case study on Argentina
Despite having been one of the continents most diligent students in the lessons of neo-liberal economic policy, Argentina is sinking in a quicksand of economic depression and social unrest. ... The government was recently forced to give 200,000kg of food aid to its most needy citizens Argentina: Inflation & Wages Argentina: Employment & Unemployment ARGENTINA FACTS Population: 38 million Capital: Buenos Aires Major language: Spanish Major religion: Christianity Life expectancy: 70 years (men), 77 years women) Monetary unit: 1 peso = 100 centavos Main exports: Food and live animals, mineral fuels, cereals, machinery Average annual income: US $7,440 Internet domain: . ... At the time, the strategy worked, but in time Argentina suffered the disadvantages of such a fixed peg. ... But when stability returned to Argentina, the inability of its currency to respond proved more of a burden than a benefit. Argentina had, in effect, ceded control over monetary policy - consider how important cutting interest rates has been to the US and UK this year. ... While Argentina was able to sidestep the fallout from the Mexican currency collapse of 1995, the so-called Asian currency crisis, which began two years later, provided a more troublesome beat. ... But it will hurt businesses that have invested in Argentina, by making their investments in the country less valuable, and their profits smaller. And it will be bad news for those people in Argentina who have borrowed money in dollars and are paid in pesos - for example, some small businesses and many with mortgages. ... However, the sums Argentina owes are so massive that it is very much in its creditors own interest to eventually come to an arrangement. ... In the 1930s Argentina was, thanks largely to beef exports, a global power, boasting income per capita similar to that of France. ... With world economic conditions fair, and seeds of recovery sown, Argentina became locked in a virtuous circle of foreign investment fostering growth, which attracted further cash. ... At the same time, a higher court ordered the judge in charge of the case, Julio Speroni, to reopen investigations into the part played in the shipments by ex-president Carlos Menem, his right-hand man, Emir Yoma, and a former defence minister, Erman Gonzalez. ... For many observers, especially outside Argentina, Mr Cavallo-who passed rapidly from political glory to ignominy as the government of President Fernando de la Rua collapsed at the end of last year-is the classic scapegoat. ... Indeed, in December he formally declared that Mr Cavallo had no case to answer. ... In the arms case, the customs service failed to check the shipments and the exporters received unjustified rebates from the tax authorities. ... Although he calls the re-opening of investigations against him "political persecution", his rule in the 1990s was rife with scandals, and his case has not been helped by the discovery last year that he had opened secret multi-million-dollar Swiss bank accounts in his familys name. ... The case dates from 1994, the route that the money took has been established, the Swiss bank accounts are discovered and a major participant has committed suicide, but the case has still not reached a public hearing. ... There are 24 million people eligible to vote in Argentina, which has a total population of 36 million. ... But campaign spending has not been a major issue in Argentina in recent years, and the new measures may fail to displace the bribery scandal in the minds of voters.