59%; direct loans, 30%); of which external, US$92.3 bil. (12/2007)
|revenue = US$64.2 billion (2007) (value-added taxes, 31.4%; taxes on income and capital gains, 22.1%; social security, 17.7%; customs duties, 14.4%; other, 14.4%)<ref>[http://www.afip.gov.ar/institucional/estudios/archivos/Informe.4.trimestre.2007.pdf]</ref>
|expenses = US$55.6 billion (2007) (social insurance and pensions, 30.9%; health, 14.3%; debt service, 11.6%; energy and infrastucture, 11.6%; education, 6.8%; labor programs, 6.4%; defense, 6.4%; other, 12.0%)<ref>[http://www.mecon.gov.ar/peconomica/docs/gp_nac.xls]</ref>
}}
'''Argentina''' benefits from rich [[natural resources]], a highly literate population, an export-oriented [[agricultural sector]] and a diversified [[industry|industrial]] base. Historically, however, [[Argentina]]'s economic performance has been very uneven. Early in the twentieth century it was one of the richest countries in the world,<ref>Maddison, Angus. The World Economy: A Millennial Perspective--cited at http://www.cei.gov.ar/revista/06/parte%204beng.pdf</ref> but it is now an upper-middle income country. Despite this, Argentina is still one of the most developed countries in Latin America, as measured by its GDP per capita and its Human Development index.
[[Image:Jun%C3%ADn_y_R%C3%ADo_Salado.jpg|thumb|323px|left|View of [[Junín, Buenos Aires Province|Junin]] and the Argentine grain belt, beyond.]]
==Historical overview==
===Argentina's emergence into the world economy===
Prior to the 1880s, Argentina was seen as a backwater region of the world. Around 1870 the Argentine economy began to experience swift growth through the exportation of its livestock commodities. This marked the beginning of a significant period of economic expansion. Between 1870 and 1914, the Argentine economy sustained an average rate of growth equal to 5% a year.<ref>[http://www.wiwi.uni-frankfurt.de/profs/klump/D/koll/DiazCafferata_powerpoint.pdf]</ref> Throughout the period from 1890 to 1939, the country's per capita income was similar to that of [[France]], [[Germany]] and [[Canada]]<ref>[http://www.chrisblattman.org/BHW2004-NBERw10600pdf]</ref> (though income in Argentina was considerably less evenly distributed).<ref>Johnson, Lyman. Distribution of Wealth in 19th Century Buenos Aires Province. Univ. of New Mexico Press, 1994.</ref>
====The development of land====
Since becoming a nation in 1816, Argentina, being the eighth largest country in the world by [[List of countries by area|area]], has held an advantage in this [[factor of production]]. In the early nineteenth century the rural economy was almost entirely devoted to subsistence farming and above all, livestock raising, which spread quickly in Argentina's mild climate. Moreover, during periods of falling prices for their products ranchers were able to maintain positive returns, proving their resilience in a volatile market. Over the next few decades, cattle and sheep ranchers became the most influential men in Argentina, as their exports quickly became the unstable young country's nearly sole source of foreign exchange.<ref>Brown, Jonathan. A Socioeconomic History of Argentina. Cambridge University Press, 1979.</ref>
[[Image:Gaucho.jpg|thumb|180px|left|An 1887 impression of a ''[[gaucho]]'' at ease. The resourceful gaucho helped livestock ranching extend through much of Argentina.]]
Labor-intensive crop farming languished for much of this era, the victim of internecine wars, an acute shortage of labor, a lack of qualified agronomists and livestock ranchers themselves. Following a decade of revolution, however, focus changed toward the development of grain farming and after 1862, during [[Bartolome Mitre]]'s difficult presidency, the first institute of [[Agronomy]] and the first initiatives encouraging immigration were given life.<ref name=scarecrow>Historical Dictionary of Argentina. London: Scarecrow Press, 1978.</ref>
Livestock raising required relatively few ''gauchos'' and continued to dominate land use; but, in 1875, the first Argentine grain shipment to arrive intact in Europe ignited an agricultural boom that soon replaced vast tracts of lands once devoted to livestock with "waves of grain". British capital and European immigration soon followed, easing capital, skills and labor shortfalls without which the development of modern Argentina would not have been possible.<ref name=scarecrow/>
====The development of the labor market====
[[Image:Hotel_Inmigrantes_Buenos_Aires.jpg|thumb|left|300px|Built in 1906 to help welcome the hundreds of newcomers arriving daily, the Immigrants' Hotel is now a national museum.]]
[[Immigration in Argentina|Immigration]] was central to Argentina's development. Prior to the 1860s, there was relatively little migration into the country; the population in 1869 was less than 2 million and, due to the sparse population, vast tracts of land remained unutilized. Labour shortages became widespread, resulting in the growth of real wages and, consequently, an increasing gap between the wage rates of Argentina and Europe. This facilitated a nearly-uninterrupted mass immigration until [[World War I]] and by 1914, one third of [[Argentina]]'s 8 million people had been born elsewhere, mostly in [[Italy]] and [[Spain]].<ref name=Crawley>Crawley, Eduardo. A House Divided: Argentina, 1880-1980. St. Martin's Press, 1985</ref>
In all, over 3.6 million [[Demographics of Europe|Europeans]] migrated to Argentina permanently between 1857 and 1940<ref>[http://www.argentina.gov.ar/argentina/portal/img/grafico_inmigracion.gif]</ref> and another 3 million passed through as seasonal workers, often moving on to the [[United States]].<ref>[http://www.yale.edu/ynhti/curriculum/units/1990/1/90.01.06.x.html]</ref> Because the immigrants that stayed were much less likely to be field laborers than those that moved on, immigration helped quickly urbanize Argentina and its urban population tripled to over 4 million between 1895 and 1914, alone.<ref>[http://unstats.un.org/unsd/demographic/products/dyb/dybsets/1952%20DYB.pdf]</ref> The establishment of a [[Education in Argentina|national system]] of free, universal grade schools by Education Minister (and later, President) [[Domingo Sarmiento]] during the 1860s and 1870s raised literacy rates from 22% in 1869 to 65% in 1914 and helped further consolidate a modern labor structure.<ref name=scarecrow/>
[[Image:Ucranians_cropping_yerba_mate_in_Tres_Capones.jpg|thumb|left|Ukrainian immigrants harvesting ''[[yerba mate]]'', 1920. Immigrants found rural and urban work, becoming indispensable to both.]]
This mending of the labor problem facilitated economic development. Immigrants, as an important factor of production, were able to alleviate the labor shortage and so, helped diversify Argentina's commodity exports. The livestock, leather and wool sectors had dominated production since the eighteenth century<ref name=scarecrow/>; but, now, with the rise in labor supply, the arable sector saw development.
Argentina's commodity export market became less dependent on [[Argentine beef|beef]] and quickly diversified into [[wheat]] and [[maize]]. Accessible education and the relatively capital-intensive nature of [[Agriculture in Argentina|Argentine agriculture]] itself (which, as early as 1895, employed only a third of all labor)<ref>Second General Census of Population and Housing, 1895.</ref> helped likewise redirect most of this immigrant labor into the service and industrial sectors and for the most part, this helped fortify the country against market shocks (though certainly not internal, social or political disturbances), contributing to the overall, successful level of development the country experienced between 1870 and 1930.
====The development of capital markets====
Like immigration, foreign investment played a central role in Argentina's economic development. Prior to [[World War I]], it could be said that Argentina's capital investment ''was'' foreign capital investment and immigrants as well as foreign investment flocked to Argentina.
[[Image:La_Porte%C3%B1a.jpg|thumb|260px|In 1857, ''La Porteña'' became the first locomotive to operate in Argentina.]]
The [[United Kingdom]] contributed more direct investment into Argentina during this period than all other sources combined, as it did for many other Latin American states in that era. Large-scale British investment began around 1875 and by 1890, British nationals held a cumulative 180 million [[Pound Sterling|pounds Sterling]] (over US$800 million) in direct investments. Argentina had become, by then, the leading destination for British investment in the world.<ref>[http://www.cema.edu.ar/ceieg/arg-rree/10/10-002a.htm]</ref> Though most of these funds found their way into productive activities such as [[Rail transport in Argentina|railways]], [[mortgage bank|mortgage banking]] and [[public services]], fully a third was channelled into Argentine government [[Bond (finance)|bonds]].
Lured by high rates of return, underwriters like the influential [[Barings Bank]] made Argentine and [[Uruguay|Uruguayan]] bonds the darlings of [[London]] derivatives speculators during the 1880s. These instruments began to lose value towards 1890, however, and before most investors could unload them, the [[pyramid scheme]] Barings seemed to have built up [[panic of 1890|collapsed]]. So serious were these losses (some involving the most prominent British families), only intervention by the [[Bank of England]] averted a possible financial crisis.
[[Image:Banco_Hipotecario_%28actual_Banco_Central%29.jpg|thumb|View, circa 1880, of the National Mortgage Bank, which contributed to the early development of Argentina's large middle class.]]
This instability notwithstanding, Argentina truly stood out among [[Latin America]]n states in terms of [[foreign direct investment]] received during this era. Investment (and the economy) soon recovered and by 1914, Argentina's public external debt stood at US$784 million in (mostly) 4<small>1/2</small>% bonds, with a further US$3.217 billion in foreign direct investment (Bulmer-Thomas, 2003: 102). Nearly half of all British direct investments worldwide had, by then, been plowed into the Argentine economy.<ref>[http://www.cema.edu.ar/ceieg/arg-rree/10/10-002a.htm]</ref>
[[Image:Retiro_BsAs_120.jpg|thumb|210px|left|Retiro railway station, circa 1920. Clearly, one of the most magnificient landmarks from the era of British investment in Argentina.]]
No doubt, Argentine development and the [[Rail transport in Argentina|railways]] and [[Argentine beef|meat-packing industry]] in particular, would have been severely limited absent these investments. Domestic credit was scarce and start-up costs were often beyond the reach of local investors ''per se''. It's worth noting, then, that in contrast, the agricultural sector developed into an export powerhouse that alone brought in nearly a billion dollars a year by the late 1920s with virtually no foreign investment and comparatively little domestic credit, as well.
The most important aspect of foreign investment was its share in Argentina's capital stock relative to the size of domestic contributions. The boom in foreign capital during the 1880s was able to cover, by some estimates, a [[current account deficit]] of 30 percent of GDP. It is important to note, though, that while foreign investment arrived in large amounts, its percentage of total investment and hence its influence on economic development was so great because domestic investment and savings were so small.
====Appraisal and the twilight of export-led growth====
[[Image:Callealem.jpg|thumb|240px|Scene in downtown Buenos Aires, circa 1920]]
The relatively sudden modernization in the Argentine economy before 1914 was achieved through investment from and exports to [[Europe]]. Dependent upon beef jerky and hides until the advent of refrigerated shipping in 1876,<ref name=scarecrow/> exports diversified into chilled beef and mutton, to cereals and eventually to some processed goods like flour, lard, canned luncheon meat and linseed oil (a common solvent at the time). These were sent off to Europe, where rising living standards created a booming market for imported foodstuffs and other raw materials. In return, [[United Kingdom|Great Britain]], [[France]] and [[Germany]] invested in the development of Argentina, particularly in sectors that were oriented toward exports (such as [[Rail transport in Argentina|railways]], which are still the most extensive in [[Latin America]]).
While many Argentines saw the foreign exchange their booming export sector brought in as central to the development of a national market, export volumes themselves did not outstrip the economy as a whole. Exports averaged 15-20% of GDP during the era between 1870 and 1913 (far less a proportion than, say, [[Cuba]]'s).<ref>[http://www.chrisblattman.org/BHW2004-NBERw10600.pdf]</ref> So, though foreign exchange probably made it possible, most of the economic growth itself can be accounted for by growing domestic activity--if, for the most part, the country's economic stability still remained deeply dependent on the performance of the international economy.
Foreign investment and the commodity market can be extremely volatile. Because Argentina's economy relied so heavily on foreign credit and a demand for its agricultural products, it was particularly susceptible to these periods of volatility, which brought about severe repercussions for the country's economic growth. Foreign investment for Argentina, then, was a double-edged sword. While it contributed to the long period of growth between the late 1800s and early 1900s, foreign investment dried up during [[World War I]]. Because national markets had not yet matured, the domestic economy was unprepared to make up for losses incurred by the international market shock and the economy, which had grown by an average of about 6% until 1913, shrank by 10% in 1914 and remained in low gear during the war.<ref>The Statistical Abstract of Latin America. University of California, Los Angeles.</ref>
===The industrial era===
[[Image:F%C3%A1brica_Militar_de_Aviones_de_C%C3%B3rdoba_-_1940-1950.jpg|thumb|228px|left|Fighter plane production line, [[Cordoba, Argentina|Cordoba]]. Operating since 1927, it was an early milestone in the development of heavy industry in Argentina.]]
The period between 1914 and 1945 challenged the Argentine economy, as it did most of the world's. Foreign investment disappeared during World War I to finance the European war effort, and failed to return after the peace. The Argentine economy retained close links to British trade and investment; but after 1918, a stronger commercial relationship emerged with the United States and [[Wall Street]], which now dominated the international economic stage. The now indispensable urban working and middle classes had recently secured [[S%C3%A1enz Pe%C3%B1a Law|universal male suffrage]] and, in 1916, elected the country's first [[populism|populist]] leadership. The new administration of longtime activist [[Hipolito Yrigoyen]] extended subsidized loans to Argentina's then-sizable [[peasant]] class and translated recently-found [[petroleum|oil]] deposits into the the country's first significant experiment with [[Government-owned corporation|public enterprise]], the 1922 creation of the state oil concern [[YPF]]. Though it did not become a monopoly in the way [[Mexico]]'s [[PEMEX]] did, YPF yielded about 15,000 barrels daily by 1930 (a fourth of Argentina's oil needs)<ref>Revista de Economia Argentina, number 20. Buenos Aires, 1938.</ref> and its success (albeit modest) made it a target of [[Standard Oil]].<ref>Wirth, John. The Oil Business in Latin America. Beard Books, 2001</ref>
Economic growth returned to about 6% annually during the 1920s and by 1929, for instance, there were over 400,000 motor vehicles in the country (more than any other in Latin America).<ref>[http://www.cocheargentino.com.ar/varios/cronologia.htm]</ref> The [[Wall Street Crash of 1929|1929 stock market collapse]], however, marked the end of Argentine hopes for a return to the export-led growth model. Suffering the brunt of public discontent (including at least one asassination attempt), the aging Yrigoyen was deposed in a quiet [[1930]] [[coup d'etat]] that placed him under house arrest and his point man at YPF, [[Enrique Mosconi]], into exile. Per capita GDP, meanwhile, plummeted almost as quickly as the [[United States]]': in 1932 it reached its lowest level since 1900.<ref>The Statistical Abstract of Latin America</ref>
====Import substitution industrialization====
Even before [[World War II]], a new model of economic growth began to emerge. The Economic Census of 1935 counted over 600,000 workers in manufacturing (mostly in firms with fewer than five employees)<ref>Economic and Industrial Census, 1935</ref> and, benefitting from innovative self-financing and government loans alike, these industries employed 1.5 million by 1947<ref>[http://unstats.un.org/unsd/demographic/products/dyb/dybsets/1956%20DYB.pdf]</ref>. [[Import substitution industrialization]], or ISI, was adopted into Argentina's economic policy and where the government had adopted a more ''[[laissez-faire]]'' approach with export-led growth, ISI meant direct government intervention. Though it had been larded with [[Standard Oil]] and [[Royal Dutch Shell]] lobbyists since after the 1930 coup,<ref>Wirth, John. The Oil Business in Latin America. Beard Books, 2001.</ref> the Argentine government took a quick turn and by 1932, for example, it began levying gasoline taxes to fund its new highway bureau and began Argentina's first large-scale [[hydroelectric]] projects.<ref>[http://www.historiadelpais.com.ar/argentina_noticias.php]</ref>
[[Image:Evita_y_Per%C3%B3n_05.jpg|thumb|260px|Juan and Evita Peron greet their public, 1950]]
The Argentine economy was able to return a modest level of growth. Having recovered its lost ground by the late 1930s partly through import substitution, the economy continued to grow modestly during World War II (in sharp contrast to what had happened in the previous World War). Indeed, the reduced availability of imports and the war's beneficial effects on both the quantity and price of Argentine exports combined to create a US$ 1.7 billion cumulative surplus during those years.<ref>National Geographic Magazine. March, 1975.</ref>
What followed is, of course, one of the most contentious periods of time in modern Argentine history, as well as the source of many of the [[Politics of Argentina|political divisions]] that exist in Argentina to this day. Even before he took office in 1946, President [[Juan Peron]] took dramatic steps he felt would result in a more economically independent Argentina better insulated from shocks like World War II (Peron believed there would be a third).<ref>National Geographic Magazine. December, 1994.</ref> In his first two years in office alone, he nationalized the Central Bank, paid off its billion-dollar debt to the [[Bank of England]], nationalized the railways (mostly obsolete narrow-gauge track), [[ship transport|merchant marine]], universities, public utilities, public transport (then, mostly tramways) <ref name=Crawley/> and probably most significantly, created a single purchaser for the nation's mostly export-oriented grains and oilseeds--the I.A.P.I.<ref name=scarecrow/>
Soon the central government's chief source of non-tax revenue, the IAPI benefited from the jump in international grain demand and high prices during 1946-47. It helped finance generous social reforms and record public works investments (in particular, the construction of over 3000 hospitals and clinics and of over 8000 schools)<ref name=Crawley/>. Dormant mortgage and development loan programs were revitalized and the economy grew by over a fourth in 1946-48. These programs, among other things, eradicated tropical diseases in the underdeveloped [[Gran Chaco|north]] and the country's recurrent problem with [[locusts]]; but, the IAPI soon began shortchanging growers and, when world grain prices dropped in the late 1940s, it stifled agricultural production, exports and business sentiment, in general.<ref>[http://www.pagina12.com.ar/diario/elpais/subnotas/103697-32644-2008-05-07.html]</ref> Argentine exports were, moreover, largely shut out of booming European markets by political pressure from the administration of U.S. President [[Harry S. Truman]] (which regarded Peron as an unapologetic [[fascist]])<ref name=Crawley/> and the resulting trade deficits of 1949-52 brought Argentina its first serious bout of [[stagflation]] since World War I.
This crisis as well as the passing of the most influential and populist adviser in Peron's inner circle (his wife, [[Eva Peron]]) led the President to adopt more business-friendly policies after 1952.<ref name=scarecrow/> His new policies reinvigorated exports and stimulated badly needed foreign investments in [[petroleum]] and the auto industry, while keeping wages high, labor rights strong and investment in public works in high gear;<ref name=Crawley/> even after a conflict with the [[Roman Catholic]] church resulted in his overthrow (1955), this combination of policies remained--more or less--the general blueprint for economic policy for the next twenty years.
[[Image:EdificioELMA.JPG|thumb|250px|Headquarters of the National Merchant Marine, 1972. The public sector figured prominently in Argentina's development after 1945.]]
====Appraisal====
[[Image:Rogelio_Frigerio_-_Gente_734_AG_1979.jpg|thumb|120px|left|Economist [[Arturo Frondizi|Rogelio Frigerio]] (1914-2006) encouraged local and foreign investment in the energy and industrial sectors, making Argentina nearly self-sufficient in both by the 1960s.]]
[[Inflation]] first became a chronic problem during this period (it averaged 26% annually from 1944 to 1974) and Argentina did not become "industrialized", or fully "developed"; but, from 1932 to 1974, Argentina's economy grew almost five-fold<ref>Statistical Abstract of Latin America</ref> (or, 3.8% annually) while its population only doubled. Though unremarkable, this expansion was well-distributed and so resulted in very positive changes in [[Culture of Argentina|Argentine society]], most notably the development of the largest proportional middle class (40% of the population by the 1960s) in [[Latin America]]<ref>Statistical Abstract of Latin America.</ref> as well as the region's best-paid, most unionized working class.<ref>St. James Encyclopedia of Labor History Worldwide</ref>
===The modern era===
====Crisis and coup====
Although Argentina was nearly self-sufficient in petroleum, the 1973-74 oil shock adversely impacted the nation's delicate financial balance. It, in part, caused the nation's foreign oil bill to jump from US$50 million to US$500 million in 1974<ref>Lewis, Paul. The Crisis of Argentine Capitalism</ref> and indirectly helped erase the rest of the nation's record billion-dollar 1973 trade surplus. This adverse turn might have been better managed had it not been that the [[Peronists]] (newly returned to power in May 1973) were under enormous pressure from their political base (labor, in general and the unions, in particular) to avoid a recession at almost any cost (a consideration painfully denied them by [[Alvaro Alsogaray|conservative policy makers]] in 1959 and in 1962).<ref name=Crawley/> Unable by 1975 to control soaring budget and trade deficits, as well as a wave of violence between [[Trotsky]]ite and [[fascist]] extremists, the Peronist government resorted to a chaos of sharp currency devaluations and erratically timed wage hikes and freezes.<ref>Lewis, Paul. The Crisis of Argentine Capitalism</ref> In a seemingly never-ending tide of near-hyperinflation, stikes, business [[Lockout (industry)|lockout]]s and violence, Argentine popular opinion turned to the [[Argentine military|military]], who took power in a bloody March 1976, [[National Reorganization Process|coup]].
Greeted initially with euphoria in the business community, the [[coup d'etat]] filled policy-making positions generally and the critical [[Minister of Economy of Argentina|Economics Ministry]], in particular, with ultra-[[conservatism|conservative]] ideologues--many of them scions of [[Argentina]]'s old agricultural elites.<ref name=Crawley/> In touch with the investors' and exporters' legitimate need for stability but quick to order wage freezes that often lasted months, these [[Cambridge]] and [[University of Chicago]]-trained economists proved unable to curb the [[National Reorganization Process|junta]]'s appetite for defense spending and unwilling to discourage speculators from taking advantage of Argentina's financial instability, often themselves profiting through the use of their advantage as [[Insider trading|insiders]].<ref>[http://www.argentina-rree.com/documentos/festival/Cap%201-%20Nacimiento%20patria%20financiera%20y%20contratista.pdf]</ref>
[[Image:Martinez_de_Hoz_y_Videla_-_Telam.jpg|thumb|220px|Ultraconservative economist Jose Alfredo Martinez de Hoz (''left'') and his boss, Pres. Jorge Videla, at a 1980 trade luncheon.]]
Buffeted by wage freezes difficult to oppose against the backdrop of massive [[Dirty War|human rights abuses]], real incomes fell by over a third that first year alone and have yet to fully recover.<ref>[http://www.scielo.br/img/revistas/rec/v11n1/a01fig02.gif]</ref> Unusually corrupt among the country's litany of often opprobious past Economy Ministers,<ref>[http://www.rionegro.com.ar/diario/tools/imprimir.php?id=9132]</ref> [[Jose Alfredo Martinez de Hoz]] also pursued "[[free trade]]" and a strong Peso policy even as [[inflation]] ran at over 100% a year, encouraging a wave of imports that helped result in a 20% fall in industrial output<ref>[UN Statistical Yearbook. 1982]</ref> Credit markets in New York and Paris meanwhile opened up to Argentina's profligate government and corrupt financiers alike and by 1981 over US$30 billion in bad debts had piled up, destroying business confidence and forcing a ruinous run on banks and the [[Argentine peso ley|Peso]]. <ref>National Geographic Magazine. August, 1986.</ref>
====Debt and depression====
The combination of depressed real wages and financial chaos amounted to a "perfect storm" to the Argentine economy, made all the more difficult to bear by the dictatorship's tragic 1982 invasion of the [[Falkland Islands]].<ref name=Crawley/> GDP shrank by 12% in 1981-82, the sharpest decline since 1930.<ref>Statistical Abstract of Latin America</ref> One of the worst contributors to this crisis was probably the [[Central Bank of Argentina|Central Bank]] "Circular 1050." The policy tied [[negative amortization|adjustable loan]] rates to the value of the [[United States Dollar]] and consequently, caused monthly interest payments to rise over ten-fold between early 1981 and mid-1982; banks were writing off about 5% of their loan portfolios monthly, by then.<ref>Argentina: From Insolvency to Growth. World Bank, 1993.</ref> Fixed investment, which had weathered instability in the '70s well, collapsed by almost 40% and stayed in low gear during the rest of the 1980s.<ref>Statistical Abstract of Latin America</ref>
When the [[Falklands War]] disaster brought new, more moderate leadership to the junta in July 1982, the new President of the [[Central Bank of Argentina|Central Bank]] [[Domingo Cavallo]] quickly discarded the hated Circular 1050. Indeed, history might have kinder to him had he left his reforms at that; but, to aid manufacturers in debt (facing unaffordable US dollar payments), he extended them a little-known loan guarantee designed to buffer their US Dollar-denominated debts from sharp falls in the Peso. Insiders, including Martinez de Hoz, had been enjoying this exchange rate guarantee since the Peso crisis began<ref>[http://www.weblogs.clarin.com/secretos/archives/2007/07/acindar-inversiones-millonarias-en-medio-de-los-cortes-de-energia.html]</ref> and so, it was nothing new. [[Domingo Cavallo|Cavallo]] was sacked the next month and though it's often overlooked, his successors over the next five years unethically extended the costly facility to all manner of debtors, adding up to US$15 billion to the national debt.<ref>[http://www.argenpress.info/notaold.asp?num=008347]</ref>
Facing a public howling for their heads, the [[National Reorganization Process|junta]] quietly transferred power to a democratically elected administration in late 1983<ref>National Geographic. August, 1986.</ref> and though his fellow citizens had great hope in him initially, President [[Raul Alfonsin]] proved unable to translate his considerable political skill and high-minded intentions into economic stability or even fruitful negotiations with Argentina's impatient creditors. Appointing increasingly [[Jose Luis Machinea|conservative policy makers]] who quickly bailed out speculators in debt even as they ordered more wage freezes<ref>[http://www.argenpress.info/notaold.asp?num=008347]</ref>, he increasingly alienated labor and the working poor (all of whom had fresh, painful memories of the dictatorship's incomes policies). The reinvigorated unions, led by the [[General Confederation of Labour]] (CGT), responded to Alfonsin's wage freezes with thirteen [[general strikes]] and over 2000 minor ones.
Alfonsin's economists did cut defense spending and budget deficits in 1984-86 and even publicly considered some privatizations as a means of shedding drains on the treasury and restoring business confidence; but these plans were partly the victim of bad timing, as most potential investors saw the prospects as too risky.<ref>National Geographic Magazine. August, 1986.</ref> Slack domestic demand helped create a cumulative US$20 billion in trade surpluses during Alfonsin's term; but, massive tax evasion and the flight of much of this (and other) capital abroad forced the Central Bank to "print" money to cover foreign debt interest and the estimated US$2 billion yearly losses the panoply of [[government-owned corporation|state enterprises]] were chalking up, by then. Ultimately, the [[World Bank]], under pressure from the new administration of [[George H. W. Bush]], dealt the suspense a final blow when, in February 1989, it recalled a US$350 million tranche of a loan package agreed on with the Central Bank. Unable to manoeuver because the Central Bank had earlier sold most of its scarce reserves to shore up its new currency (the [[Argentine austral|Austral]]), the shock sent the Austral into a tailspin and amid [[1989 riots in Argentina|riots]], Alfonsin into retirement five months early.<ref>Clarin. 3 March 1989.</ref>
====Convertibility and liberalization====
When [[President of Argentina|President]] [[Carlos Menem]] took office on July 8, 1989, the economy of the country was in a critical state. Argentina had piled up a US$ 65 billion [[external debt]], and output was plummeting. [[Inflation]], which had averaged over 200% a year during the 1975-1988 period,<ref>[http://www.indec.mecon.gov.ar]</ref> reached 5000% in 1989; prices tripled in the month of July alone. GDP per capita had fallen from its 1974 peak by nearly a fourth and real median wages by around half.<ref>[http://www.monografias.com/trabajos901/argentina-trabajo-docentes-ensenanza-crisis/Image2489.jpg]</ref>
[[Image:Domingo_Cavallo.jpg|thumb|180px|The controversial Domingo Cavallo, 1982.]]
To combat the crisis, the President embarked on a path of [[free trade|trade liberalisation]], [[deregulation]], and [[privatisation]]. Seeing very mixed results at first, he then appointed former [[Central Bank of Argentina|Central Bank]] head [[Domingo Cavallo]] [[Minister of Economy of Argentina|Minister of the Economy]]. In April 1991, Cavallo implemented radical monetary reforms which [[fixed exchange rate|pegged]] the [[Argentine peso]] to the [[United States dollar]] and limited the growth in the [[monetary base]] by law to the growth in [[reserve currency|reserves]]. The 1991 "Convertibility Law" (''Ley de Convertibilidad'') established a quasi-[[Argentine Currency Board|currency board]]. The government privatised most state-controlled companies, opened the economy to foreign trade and investment and created [[workers compensation]] systems and private [[pension funds]]; these elective pension funds now hold investments of over US$32 billion.<ref>[http://www.safjp.gov.ar/SISAFJP/]</ref> Inflation (1300% in 1990) fell to 84% in 1991 and to single digits by 1993; GDP rebounded, growing by over 5% on average between 1990 and 1998. A boom in the early 1990s was followed by more erratic growth after 1994.<ref>[http://www.indec.mecon.ar]</ref>
Privatizations yielded mixed results and some became poster children of mismanagement ([[Aerolineas Argentinas]], notoriously). The structural reforms nonetheless provided stability and boosted confidence after decades of decline and chronic bouts of high inflation. These changes fostered major new investments in services and industry in the 1990s, particularly in the [[telecommunications]], [[cuisine of Argentina|food processing]], [[Banking in Argentina|banking]], [[Rail transport in Argentina|freight rail]], [[Electricity sector in Argentina|energy]], and [[mining]] sectors.
Menem and Cavallo also cultivated trade relations with Argentina's neighbors, particularly [[Brazil]]. Inheriting negotiations begun in 1985, they secured the formal [[Treaty of Asuncion|treaty]] that instituted the [[MERCOSUR]] common market in March 1991, and Brazil soon became Argentina's largest trading partner.
Business investment more than doubled from 1990 to 1994 and partly as a result, Argentina's exports leapt from about US$12 billion in 1992 to around US$26 billion by 1997. The strong, fixed exchange rate, however, soon made imports a bargain again and the [[trade balance]] turned in a cumulative US$22 billion in [[deficit]]s between 1992 and 1999, including several billion from Brazil (putting strain on MERCOSUR).<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/19/balan1910-2006.xls]</ref>
Forced to borrow abroad to maintain the dollar/[[Historical exchange rates of Argentine currency|Peso]] parity under such pressure, the foreign debt quickly ballooned again. The national public debt, now mostly comprised by [[bond (finance)|bonds]] denominated in dollars, increased continuously, growing by more than 60% between 1994 and 1999.
[[Image:Argentina national debt 1994-2004.png|thumb|240px|left|Public debt of Argentina, 1994–2004]]
The opening of the economy and the deregulation of the labour market also fostered [[unemployment]], which went from less than 7% in 1991 to over 12% in 1994 and, propelled by the Mexican shock, to over 18% in 1995. Though recovery soon brought some relief, unemployment had only declined to 12% by the time GDP peaked, in mid-1998.<ref>[http://indec.mecon.ar]</ref>
These problems notwithstanding, Argentina was still considered a model for free market reforms among developing countries<ref>Argentina: From Insolvency to Growth. World Bank, 1993</ref> and after the successful auction of "[[Nicholas F. Brady|Brady]] Bonds" in 1992, the central government was able to indebt itself entirely through the sale of treasury [[bond (finance) |bonds]] to support this model.<ref>[http://mecon.gov.ar/peconomica/basehome/infoeco/finanzas_publicas..htm]</ref>. The [[Central Bank of Argentina|central bank]] raised almost US$100 billion this way by 2000 and Argentine debt became the most [[securities|securitized]] (or, dependent on free bond markets instead of on direct loans) in the developing world.<ref>[http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/05/30/000094946_03051504051564/additional/310436360_20050014095626.pdf]</ref>
====International instability====
In 1995, the [[1994 economic crisis in Mexico|Mexican peso crisis]] produced [[capital flight]], the loss of banking system deposits, and a severe, but short-lived, [[recession]]; a series of reforms to bolster the domestic banking system followed. Real [[Gross Domestic Product|GDP]] growth recovered strongly, reaching 8% in 1997.
In 1998, international financial turmoil caused by [[Russian financial crisis|Russia's problems]] and increasing investor anxiety over Brazil produced the highest domestic interest rates in more than three years, halving the growth rate of the economy.
While [[macroeconomics]] recovered fairly quickly from the effects of the [[1994 economic crisis in Mexico|Mexican crisis of 1994-95]] (known as the ''Tequila Effect''), Argentina could not return to strong growth after the [[recession]] that followed the successive shocks from [[Asia]], [[Russia]] and Brazil.
====The Argentine Crisis====
{{main|Argentine economic crisis (1999-2002)}}
In 1999, following the 1998 international crisis, GDP fell by 3% and Argentina entered fully into recession. President [[Fernando de la Rúa]], who took office in December 1999 following the 10-year administration of [[Carlos Menem]], sponsored tax increases and spending cuts to reduce the deficit, which had ballooned to 2.5% of GDP. The new government also arranged a new US$7.4 billion stand-by facility with the [[International Monetary Fund]] (IMF) for contingency purposes — almost three times the size of the previous arrangement. The new government passed laws intended to change the country's labour code, and attempted to address the precarious financial situation of several highly indebted provinces.
The issue of Argentina's massive [[public debt]] became a subject of considerable controversy, and increased tension between Argentine governments and the IMF. In 2001, capital flight increased, and the government found itself unable to meet debt payments. The crisis exploded after the ''[[corralito]]'' (an almost complete freezing of bank deposits) caused [[cacerolazo|massive protests]]. After the [[December 2001 riots (Argentina)|December 2001 riots]], President De la Rúa resigned.
On [[December 23]] [[2001]], interim president [[Adolfo Rodríguez Saá]] declared a short-lived [[moratorium|debt moratorium]]. After a few days, Argentina officially [[default (finance)|defaulted]] on $93 billion of its debt, mostly the securitized bonds.
[[Image:Buenos_Aires_-_Manifestaci%C3%B3n_contra_el_Corralito_-_20020206-22.JPG|thumb|190px|left|Depositors protesting frozen accounts for fear they might lose value, or worse. February 2002.]]
In January 2002, the convertibility plan that pegged the Argentine peso to the U.S. dollar on a one-to-one basis was scrapped, after nearly 11 years. The peso was floated and suffered a swift and sharp [[devaluation]] (losing about 70% of its value in four months), which in turn triggered a 40% surge in consumer prices.
In 2002, Argentina's [[Measures of national income and output|GDP]] sunk by 10.9%; GDP fell to its 1993 level and on a per capita basis, to that of 1968. Poverty in Argentina grew from an already high 35.9% in May 2001 to a peak of 57.5% in October 2002; the last official report is 23% for the first semester of 2007, which means the country has just returned to pre-crisis levels. Unemployment, having exceeded 20% in 2002, has also declined; it has averaged around 8.7% since 2006.
====Debt restructuring and the role of the IMF====
In a speech before the [[United Nations]] [[United Nations General Assembly|General Assembly]] in May 2004, President [[Nestor Kirchner|Kirchner]] asked for "a structural redesign of the [[International Monetary Fund]]", which has changed "from being a lender for development to a creditor demanding privileges".
Shortly after, at the meeting of the IMF and the [[World Bank]], leaders of the IMF, the [[European Union]], the [[G7|Group of Seven]] industrialised nations, and the [[Institute of International Finance]] (IIF), warned Kirchner that Argentina must come to a debt-restructuring agreement, increase its primary budget surplus to pay more debt, and impose "structural reforms" to regain the trust of the world financial community.
The [[Argentine debt restructuring|debt restructuring process]] was long and complex. Argentina offered a steep discount on its obligations (approximately 70%) and finally settled the matter with over 76% of its defaulted creditors (the default did not include the IMF, which has continued to be paid in due time).
In December 2005, Kirchner decided to liquidate the Argentine debt to the IMF in a single payment, without refinancing, for a total of $9.8 billion. The payment was partly financed by Venezuela, who bought Argentine bonds for $1,600 million. [http://www.clarin.com/diario/2006/01/10/elpais/p-01501.htm]
In 2006, Argentina reentered international debt markets selling US$500 million of its Bonar V five year dollar denominated bonds, with a yield of 8.36%, mostly to foreign banks and [[Moody's]] boosted Argentina's debt rating to B from B-. [http://www.gfmag.com/index.php?idPage=98]. However, the reliance of Argentina on Venezuela for a large portion of its financing needs has not been well received in Wall Street circles. On July 18, 2006 [[Goldman Sachs]] Emerging Markets Research noted: "Instead of trying to restore its credibility with the broad capital markets, the government keeps on relying on Venezuela as its main credit supplier" (as quoted in the Wall Street Journal on July 28, 2006). The total amount of Argentina's debt held by Venezuela is estimated at around US$4 billion. [http://www.lanacion.com.ar/economia/nota.asp?nota_id=826986]
[[Image:Néstor_Kirchner_y_José_Luis_Gioja-San_Juan-25_de_marzo_de_2004.jpg|thumb|240px|[[Nestor Kirchner|President Nestor Kirchner]] savors the moment in a reopened cookie factory, 2004.]]
====Economic expansion====
The [[Argentine economy]] has been [[economic growth|growing]] again with surprising strength: 9% annual growth, sustained for five consecutive years (2003 through 2007). This stability was initially due to a surge in trade surpluses (over all previous historical records) and the sustained growth has been led by an over three-fold jump in [[fixed investment|business investment]] since the 2002 low.<ref>[http://www.mecon.gov.ar]</ref> This reflects the return of local and international confidence, as well as record [[public works]] investment and a vigorous incomes policy on the part of the [[Nestor Kirchner|Kirchner]] Administrations.<ref>[http://www.mecon.gov.ar/download/infoeco/apendice2.xls#A2.5!A1]</ref> Private sector employers have, since then, created over 2 million jobs and recovered median pay to over US$800 a month (about US$1,600, in purchasing power parity terms), a level closer to Argentina's historical average.<ref>[http://www.ieco.clarin.com/2008/06/18/01696111.html]</ref> This has boosted local consumption by two-thirds in real terms; but, foreign investment has increased only modestly.<ref name=infoeco>[http://www.mecon.gov.ar/download/infoeco/actividad_ied.xls]</ref>
Benefiting from an undervalued local currency that allowed industry to produce goods with competitive prices in the international market, [[manufacturing]] in Argentina recovered quickly from the crisis. Manufacturing in general has grown by over 60% since [[2002]] and some long-suffering industries, such as [[textiles]], [[furniture]], [[machinery]], [[construction]] materials and [[publishing]] have more than doubled their output.<ref>[http://www.mecon.gov.ar/peconomica/basehome/infoeco/nivel_de_actividad.htm]</ref> Motor vehicle output, in particular, has jumped from a depressed 155,000 units in 2002 to a record 545,000 units in 2007 (auto sales have risen even more)<ref>[http://adefa.com.ar]</ref>.
====Criticism====
According to the [[Heritage Foundation]], a Washington-based conservative think tank, the state's role in the economy has expanded since the start of the Kirchner administration, primarily through price fixing in some industries and the creation of a state-owned airline and a state-owned energy company. The Heritage Foundation assigns Argentina a score of 3.3 (mostly unfree) in [[economic freedom]] on a scale of 1 to 5 of, which places the country in the 109th position of the 157 evaluated at the [[Index of Economic Freedom]].
Though nothing new to Argentina, inflation has also proven difficult to contain. Price stability returned quickly after the 2002 crisis and [[Nestor Kirchner|Pres. Kirchner]] inherited annual inflation in the 3-4% range. The robust recovery that followed has been accompanied by growth in median incomes averaging 17% (including a 25% jump in the year to April 2008, alone); but, it's also seen a 26% average expansion in the [[monetary base]].<ref name=infoeco/>
The Kirchner Administration began pursuing a price truce with retailers as early as 2005; but, with [[macroeconomic]] pressures at these levels, the initiative soon failed.<ref>[http://www.clarin.com.ar/diario/2005/12/09/um/m-01104631.htm]</ref> To make matters worse, in early 2007 the administration began interfering with inflation estimates and, as of mid-2008, continues to do so<ref>[http://www.clarin.com/diario/2007/02/22/um/m-01368275.htm]</ref> (by how much, of course, remains a subject of debate; but, where the Economy Ministry has refused to acknowledge [[inflation]] greater than 10%, their own measure of ''implicit private consumption prices''--a factor in GDP estimates--suggests inflation in the order of 16%).<ref name=infoeco/>
==Banking==
[[Image:Banco-central-arg.JPG|thumb|260px|[[Banco de la Nacion Argentina|Bank of the Argentine Nation]], Buenos Aires.]]
{{main|Banking in Argentina}}
Argentine banking, whose deposits exceeded US$75 billion in April, 2008,<ref>[http://www.bcra.gov.ar/pdfs/polmon/InfBanc0408.pdf]</ref> developed around public sector banks but is now dominated by the private sector, which makes up most of the 85 active institutions (4,000 branches) in the country and holds about 60% of deposits and loans. Locally and foreign-owned institutions split this percentage about evenly.<ref>[http://www.aba-argentina.com/informes/memoria-anual-2007/Memoria2007versionEspanol.pdf]</ref> The largest bank in Argentina by far, however, has long been the public [[Banco de la Nacion Argentina]]. Not to be confused with the [[Central Bank of Argentina|Central Bank]], this institution now accounts for about a fourth of the system's total deposits and a seventh of its loan portfolio.<ref>[http://www.aba-argentina.com/informes/ranking_bancos/pdf/rankingfebrero2008.xls]</ref>
During the 1990s Argentina's financial system was consolidated and strengthened. Deposits grew from less than US$15 billion in 1991 to over US$80 billion in 2000, while outstanding credit (70% of it to the private sector) tripled to nearly US$100 billion .<ref>[http://www.aba-argentina.com/informes/memoria_anual/memoria-anual-2007/Memoria2007versionEspanol.pdf]</ref>
The banking system largely lent US dollars and took deposits in [[Argentine peso]]s and when the Peso lost most of its value in early 2002, many borrowers again found themselves hard-pressed to keep up. Indeed, delinquencies tripled to about 37%.<ref>[http://www.aba-argentina.com/informes/memoria_anual/memoria-anual-2007/Memoria2007versionEspanol.pdf]</ref> Over a fifth of deposits had been pulled out by December 2001, when [[Minister of Economy of Argentina|Economy Minister]] [[Domingo Cavallo]] imposed a near-[[corralito|freeze]] on cash withdrawals. The lifting of restrictions a year later was bittersweet, being greeted calmly<ref>[http://clarin.com/diario/2002/12/03/e-00801.htm]</ref> if with some umbrage at not having these funds freed at their full [[U.S. Dollar]] value. Some fared worse; the owners of the now-defunct Velox Bank defrauded their clients of up to US$800 million.<ref>[http://ipsnews.net/print.asp?idnews=39063]</ref>
Credit in Argentina is still relatively tight. Lending to the private sector has been growing by 40% a year since 2004 and deliquencies are down to 2-3%; but, credit outstanding is still, in real terms, about 20% less than in 2000 and as a percent of GDP, quite low by international standards. The [[prime rate]], which had hovered around 10% in the 1990s, hit 67% in 2002 and though it returned to normal levels quickly, rising inflation has been affecting it again (it's 16%, as of Dec. 2007).<ref>[http://www.aba-argentina.com/informes/memoria_anual/memoria-anual-2007/Memoria2007versionEspanol.pdf]</ref>
Partly a function of this and past instability, Argentine nationals also hold an estimated US$120 billion in overseas accounts and, as of 2007, this figure continues to grow (albeit slowly).<ref>[http://www.ieco.clarin.com/notas/2008/07/06/01709567.html]</ref>
==Foreign trade==
{{main|Foreign trade of Argentina}}
Argentine exports are fairly well diversified; but, though agricultural raw materials were only 20% of the total in 2007, exports are (including processed goods) still 55% agricultural in origin. Soy products alone ([[soybean]]s, [[vegetable oil]], etc.) account for almost one fourth of the total. Argentina's leading export only a generation ago, [[cereal]]s (mostly [[maize]] and [[wheat]]) make up less than one tenth.
[[Image:Exportaciones_argentina_-_1991-2007.png|thumb|270px|Argentine exports since 1991, in billions of US dollars.]]
Industrial manufactures today account for 30% of Argentine [[export]]s. The country exported over 316,000 motor vehicles in 2007 (mostly to Brazil and [[Mexico]])<ref>[http://adefa.com.ar/informacion_estadistica/2007]</ref> and, including auto parts, this is today the country's leading industrial export and about 10% of the grand total. Chemicals, steel, aluminum, machinery and plastics account for most of the remaining industrial exports.
A net energy importer until 1981, Argentina's fuel exports began increasing rapidly in the early 1990s and today account for about an eighth of the total. Refined fuels make up about half of this; crude petroleum and natural gas exports have been, together, hovering around US$3 billion in recent years.<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/19/ica_01_08.pdf]</ref>
Argentine imports have historically been dominated by the need for industrial supplies, machinery and parts; together, these amounted to US$34 billion in 2007 (three-fourths of the total). Consumer goods (including motor vehicles) make up most of the rest.<ref>[http://www.indec.mecon.ar/nuevaweb/cuadros/19/ica_01_08.pdf]</ref>
==Investment==
U.S. [[Foreign direct investment|direct investment]] in Argentina is concentrated in telecommunications, petroleum and gas, electric energy, financial services, chemicals, food processing, and vehicle manufacturing. The stock of U.S. direct investment in Argentina approached $16 billion at the end of 1999, according to embassy estimates. Canadian, European, and Chilean firms — other important sources of capital — have also invested significant amounts. In all, foreign nationals hold over US$60 billion in [[list of countries by received FDI|direct investment]].
[[Image:Puerto_Madero_DLightning.jpg|thumb|260px|left|The recycled docklands at ''[[Puerto Madero]]'' are among the developments attracting foreign (as well as local) investment.]]
Brazil has, since 2000, also became an important investor in Argentine assets and Spanish companies in particular have entered the Argentine market aggressively, with major investments in the petroleum and gas, telecommunications, banking, and retail sectors. Several bilateral agreements play an important role in promoting U.S. private investment. Argentina has an Overseas Private Investment Corporation ([[OPIC]]) agreement and an active program with the [[Export-Import Bank of the United States|U.S. Export-Import Bank]]. Under the 1994 U.S.-Argentina Bilateral Investment Treaty, U.S. investors enjoy national treatment in all sectors except shipbuilding, fishing, nuclear-power generation, and uranium production. The treaty allows for international arbitration of investment disputes. In October 2004 [[China]] announced it would invest US$20 billion in Argentina. An agreement provided for about Chinese investment in railway reconstruction (worth US$8 billion) and oil research (US$5 billion). The agreement failed to materialize.
In 2005 Argentina attracted $2.4 billion in foreign direct investment (FDI). As percent of GDP, its FDI is one of the lowest in Latin America. Current policies of Kirchner's administration and difficulty in enforcing contractual obligations are blamed for this poor performance.<!-- needs a source -->
==Other statistics==
[[Image:Imagen102.jpg|thumb|200px|A collector's ''Justicialist'', circa 1951. This was was the first completely Argentine car in design and make.]]
'''Investment (domestic, physical):'''
US$64 billion, 22.7% of GDP (2007) <ref>[http://infobae.com/contenidos/369236-100896-0-La-actividad-econ%F3mica-se-aceler%F3-los-%FAltimos-meses]</ref>
'''Household income or consumption by percentage share:'''
* ''lowest 10%:'' 1.2%
* ''highest 10%:'' 35.3%
'''Motor vehicles:'''
8.86 million active registrations (one per 4.5 people)<ref>[http://www.dnrpa.gov.ar/bolesta1/boletin1020/pagina11.htm]</ref>
'''Agriculture - products (metric tons, 2007):'''
soy (47.6 M), maize (21.8 M), sugarcane (20.5 M), wheat (14.6 M), sunflower seeds (3.6 M), citrus fruit (3.2 M), sorghum (3.0 M), grapes (2.8 M), potatoes (2.6 M), hops (1.3 M), apples (1.2 M), green teas (1.1 M), rice (1.1 M).
''Meats'': beef, 3.2 M; poultry, 1.2 M, seafood 0.7 M.<ref name=mecon>[http://www.mecon.gov.ar/download/infoeco/actividad_ied.xls'1.20ISAC'!A1]</ref>
'''Industrial production:'''
Value added, US$52 billion; growth rate, 7.5% (2007 est.)
[[Image:Cosecha-ar-1992-2007.png|thumb|260px|Argentine harvests of grains and oilseeds, 1992-2007 (in millions of metric tons).]]
'''Electricity:'''
* ''production:'' 107.4 [[TWh]] (2007)
* ''consumption:'' 103.0 [[TWh]] (2007)<ref name=mecon/>
* ''exports:'' 4.14 TWh (2005)
* ''imports:'' 8.02 TWh (2005)
'''Electricity - production by source:'''
* ''fossil fuel:'' 52.2%
* ''hydro:'' 40.8%
* ''nuclear:'' 6.7%
* ''other:'' 0.2% (2001)
[[Image:Central_vista_externa_en_gris.jpg|thumb|260px|[[Yacyreta]] hydroelectric dam, NE Argentina. Hydropower has helped Argentina lessen its dependency on fossil fuels.]]
'''Petroleum:'''
* ''production:'' 682,000 barrels/day (2005)
* ''consumption:'' 532,000 barrels/day (2005)
* ''exports:'' 154,000 barrels/day (2005)
* ''proved reserves:'' 2.8 billion barrels (2004 est.)<ref>[http://data.un.org/Data.aspx?d=EDATA&f=cmID%3ACR%3BtrID%3A04#EDATA]</ref>
'''Natural gas:'''
* ''production:'' 48.9 billion m³ (2006)
* ''consumption:'' 41.3 billion m³ (2007)<ref name=mecon/>
* ''exports:'' 6.7 billion m³ (2005 est.)
* ''imports:'' 1.7 billion m³ (2005 est.)
* ''proved reserves:'' 768 billion m³ (2004)
'''Reserves of foreign exchange & gold:'''
Dec 2006: $31 billion <ref> [http://www.lanacion.com.ar/867076 Las reservas internacionales del Central superan los US$ 31.000 millones] </ref>, March 2007: $35 billion <ref>[http://www.clarin.com/diario/2007/03/01/um/m-01372524.htm Las reservas del Banco Central ya superan los US$ 35 mil millones]</ref>, May 2007: $40 billion <ref>[http://www.clarin.com/diario/2007/05/21/um/m-01423305.htm Las reservas volvieron a batir récords: ya superan los US$ 40 mil millones<!-- Bot generated title -->]</ref>, March 2008: $50 billion <ref>[http://infobae.com/contenidos/369033-100896-0-Las-reservas-superaron-los-us50-mil-millones]</ref>
'''Debt - external:'''
''Total (12/2007):'' US$123.9 billion (''private'', US$31.6 bil.; ''public'', US$92.3 bil.).
== References ==
{{reflist|2}}
<div class="references-small">
*Bulmer-Thomas, Victor. ''The Economic History of Latin America since Independence'' (New York: Cambridge University Press). 2003.
*[http://www.fondad.org/publications/argentina/contents.htm The Crisis that Was Not Prevented: Lessons for Argentina, the IMF, and Globalisation, Jan Joost Teunissen and Age Akkerman (eds.), Fondad, 2003, book, pdf)]
*[[CIA World Factbook]] 2000 and the 2003 U.S. Department of State website
*[http://www.gregpalast.com/detail.cfm?artid=96&row=2 Who Shot Argentina? The Finger Prints On the Smoking Gun Read ‘I.M.F.', Greg Palast, Guardian (London) Sunday, August 12, 2001,)]
<references/>
</div>
==See also==
{{Argentina main topics}}
* [[Agriculture of Argentina]]
* [[Argentine economic crisis (1999-2002)]]
* [[Argentine Currency Board]]
* [[Buenos Aires Stock Exchange]]
* [[Economy of South America]]
* [[Forestry in Argentina]]
* [[Historical exchange rates of Argentine currency]]
* [http://www.cepr.net/documents/publications/MWLS_ArgentinaRecovery_Formatted_PDF2.pdf Argentina's Economic Recovery: Policy Choices and Implications] from the [[Center for Economic and Policy Research]]
{{SACN}}
{{WTO}}
{{South America in topic|Economy of}}
[[Category:Economy of Argentina| ]]
[[Category:WTO member economies]]
[[ca:Economia de l'Argentina]]
[[de:Wirtschaft Argentiniens]]
[[es:Economía de Argentina]]
[[fr:Économie de l'Argentine]]
[[gl:Economía de Arxentina]]
[[io:Ekonomio di Arjentinia]]
[[lt:Argentinos ekonomika]]
[[oc:Economia d'Argentina]]
[[pt:Economia da Argentina]]
[[ro:Economia Argentinei]]
[[vi:Kinh tế Argentina]]