The Argentinian Debt Crisis in Historical Perspective

August 26, 2013

Brenna Owen

Argentinian President and Argentinian flag

Geopoliticalmonitor.com

The Argentinian economy has long perplexed economists and political scientists studying 20th century Latin American development. At the turn of the 19th century, Argentina, a country both rich in agricultural resources and plagued by labor shortages, represented an attractive destination for central and southern European immigrants. By 1915, it had become the world’s tenth wealthiest country per capita, and its population had outgrown Canada and other ‘developed’ countries as immigrants arrived in droves.

Over the course of the rest of the century, Argentina’s economy experienced modest highs and devastating lows. Though the Great Depression caused the country’s GDP to fall by a quarter between 1929 and 1932, import substitution industrialization (ISI), an economic policy that focuses on domestic production rather than foreign imports, led to a modest economic recovery through the 1930s and 40s. Yet the most catastrophic economic pitfalls were yet to come.

 

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  • Tim Hunke

    It is indeed sad to hear of the problems existing in Argentina. It was once a great and powerful country. Buenos Aires was considered the Paris of the Americas. I wish them well in their struggle.

  • Gregorio burlingame

    If you knew how much money the politicians had offshore!

  • Andres

    Hi Mrs Owen,

    "The Argentinian economy has long perplexed economists and political scientists studying 20th century Latin American development."

    This perplexion is mainly due to a lack of knowledge of complex socio-political issues and an insistence of applying Western patterns of behavior to different World regions.

    For instance, you wrote:

    "At the turn of the 19th century, Argentina, a country both rich in agricultural resources and plagued by labor shortages, represented an attractive destination for central and southern European immigrants. By 1915, it had become the world’s tenth wealthiest country per capita, and its population had outgrown Canada and other ‘developed’ countries as immigrants arrived in droves."

    True, but:

    – Labor shortages didn’t mean available well paid jobs in decent working conditions. For instance, thousands of European workers escaping famine in their native countries helped to build the Buenos Aires subway network in the 1910’s, coming back also in droves after those public works finished. Not precisely a picture of a country of high growth expectations.

    – Social and economic conditions on the innerland were far from those you found at the Northern hemisphere. Rural Argentina in the early XX century ressembled more the US Southern states before 1965 than the conditions after that: A semi-feudal system managed de facto by landlors, with unsurmountable bareers to entry for colonizing immigrants and very few opportunities for upward mobility.

    There was no Homestead Act in Argentina as there was in the US or Canada, and no automatic citizenship for newcomers. Search for "Grito de Alcorta", "Reforma Universitaria" and "Ley Saenz Peña" in Wikipedia and you’ll learn what these events meant and why happened.

    – The average Argentine per capita income was effectively one of the highest in the World by 1910, but this average doesn’t take into account the huge disparities between the poor and the rich. Similar to current Saudi Arabia, a country with one of the highest per capita income today but hardly to be described as a country with a high standard of living.

    Many people watch pictures of the wealthiest Buenos Aires neighborhoods from the early XX century and believe that the country was a kind of Shangri-La, but far from reality. Those in the upper echelons had a lavish standard of living, with everyone else struggling to thrive (middle class made up of immigrants) or even survive (dark-skinned peasants from the inner provinces), with almost zero political power to make things change. Not a coincidence that the most popular political parties there came after significant social unrest (1890 Revolution, Semana Trágica of 1918, etc.): UCR, defending the interest of upwardly moving immigrants, and Peronism, defending the living standards of workers coming from the innerland.

    As a final note, you may describe Peron as "divisive", but he could also be described as "uniting". In fact, his movement helped to consolidate work unions who were too weak before since they were divided in Communist, Socialist or Anarchist factions, making them strong enough to face industrial lobbies and get important concessions such as 8-hr labor shifts, medical coverage, etc. Those lobbies didn’t precisely love Peron for making them reliquish wealth and would certainly call him a "dictator", a "new Hitler" or a "divisive" leader.

    Thanks,

    Andres

  • Re: Andre’s comment. Very spot on – if the British had settled in Argentina/Uruguay after the British invasions of the Rio de la Plata in 1806-07, the way they did in Canada and Australia (other relatively empty, bountiful, temperate-zone lands), Argentina’s economic development would have been much more comprehensive and sustainable. Argentina would be every bit as much a First World country as the US, Canada, Australia, New Zealand, Japan, and the western European countries!

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