Argentina is located in the east of South America, east of the Atlantic Ocean, south of Antarctica across the sea, west of Chile, north of Bolivia, Paraguay, northeast of Uruguay, Brazil, a land area of 2.7804 million square kilometers, is a presidential federal republic composed of 23 provinces and the federal capital (Buenos Aes). In 2022, Argentina's total population was 47.32 million.
Argentina was inhabited by Indians until the 16th century and became a Spanish colony in the mid-16th century. On May 25, 1810, the May Revolution broke out against Spanish colonial rule, on July 9, 1816, Argentina declared independence, established a federal republic in 1853, and the constitution after the fourth constitutional amendment in 1994 stipulated that Argentina was a federal state with representative democracy.
Argentina is a country with strong comprehensive national strength in Latin America, with complete industrial categories and developed agriculture and animal husbandry. In March 2022, Argentina and the International Monetary Fund reached an agreement to repay $45 billion in debt. Official economic data released by Argentina's National Institute of Statistics shows that the total economic volume of Argentina in 2020 was $383 billion, down 9.9% year-on-year, and human GDP was $8,524.
Argentina is predominantly white and Indo-European, mostly of Hispanic descent. Argentina was originally home to the indigenous Indian population, but there are only about 1 million Indians in Argentina. Since the Age of Discovery, Spanish and Portuguese colonists have invaded the Americas, with the Portuguese occupying Brazil and Spain occupying most of the region from Mexico to Argentina.
Argentina's geographical environment is very superior, first of all, Argentina is generally located between 21 degrees south latitude and 55 degrees south latitude, mainly divided into three major climate types, the most northern belongs to the savannah climate, the central part belongs to the subtropical monsoon climate, and the south belongs to the temperate continental climate. Argentina has less tropical territory and most of the region has four distinct seasons.
Secondly, Argentina has abundant rainfall and abundant water resources, the main rivers are the La Plata-Paraná River. The river is the second largest in South America, flowing through Argentina, Brazil, Paraguay and other countries before finally emptying into the Atlantic Ocean. After entering Argentina, the river flows through the Pampas steppe region, bringing abundant fresh water to Argentina, and the coastal area has become Argentina's agricultural and pastoral base.
Moreover, the terrain conditions are good, which is conducive to the development of agriculture and animal husbandry. Argentina's terrain is high in the west and low in the east, and the altitude gradually decreases from west to east. The border area between western Argentina and Chile belongs to the Andes. The Andes Mountains are located in the western part of South America, running north-south, with a total length of 8,900 kilometers and an average altitude of 3,660 meters.
Argentina is located on the eastern side of the Andes, gradually decreasing in altitude and has very vast plains. The northern part of Argentina belongs to the Granchaco Plain, the central and eastern regions belong to the Pampas, and the southern region belongs to the Patagonian Plain.
Argentina is a large animal husbandry country, animal husbandry is mainly distributed in the Pampas, according to statistics, the grassland has reached 60 million head of cattle, developed animal husbandry makes Argentina's beef exports in the forefront of the world, known as the world meat bank.
In addition, the Pampas is also the plantation base of Argentina, one of the world's main black soil distribution areas, the land is very fertile, widely cultivated wheat, corn, soybeans and other crops.
Argentina, with its excellent geographical conditions and rich natural resources, has become one of the top 10 economic powers in the world as early as the beginning of the 20th century, and reached the middle-income level in the 70s of the 20th century. However, despite the development of recent decades, Argentina's economy has not improved much, and it has stagnated, and so far, the per capita GDP has not exceeded 10,000 US dollars, becoming a country that has fallen into the "middle-income trap".
So what is the reason for Argentina's chronic fall into the "middle-income trap"? The author believes that the problem mainly comes from the following aspects:
First, the government intervenes excessively in the economy, and after policy failure, it turns to the extreme of outright liberalism
According to economic principles, in the process of economic development, we must seriously handle the relationship between the government and the market. In the process of economic management practice in various countries, most countries have adopted a method of combining the government and the market and complementing each other, the difference is: "is there more market, or more government." “
In the late 80s of the 20th century, the Argentine government intervened strongly in the economy and implemented a protectionist development model. However, neither the Argentine military junta, nor the democratic regime represented by Menem nor the new reformers have been able to manage the relationship between economic development and social development, while taking into account the development of both.
As a result, economic development goals are ignored in order to advocate social equity, and social equity is ignored in order to solve economic development problems, and social development imbalances in turn aggravate economic turmoil and form a vicious circle, thus triggering serious economic and social crises.
An important indicator to measure the results of economic development is to see whether the level of social development has improved and whether the people's living standards have improved. Data show that in the 40 years from 1970 to 2009, Argentina had negative growth in the per capita GDP index in 15 years, and an economic crisis occurred on average in five years.
Social and economic development is seriously lagging behind, the degree of impoverishment is very high, income distribution is unbalanced, social classes are solidified, the middle class is shrinking, and official corruption is serious. According to the data, the richest people in Argentina earn about 120 times the income of the poorest. In Transparency International's "Corruption Perceptions Index" ranking, Argentina has never scored more than 3.5 points in other years, except for 5.24 points in 1995, which is one of the most corrupt countries in the world.
In fact, historically, Argentina's history as a modern country is too short, and the state system is immature and imperfect, so that many policies of the central government are difficult to implement. Moreover, Argentina's government changes too quickly and lacks economic policies based on long-term development.
Instead of taking a smooth and gradual approach to economic reform, it took a risky and radical approach from one extreme to another, which led to Argentina's economic development lacking the stability of the social environment and the continuity of policies, so that a series of structural problems facing economic and social development could not be solved, and the country fell into the "middle-income trap" for a long time.
Second, financial policy mistakes, long-term dependence on foreign debt to develop the domestic economy
Argentina's economic development has long been dependent on external debt, so much so that the unlimited expansion of debt led to two debt crises in Argentina, in 1982 and 2001. The Argentine government blindly borrowed heavily to cover the huge domestic fiscal deficit, which eventually led to the bankruptcy of the national debt and the bankruptcy of credit.
In the 80s of the last century, Argentina's annual debt service accounted for more than 50% of exports, and the proportion of total external debt to total exports reached a historical high of 717% in 1987, and a large amount of external debt did not match its solvency at all, so that after the outbreak of the Argentine economic crisis in 2001, the government had to announce a moratorium on the payment of $132.1 billion of government debt, and the country's credit was seriously frustrated, further aggravating capital flight and further deteriorating its domestic economic situation.
The Argentine central bank has problems with its control over monetary policy, with excessive currency issuance for many years, the exchange rate of the national currency peso often fluctuates sharply, the international market generally lacks confidence in the Argentine peso, and domestic enterprises and people have also developed the habit of saving dollars.
Since the 90s of last century, in order to cope with high inflation and frequent fluctuations in exchange rates, the Argentine government has adopted an exchange rate system in which its national currency is linked to the US dollar. However, the implementation of the Linked Exchange Rate System is based on adequate foreign exchange reserves. Argentina's ability to earn foreign exchange through exports was low, and eventually foreign exchange reserves were exhausted, resulting in the collapse of the linked exchange rate system, loss of investor confidence, and a large number of foreign capital fled.
On the other hand, the Argentine government blindly turned to outright liberalism after the failure of the government's intervention policy. The complete opening up and trade liberalization without restrictions on foreign investment has led to the country's economic lifeline falling into the hands of foreign capital.
After coming to power, the Menem government vigorously pursued trade liberalization policies, significantly reducing import tariffs and quantitative restrictions, while the reduction of export taxes was suspended. This dealt a heavy blow to the national industry, resulting in foreign capital basically controlling Argentina's financial system and real economy.
Third, the industrial structure is single, and industrial development is stagnant
Agriculture and livestock have always dominated Argentina's economic development, and its foreign trade is mainly dependent on the export of agricultural primary products. Although Argentina has established its own industrial system, the level of industrial development lags behind, the manufacturing industry is underdeveloped, and it has not completed industrial upgrading, and there is still a big gap with developed countries, and industrial manufactured goods still rely heavily on imports.
Facts have proved that a country's economy should develop comprehensively and comprehensively, after all, the current global economy has not formed a unity, and economic cooperation between countries in the world is fundamentally a relationship of interests and competition.
The national economy is too dependent on the development of certain single industries, which is not only vulnerable to external shocks, but also difficult to ensure the sustainability of economic growth. Since the outbreak of the Russian-Ukrainian conflict, the drawbacks of Russia's economy being highly superior to energy exports have been exposed.
epilogue
In short, after a country falls into the middle-income trap, the hope of climbing out is very slim, and the possibility of becoming a developed country in the future is not great. Because in the 77 years since the end of World War II, only 13 countries have moved from middle-income countries to developed countries, including only four in Asia, namely Japan, Singapore, South Korea and Israel.