Icy glaciers, arid deserts high in the mountains, vast grassy plains and a very long coastline, Argentina is a land of incredible natural beauty. Its name is derived from the Latin word for silver, in reference to an ancient legend about a land rich in the shiny metal, somewhere up in the Andes Mountains. Early European explorers searched in vain for this mythical land. Instead, they established their very own Provincias Unidas del Rio de la Plata, or the United Provinces of the Silver River – Argentina’s early name. They also built the fabulous city of Buenos Aires, in the image of the big cities they left behind in Europe.
Urbane people passionate about soccer, juicy beef steaks and wine, Argentineans have experienced many economic swings during the last few decades, from financial crises, and hyperinflation to recessions and boom periods. The tide appeared to have turned early in this decade, when the Argentinean economy expanded rapidly. Unlike the many false dawns of the past, the recovery seemed more sustainable, as there was a significant improvement in political stability as well. However, that phase of fast growth ended with the global recession as the economy slipped again. Though the country has since recovered, the pace of growth has been disappointing, now lagging most other emerging economies.
Not many people have seen economic booms and busts as often as the Argentineans have. During the first decade of the last century, they enjoyed the seventh highest income levels in the world – ahead of even the Germans and the French. By then, Argentina had completed nearly a century as an independent sovereign state. Buenos Aires, its capital, had well over a million inhabitants, and was the second largest city in the Americas after New York. Europeans flocked to the city for business and in search of work, marking an indelible stamp on the culture and demographics.
The two World Wars and the Great Depression led to a dramatic fall in export demand and foreign investments, spoiling the economic fortunes of Argentina. The post-war period was marked by political instability and military dictatorships. Juan Peron, an army officer who was first elected as president in 1946 and again in 1952 and 1973, played a major part in shaping domestic policies. Economic policies during the period increasingly became inward looking and socialist, which prevented any meaningful and sustainable recovery.
Political instability peaked in 2001 when the country had as many as five presidents in just two weeks! These swift changes in political leadership followed a period of economic collapse and bloody riots in major cities. Things improved from 2003 under President Nestor Kirchner, and in 2007, his wife Christina Kirchner was elected as Argentina’s first woman president.
Estancias and gauchos
Blessed with vast plains ideal for raising cattle, Argentina turned to livestock farming which fostered prosperity in the 19th century. A unique culture and lifestyle developed around the estancias – Spanish for ranch. The estancias, which included even small farms, were run by gauchos or cowboys, and continue to thrive today. More recently, the estancias are attracting travelers interested in experiencing traditional working ranches. For the modern tourist from the developed world, adventure sport activities have also been thrown in.
Gauchos were wanderers or nomads roaming the plains of South America, who later settled down to run the organized farms that came up to feed the European demand for leather and later, beef. As overseas demand for meat and leather waned after the First World War, the farms went into a decline. Political instability within the country held back the revival of the Argentinean livestock industry during the second half of the last century.
Firm demand and higher prices for meat products in recent years reinvigorated the estancias and exports picked up, including to the U.S., until the global economic slowdown led to slower shipments. Though Argentina remains the third largest beef exporter globally, the gap with leader Brazil has widened. Unfavorable government policies, like the 2006 ban on beef exports to fight domestic inflation, remain the biggest challenge for the industry. The beef export ban was later replaced by a quota system which continues to restrict export volumes. Lower domestic prices have led to an increase in domestic consumption since the export restrictions and Argentineans, who devour more than 150 lbs of beef on average every year, remain the biggest consumers of beef in the world.
Mendoza – Argentina’s Napa valley
When Wine Spectator, one of the most influential voices in the wine industry, rated
Argentina is often called the sleeping giant in the global wine market. The country
Annual wine exports from Argentina now exceed $600 million and the U.S is the biggest
Political instability and restrictive policies hinder economic growth
|Sovereign countries usually do not refuse to honor their debt obligations. Defaulting countries will be shut out of global credit markets and raising external finance will be extremely difficult in the future. Even then, Argentina did not have much of a choice but to default on its debt repayments to international creditors in 2001. The government’s finances were so bad that it could not have made the repayments even if it wanted to, as the IMF refused to provide additional loans. At $81 billion, it was the biggest ever sovereign debt default in history.
The first wave of development happened towards the second half of the 19th
Large capital inflows, initially from Britain and subsequently from the U.S., facilitated
Foreign investment flows dried up after the Second World War and the Peron government,
Though Argentina’s economy has performed below par for the last several decades,
Policy inconsistency and concerns about poor economic governance have long affected
The debt default that initially helped, but hurt later
Sovereign countries usually do not refuse to honor their debt obligations. Defaulting
Three years later, Argentina offered to pay its creditors 30 cents to a dollar on
However, the debt default and the recovery suits filed by the remaining creditors
As the country’s debt servicing needs are set to rise in the coming years, and domestic
Trade ties that bind, though often fractious
South American countries have deep economic relationships among themselves and hence
A decade ago, trade between South American countries was even more important, which
Efforts are being made by member countries to strengthen Mercosur, through further
However, the relationship between countries in the region has often turned fractious
Candies to online auctions
Most Americans wouldn’t suspect that the candies they crave for are probably made
Such success stories in non-traditional businesses are rare in Argentina, where
As well, Argentina is a large exporter of copper and gold concentrates. Other mineral
With changing global trends, Argentinean businesses are also evolving. Good education
Yet, the enterprise which should represent Argentina today and inspire its young
Young, vibrant, adventurous, and full of life – that is the image the world had
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