The Argentine Economic Crisis 1999-2002
Basic Information About Argentina
Argentina is a nation located on the East coast of the sothern-most tip of South America. It occupies an area of 2,766,890 square kilometers, which is approximately equal to about three-tenths the size of the United States. It has a population of nearly 40 million people with a growth rate of 1.13%. The populace is 97% Caucasian (primarily of Italian and Spanish decent) with various indigenous groups comprising the remaining 3%. Over 90% of the population is Catholic. The primary language of the nation is Spanish. The national literacy rate is around 96% (CIA).
Argentina has been a democracy since 1983, before 1983 it suffered from a tumultuous period during which it fluctuated between democratic and authoritarian rule. It is currently a constitutional republic with mandatory suffrage of all citizens over 18 years of age. The current president is Eduardo Alberto Duhalde, who has held power since he was appointed to the position of presidency on the second of January 2002 (CIA).
The Argentinian economy enjoys a well diversified industrial sector along with a well developed export-oriented agricultural sector . Argentina also benefits from extensive natural resources and a well educated populace. Major industries in Argentina include food processing, motor vehicles, consumer durables, textiles, chemicals and petrochemicals, printing, metallurgy, steel. Argentina boasts a GDP of $453 billion (2001) with about 6% devoted to agriculture, 28% devoted to industry and 66% devoted to services. Its primary export partners are Brazil (25.1% of all exports), the United States (18.7%), Germany (5%), and China (4.6%). In spite of an economy that by most objective measures ranks among the strongest in the developing world, Argentina has been plagued by economic difficulties ranging from hyperinflation in the 1980’s to extremely high unemployment in the 1990’s. Additionally, there is a large disparity between the incomes of the wealthy and poor in Argentina. Currently 37% percent of the population of Argentina lives below the poverty line. The travails of the Argentine economy reached a climax in 2001 with the banking crisis (CIA). The purpose of this paper will be to analyze what factors contributed to the Argentine economic crisis, with a particular emphasis placed on the role played by the International Monetary Fund.
Overview of the Argentine Economic Crisis
Though one can trace the roots of the Argentine Economic Crisis far back into the history of Argentina’s economic development, for the purposes of this paper we will begin with what is widely considered to be the seminal event that laid the groundwork for the crisis. This was the 1991 passage of the Convertibility Law by the Argentine legislature. This law, which was promoted by then President Carlos Menem and his Minister of Economy Domingo Cavallo, was the...