Argentina holds an unenviable place in history as the example textbooks point to for what can go wrong in economic development. At the time of the First World War, Argentina had among the highest living standards in the world – competitive with the United States, Great Britain, Germany, and Australia. But the country was never able to keep pace with other developed nations and today is a middle-income country. Between 1913 and 2015, Argentina’s GDP per capita rose by 1.1% compared to a 1.8% average for a basket of selected economies. Had Argentina increased living standards at this broader average, per capita income would be about the equivalent of $40,000 today – double what it actually is.
Juan Peron’s Presidency has directly and indirectly shaped the country since it occurred in 1946 and between 2003 and 2015, Nestor Kirchner and then his wife Cristina governed the country as part of a Peronist party, the Justicialist Party (PJ). Macri has taken a largely free-market approach to managing the economy – among his actions were the removal of currency controls, the promotion of increased international trade, the removal of energy and utility subsidies for Argentinians, the removal of export quotas, and the signing of an agreement with past bondholders that allowed Argentina to return to the capital markets.
Thus far, however, the President’s economic program has not been seen as successful by Argentinians. Few could blame them for thinking so. The economy continues to contract and inflation has moved towards 40% per year.
While prosperity has not been felt, it is still true that Macri has only been in office in a little more than a year and there is every chance that his reforms will enhance growth once the effect is felt. Fortunately for Macri, after previous President Cristina Kirchner left office amidst corruption allegations, the JP has been plagued by disorganization and political unpopularity. But for Mr. Macri’s sake, and that of Argentina’s, time may be running out on his economics plan.
Photo Credit: Casa Rosada (Argentina Presidency of the Nation), CC BY 2.5 ar, https://commons.wikimedia.org/w/index.php?curid=45568076