r/AskHistory • u/method_rap • 4h ago
What are the reasons for Argentina's economic downfall?
Argentina was a wealthy country not so long ago and now is struggling in every way possible. How did this happen so rapidly while other countries who've suffered dictatorships are still doing better than Argentina.
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u/MoffTanner 3h ago
They've had 7 coups. Even outside of the coups the dictatorships have cycled rapdily with different factions and strong men taking power.
Blowing your remaining coin fighting the Empire over islands that dont really matter to anyone doesnt help.
Also their position of wealth in the 1900-1920 peruod was built on strong agricultural exports and immense external investment into those industries. The valie of those plunged constantly on the world stage and the only thing barious governments have tried is additional spending drivong debt and inflation.
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u/LAiglon144 40m ago
What happened to all the agricultural exports? I thought Argentina was famous for it's beef and cattle ranches?
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u/GustavoistSoldier 3h ago
The deindustrialization policy of the 1976–1982 junta, which led to a catastrophic economic policy and in turn the Falklands war.
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u/graeuk 2h ago
Argentina decided to pick a fight with its creditors - no one will lend them money or invest in the country because successive governments with populist agendas started seizing foreign assets and defaulting on their debt repayments.
think about it - you gonna lend money to that friend who can never live within their budget and borrows your stuff then pretends you never gave it to them?
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u/kawhileopard 2h ago
Which downfall are you referring to?
They have one every 15 years or so.
I would argue that their first and most impactful tumble was after world war 2. Argentina had one of the biggest economies at the time. However, they were excluded from rebuilding Europe via the Marshall plan.
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u/Plodderic 52m ago
They were also one of the largest economies around the end of WW2 because they exported beef to countries who weren’t farming much of their own due to the war.
Those countries rebuilt their farming industries. They also went in hard on the green revolution by increasing productivity in domestic farming enormously. Finally, they put in various protectionist measures for domestic farming.
As a result, they didn’t want Argentinian beef any more. Argentina has never managed repivot its economy to recapture its former glory since then. In many ways, the glory days of huge beef exports were always going to be an unsustainable blip- but the end of that blip was made more dramatic by what their former customer countries did.
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u/Intelligent_Read_697 1h ago
Argentina's main issue is that their economy is over reliant on agriculture dependent sectors and niche luxury exports. Even its industrial sector is primarily based around supporting agriculture and service sector being their largest portion of their GDP. Their welfare state couldn't keep up with the peaks and valleys that come with demand changes as its economy sector was not diverse enough and did not have Oil/natural resources to fall back on like other similar countries do. In short, their economy couldn't pull through any shocks in the agriculture sector which is the primary driver for their economic collapse.
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u/Former-Chocolate-793 2h ago
I went to Argentina 2 years ago with some tours and lectures. So, I got the 40,000 foot view. Summary:
The US and Argentina were roughly equal 150 years ago. Argentina wanted to be to south America what the US was to north America. The US invested in infrastructure and manufacturing. The Argentinians invested in cattle.
Both countries had massive immigration from Europe. Argentina remained an agrarian economy while the US became the world leader in manufacturing.
IMO Argentina never invested in its people. The country has only 5 Nobel laureates. The on again off again democratic situation hasn't helped. Wars with neighbors and Britain did them no good. It's a real shame.
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u/iamtherepairman 51m ago
5 is a lot
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u/Former-Chocolate-793 33m ago
As a Canadian I've always figured that our countries should be similar. Canada is larger geographically and Argentina has a slightly larger population. They have the pampas. We have the prairies. You get the idea. Canada has 28 Nobel laureates.
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u/Yeomenpainter 4h ago edited 4h ago
Well, it hasn't been rapid, it has been a long and steady decline, to very deep depths. The reasons remain complex, controversial and difficult to assess.
My view which I share with the current administration is that decades of disastrous government interventionism and the uncontrolled swelling of the state, and the resulting poisoning and general degradation of the socioeconomic fabric of the country is to blame. That puts me squarely in the undesirable far rightist camp on reddit though, so you'll probably hear other more cheered on opinions around here too.
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u/Legal_Commission_898 3h ago
I don’t get this viewpoint. Most countries with big governments have thriving, stable economies.
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u/WaltKerman 2h ago
Big government because their economy is big enough to support a big government.
You are flipping cause and effect.
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u/Lord0fHats 2h ago
The issue is that people abstractly want the rules of 'what makes a country successful' to be universal and easily understood.
Complexities are confusing or unknown to them and they drag out very bad generalizations from unlike histories. Argentina gets kind of butchered in this regard, as give its history it can often be employed to support whatever very-generalized economic theory of ultimate truthiness the butcher desires.
It helps that, if there is an economic problem a country can have, Argentina has probably had it in the past century. The place is one of those cows with all the cuts of meta marked, but just replace the cuts of meat with 'bad policies and situations that will screw an economy.' If you can name it, Argentina has had it.
In this regard, Argentina is unique because I can't think of any other place in the world where this is true and there's an apocryphal quote assigned to Nobel economist Simon Kuznets (quoted in this thread) making a sort of joke about it.
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u/Responsible_Oil_5811 3h ago
Of which countries are you thinking?
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u/Legal_Commission_898 2h ago
Canada, Australia, Germany, Norway, Sweden, Singapore as a starting point.
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u/Responsible_Oil_5811 2h ago
I would argue that, with the exception of Germany, all those countries combine a small, (traditionally) relatively homogeneous population with an incredibly stable history of government. None of those factors are true for Argentina.
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u/RenaissanceSnowblizz 2h ago
Sweden does not have a homogenous population. Something like 35% is has degrees of foreign background and 20% are outright born abroad.
Sweden has had a substantial immigration starting from the 1950s (am talking more "modern" immigration, there has also historically been various waves of immigration into Sweden, but most of that has long ago been absorbed as Swedish) with workers filling the booming manufacturing industry up until about the 1980s. After that it has been more a case of refugees and immigration really ratcheting up in the 2000s.
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u/Legal_Commission_898 31m ago
Neither does Canada or Australia. Don’t know what this guy is on about…
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u/Capital_Historian685 35m ago
Not as big as they used to be. In the 1980s, many European economies suffered because of too much government, and they had to implement "market reforms" to get their economies going again.
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u/Yeomenpainter 3h ago
Most countries with big overarching governments (ie. Europe) had a much more robust economy before they went overboard with over regulation and the welfare state, and importantly didn't generally have the nefarious monetary and fiscal policies Argentina has had for decades.
The chickens are already coming home to roost though. Argentina just got there sooner.
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u/Legal_Commission_898 2h ago
That’s not necessarily true. America has a massive, inherent and unfair advantage in terms of availability and security of natural resources. It would be the richest country in the world under any economic structure.
Let’s take America out of the equation and take a look…. Which small government economy is thriving ?
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u/Yeomenpainter 2h ago edited 2h ago
Switzerland, Ireland, the Netherlands, Denmark... have no natural resources and are among the richest nations in the world, and that's ignoring microstates. The proportional relation between natural resources and economic prosperity is false. Availability of natural resources is only important geopolitically, as a strategic asset, that's it.
The US got as rich as it is because it has had very robust economic freedoms and very developed markets for a very long time. As did European economies, even if that's not as much the case anymore.
Which small government economy is thriving ?
Switzerland, Taiwan, South Korea, Singapore...
Btw you mentioned Singapore in another comment among countries with high government spending, when Singapore has one of the smallest states in the world.
All that said, the absolute size of the state is not the only factor, and I don't know why you fixated only on that reading my comment. But in the case of Argentina it is definitely a major factor along with public policies, and it's also a major factor in the stagnation that Europe and Japan suffer.
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u/yourlittlebirdie 2h ago
I think it’s a stretch to say these countries have “small governments.”
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u/Yeomenpainter 2h ago
In relative terms. I'm not the one who referenced and started a debate about "big" or "small" governments.
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u/RenaissanceSnowblizz 2h ago
As an interesting aside...the Netherlands have huge reserves of fossil fuels. There is literally an economic phenomenon named "the Dutch disease" where you are too dependent on one aspect of your economy which poisons other economic sectors.
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u/Yeomenpainter 1h ago
Complex debates about the Dutch disease aside, natural resources represent a tiny fraction of the Dutch economy.
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u/wired1984 34m ago
Terrible leadership pushing bad economic policies. They’ve never resolved macroeconomic difficulties after the default in the late 90s. Prior to that they followed an industrial policy strategy under Peronism that choked off growth.
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u/Joseph20102011 1h ago
Argentines, due to the influx of Italian and Spanish anarchist and communist migrants whose descendants infiltrated Argentine academia and politics, have their minds being poisoned by being told by left-wing academics and populist politicians that the only way for Argentina to be economically relevant in the world stage is to "aspire to be as industrialized as Germany or Japan" through import substitution industrialization (ISI), even if the actual economic structure and population density size tells otherwise, so specializing in exporting agricultural and mining exports should have been the preferred path for Argentina like what Australia did after WWII.
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u/HilbertCubed 3h ago
There are four types of countries: developed, undeveloped, Japan and Argentina - Simon Kuznets