Economic Stability and Sustainable Development in Argentina

Introduction

The downturn of the Argentine economy in the late 1990s, which culminated in the collapse of the constitutional government and of monetary convertibility in December 2001, triggered an intense debate in local and international media, as well as in multilateral financial institutions and academic, professional, and financial circles.¹ The main topics of discussion were the strengths and weaknesses of the recently deceased regime, the causes of what was publicly recognized as the deepest crisis in Argentine history, and who was responsible for the worst worldwide default in international payments.² However, other major issues more relevant for this review essay were also considered: (1) the prospect that the economic recovery experienced by Argentina since the second quarter of 2002 might end in another crisis; (2) whether Argentine economic development should have avoided past mistakes and followed the Australian model; (3) the impact of the quality of political institutions on public policies and hence on economic development; and (4) the nature and caliber of national entrepreneurship vis-à-vis Argentina's past experience and current need to turn a new page.

To what extent have recent scholarly monographs about Argentina's economic development addressed these concerns? Who has participated in these discussions? Which theoretical and methodological approaches have been used and why? What are the strengths and weaknesses of these works? Have they left unanswered any issues of the public policy agenda mentioned previously? If this has happened, how can these omissions be explained? In light of these questions, this review will use an issue-oriented approach to discuss some of the results of renewed scholarly interest in Argentine economic stabilization and development.

The Pattern of Long-Term Oscillations of the Economy

Many scholars and analysts have long followed two standard tracks to examine Argentina's thwarted efforts to become a developed nation. First, they have argued that Argentina is the most cultured and advanced Latin American country, which used to have a thriving middle class and a highly educated population. Second, they have stated that, partly because of its rich resources and human capital, Argentina had one of the highest rates of gross domestic product per capita in the world by 1930, and its economic performance compared quite well with that of other recent settlement nations such as the United States, Australia, and Canada.³

In Argentina: What Went Wrong, MacLachlan takes up and interrelates these arguments to examine the Argentine paradox in world economic development. The timing and contents of this book, published in 2006, suggest that it was triggered by the Argentine economic collapse of December 2001. MacLachlan's starting arguments are very straightforward: Argentina's decline during the past fifty years and its collapse in 2001 call for thorough analysis to avoid the same outcome in the United States. Second, Argentina's problems are deeply grounded in its history and their solution lies in the hands and determination of its politicians and citizens (xiii–xiv). To this end, MacLachlan traces the history of Argentina...