Argentina - an Economic Overview

A) Introduction and overview of the country

Argentina is the second-largest country of South America (1.1 million square miles). Its population in 2005 was about 38.6 million. Its official language is Spanish. In the 19th century European investments and the integration of Argentina into the world economy were combined to create a modern Argentina, introducing to it modern agricultural techniques. Subsequently, Argentina became one of the world 10Ў¦ wealthiest nations based on rapid expansion of agriculture and foreign investment in infrastructure. In 1992 president Menem imposed peso-dollar parity to decrease the hyperinflation, adopt far-reaching market-based policies and dismantling a web of protectionist trade and business regulations, and implement an ambitious privatization program. These reforms contributed to significant increases in investment and growth with stable prices through most of the 1990s. Unfortunately, extensive corruption in the administrations of President Menem and President Fernando De la Rua (elected in 1999) shook confidence and destabilized the recovery. Also, while convertibility crushed inflation, its permanence damaged Argentina's export competitiveness and created chronic deficits in the current account of the balance of payments, which were financed by massive borrowing. The contagion effect of the Asian financial crisis of 1998 precipitated an outflow of capital that gradually mushroomed into a 4-year depression that culminated in a financial panic in November 2001. In December 2001, amidst bloody riots, President De la Rua resigned, and Argentina defaulted on $88 billion in debt, the largest sovereign debt default in history.

B) Political environment

Argentina is run by a republic government, constituted in 1853 and revised in 1994. Argentina is independent since 1816. Argentina is composed by 23 provinces and one autonomous district (Federal capital). The politic parties are the Justicialistic party (PJ also called Peronist), the Radical Civic union (UCR), and numerous smaller national and provincial parties. Traditionally, the UCR has had more urban middle-class support and the PJ more labor support, but both parties have become more broadly based. In October 2005, PJ won the elections with president Kirchner. The UCR, which is still the second most powerful political party after the PJ on a national scale, has declined significantly since UCR President de la Rua was forced to resign in December 2001. Although they won only 2% of suffrage in 2003, UCR is the only opposition party with a nationwide structure.

C) Socio-cultural environment

Argentina's culture has been greatly affected by its immigrant population, and waves of immigrants from many European countries, mostly Italian and Spanish, arrived in the late 19th and early 20th centuries. Their influence contributed to the demise of pre-Columbian cultures, resulting in the lack of a dominant indigenous population. The European immigrant groups each adopted different roles, and besides the universal language of Argentina is Spanish, many natives and immigrants keep their mother tongues as a matter of pride. Because this immigrations, Buenos Aires other cities show a mixture of architectural styles imported from Europe. In the case of older settlements (and of older preserved neighborhoods within cities), modern styles appear mixed with colonial features, relics from the Spanish-ruled past. Museums, cinemas and galleries are abundant in all the large urban centers, as well as traditional establishments such as literary bars, or bars offering live music of a variety of genres.

About the religion, Argentina's population is overwhelmingly Catholic, but it also has the largest Jewish population in Latin America, estimated between 280,000 to 300,000, and also is home to one of the largest Islamic mosques in Latin America.

About the indigenous population, estimated at 700,000, is concentrated