What caught my interest about Argentina, aside from the obvious appeal of the music and Borges, was the prospect of one of the world’s best endowed economies apparently nearing bankruptcy. How had an economy with a positive trade balance possibly reached such a dire economic situation? And how would its highly educated and cultured population respond? Would the economic crisis lead to a political crisis, throwing Argentina’s people back into their authoritarian past? What I have discovered while researching the country’s economic story is that, far from causing depression, it has the power to inspire. For many of us concerned about the need to regenerate our own failing regional economies within the UK there is much to learn from Argentina’s example.
In spite of its colourful culture Argentina suffers from an image problem with most observers from developed countries who know three things about Argentina: tango, Evita and Maradona. This is rather like characterising Britain as consisting of tea-drinking, Princess Diana and David Beckham. Some figures concerning Argentina’s level of human development, as measured by the UN, indicate the fallacy of this prejudice. It occupies the 34th position in the ranked list, with only two other countries from the South¾Singapore and the Republic of Korea¾preceding it. Its adult literacy rate is 96.8 percent, some five points higher than that of Portugal; life expectancy is 73.4, two years more than in Hungary. It is important to grasp at the outset that we are not dealing here with a third-world economy. Argentina is the star performer of Latin American economies, largely thanks to its excellent endowment of natural resources and its comparatively small and highly educated and talented population. Argentina perceives itself as the cultural leader of the sub-continent and comparisons between Buenos Aires and Paris are frequently made.
So how did Argentina come to an economic disaster in 2001. Well, it's the economy stupid, or more precisely, it's the money system. The full paper, which you can download below, explores how international financial pressures destroyed a thriving economy. But the people responded creatively by inventing their own moneys to replace the international one which was failing them. This is a lesson that can inspire us around the world.
The full paper, called Argentina in the Red, is available here.