A Latin American Success Story: Five Years of Extraordinary Economic Growth and Poverty Reduction in Argentina

Event Title: A Latin American Success Story: Five Years of Extraordinary Economic Growth and Poverty Reduction in Argentina
Sponsor: Center for Economic and Policy Research
Location: The New America Foundation
Date: April 12, 2007
Time: 2:30-4:00 pm
Approximate Number of Attendees: 60
Intern Attending: Elysa Severinghaus

Featured Speaker: Felisa Josefina Miceli, Minister of Economy

Over the past several years, Argentina has experience economic growth of gargantuan proportions, similar to that of China, by going against suggestions of the International Monetary Fund (IMF). It has been largely export-led growth as they developed a competitive foreign exchange rate and found ways to restructure national debt.

As we look at this phenomenon from the outside, it is merely intuition that makes one think that Argentina’s situation may be a “boom that’s about to bust” or they are “cooking the books” with inflation. Analyzing this growth and making sense of what Argentina did correctly is important for hopeful relevance to other Latin American countries and also from a political standpoint as we approach the World Bank and IMF meetings in addition to the upcoming American presidential election.

Mark Weisbrot, Co-Director for the Center for Economic and Policy Research, brought up several important points regarding the many facets of this rapid growth. First, he asked the audience about the sustainability of Argentina’s growth. Then, he commented that it has been said that this growth is only a “brief hiatus in a great recession”.

Minister Miceli then spoke about her country’s impressive economic growth from the inside perspective. She emphasized points about restructuring and adapting to the changes in the international capital market. Additionally, she commented on Argentina’s hopes for making their current economic leaps and bounds into sustainable growth with social inclusion. Many countries have achieved growth and improved investment strategies, but consequently increased poverty and ended up in a state where the nation itself improved as a whole, but a large fraction of its population was left behind.

After five governments had fallen to their demise, when the new president, Nestor Kirchner, was sworn in during May 2003, he set out to fix the economic collapse of 2001 by changing the paradigm of what it took to govern Argentina. One of his first objectives was to achieve financial autonomy so that Argentina was less dependent on international financial institutions. When Kirchner became president, the solution that he found was to pay off almost $10 billion to the IMF to relieve his country of international debt. He abandoned programs that were not relevant to direct human and national development such as Argentina’s satellite and space programs, and put the money toward public education. Now, with economic advances, scientific and technological schools are reopening and congress aims to have tripled the amount of spending on public education by the year 2010.

Some of the key questions now involve how to accept recommendations from the IMF but also maintain political and economic freedom. Additionally, organizations like the IMF are trying to analyze what has occurred in Argentina over the past few years and find a way to extend it to other countries in Latin and South America.