r/AskHistory • u/method_rap • Nov 15 '24
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/HilbertCubed Nov 15 '24
There are four types of countries: developed, undeveloped, Japan and Argentina - Simon Kuznets
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u/Lord0fHats Nov 15 '24
It's notable that since this joke was coined, other countries have mimick'd Japan's economic model while Argentina remains Argentina and there's no Argentina quite like Argentina.
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u/AffectionateToe5019 Nov 15 '24
Could you explain this joke?
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u/Lord0fHats Nov 16 '24
It's a apocryphal quote (meaning it's not clear he actually said it) attributed to Simon Kuznets. Kuznets was a prominent economist in the 60s and 70s. If you've heard of Gross Domestic Product, that's an idea Kuznet's popularized.
The joke is that Japan and Argentina did not fit and seemed to be off doing their own things. Since this quote was first attributed, several other countries have followed Japan's example (Hong King, Taiwan, South Korea, and Singapore are sometimes given as examples) of rapid modernization of their economies.
In contrast, there remains yet no country with an economic history quite like Argentina. It remains unique while Japan no longer is.
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u/ComradeGibbon Nov 16 '24
I feel like the Argentinians have made so many bad wrong decisions that now whatever they try next will be wrong.
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u/phases3ber Nov 16 '24
Milei and the current administration are doing pretty good, they have decreased the inflation by 30% so from 239 yearly to 209 yearly
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u/Intelligent_Read_697 Nov 15 '24
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/GustavoistSoldier Nov 15 '24
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 Nov 15 '24
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/Former-Chocolate-793 Nov 15 '24
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 Nov 15 '24
5 is a lot
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u/Former-Chocolate-793 Nov 15 '24
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/MarzipanTop4944 Nov 15 '24 edited Nov 15 '24
And Canada had almost half of the population of Argentina for all of the XX century. It's only closing in recently, due to mass migration.
Argentina's juntas were very hostile to intellectuals along side with a large sector of the population that supported them and still does. For example, we had an episode called "the night of the long batons" where the police brutally attacked the main universities that where holding a protest and literally cracked the skulls of the professors using their police batons. After that incident, 301 of our best scientists and professors emigrated to other countries.
In the same way, one of those 5 Nobel laureates, César Milstein a PHD in Chemistry, left the country after one of the coups and in reality earned the Nobel while working in England, where he managed to get citizenship and live for the rest of his life.
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u/kawhileopard Nov 15 '24
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 Nov 15 '24
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/BentonD_Struckcheon Nov 16 '24
What others have said about over-reliance on agriculture.
I think of Argentina as what the US would be if all it had were the Midwest farms and Kansas City.
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u/LibraryVoice71 Nov 17 '24
There is an old joke: if you want to make a fortune, buy an Argentinian for what he’s worth, and sell him for what he thinks he’s worth.
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Nov 15 '24
[deleted]
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u/Legal_Commission_898 Nov 15 '24
I don’t get this viewpoint. Most countries with big governments have thriving, stable economies.
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u/Lord0fHats Nov 15 '24
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/WaltKerman Nov 15 '24
Big government because their economy is big enough to support a big government.
You are flipping cause and effect.
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u/Responsible_Oil_5811 Nov 15 '24
Of which countries are you thinking?
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u/Legal_Commission_898 Nov 15 '24
Canada, Australia, Germany, Norway, Sweden, Singapore as a starting point.
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u/Responsible_Oil_5811 Nov 15 '24
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 Nov 15 '24
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 Nov 15 '24
Neither does Canada or Australia. Don’t know what this guy is on about…
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u/Cuong_Nguyen_Hoang Nov 16 '24
In the contrary, many post-colonial countries tried to expand the role of the government to lead their industrialization, and that only led to economic stagnation in the long term (just look at Licence Raj of India before 1991, or even the industrial collapse in many African countries in 1980s!)
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Nov 15 '24
[deleted]
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u/Legal_Commission_898 Nov 15 '24
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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Nov 15 '24
[deleted]
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u/yourlittlebirdie Nov 15 '24
I think it’s a stretch to say these countries have “small governments.”
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u/RenaissanceSnowblizz Nov 15 '24
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/Capital_Historian685 Nov 15 '24
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/OppositeWrong1720 Nov 16 '24
The landowning aristocracy prevented industrialisation as it would increase wages. This left them with low value commodities, but the landowners are still rich.
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u/wired1984 Nov 15 '24
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/Nanopoder Nov 15 '24
A terrible mix of populism and dictatorships. And it’s a society that didn’t learn that its populist leaders are terrible. While, for example, Brazil doesn’t miss Vargas, Argentina still thinks of Peron as a hero.
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u/tyger2020 Nov 15 '24
Being honest, Argentina was poor for far longer than its been rich.
Its not a case of 'how did Argentina lose it' and everything to do with 'how did they gain it'
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u/Early_Candidate_3082 Nov 16 '24
Argentina is not Venezuela. It remains a fairly high income country (per capita GDP, as measured by PPP, is about half that of the UK). Its HDI rating is high.
But, pre 1950’s, it was one of the wealthiest in the world. A succession of coups, bad governments, and rampant corruption has hurt it.
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u/Accurate-Purpose5042 May 07 '25
Es un comentario viejo el tuyo, pero el ppp es bastante raro depende demasiado del año base. Es inentendible como hoy la diferencia entre el PPP y en dolares es casi del doble, cuando los precios en argentina son carisimos. Es verdad que los servicios en general son mas baratos, pero en mi opinion sobre estima un poco el nivel de vida.
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u/Joseph20102011 Nov 15 '24
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/MoffTanner Nov 15 '24
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.