“Argentina has not yet chosen to grow.”

As I previously blogged, Argentina has put in new controls to prevent capital flight. Those controls will make the problem worse. Walter Russell Mead sees the same problem.

Argentina has had more than its fair share of booms and busts. Even slight turmoil in the markets makes Argentines jittery and worried. Analysts worry that efforts to stop capital flight by the government have only made things worse.  They are right.

Argentina has long seen itself as Brazil’s chief rival for the leadership of South America.  In the last twenty years, the gap between the two has grown.  Brazil has made serious economic and institutional reforms that have resulted in a society that is both more just and more prosperous.  Argentina has lunged from one failed experiment to the next.  Brazil is trying to control capital influx; Argentina is fighting capital flight.  Brazilian companies are investing around the world and becoming recognized as leaders in a number of fields; Argentine companies are trapped in labyrinthine restrictions and have yet to make much impression in the world beyond. Brazil still faces many obstacles and problems but has made a decisive break with the futility of underdevelopment; Argentina is still stuck in the quagmire.

He is a little more optimistic than I am:

At some point a critical mass of Argentines will note the difference between the development trajectories of the two countries and build a political movement to put Argentina on a sustainable course.

In my opinion, they have no yet begun to exhaust their reservoir of self-defeating policies, and the Argentine populace seems impervious to that realization.

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1 Comment

Filed under Economics, Latin America

One response to ““Argentina has not yet chosen to grow.”

  1. Ernesto

    I think the comparisons between Brazil and Arg’ are in most senses a red herring, the countries are immensely different in terms of history, demographics, natural resources and geopolitical positioning. That said the biggest difference is policy coherence and longevity. When (center?)-left Lula came in he didn’t make dramatic shifts to the energy and economic strategies set by his ideologically distinct predecessors. Every Argentine government in the past several decades, there have been many, has meant a complete re-ordering of government policy forcing society and the economy to adjust; not exactly good for business. No matter what the ideology, the economy would benefit from some stability. Will be interesting to see how the economy and society will respond or adapt to the onerous and rationally-indefensible dollar controls.

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