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Globalization in Argentina

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    Globalization in Argentina has affected the country in numerous ways. There are many positives and negatives. Until 1999 globalization seemed to be the reason the country was so prosperous. Pope John Paul II stated, “From the ethical point of view, can be positive or negative. In fact, there is an economic globalization which brings some positive consequences, as the phenomenon of efficiency and increased production and, with the development of relations between countries in economic, can strengthen the process of unity among peoples and make a better service to the human family.

    However, if globalization is ruled merely by the laws of the market applied to suit the powerful, leads to negative consequences. Such, for example, the attribution of a va-absolute value to the economy, unemployment, decline and deterioration of public services, destruction of the environment and nature, the widening gap between rich and poor, unfair competition which puts the poor nations in a situation of ever increasing inferiority. ” This statement sums up the effects of globalization in Argentina.

    At first, the country experienced growth and prosperity then fell into an economic crash due to government corruption and now once again the country is trying to recover and crawl out of a recession. Globalization has affected the country socially, economically, and it has created a different culture in which argentines live. The globalization of Argentina began during the military dictatorship of General Jorge Videla from 1976-1983. This dictatorship followed the death of President Juan Peron in 1974. Peron had many protectionist policies in place which were replaced by Videla’s trade liberalization strategies.

    These strategies grew the international debt but the country had great inflow of foreign capital and investment. When the country returned to a democracy in 1983 the economy worsened and collapsed in 1989. This led to Carlos Menem taking office and acted under guidance from the International Monetary Fund (IMF) to create policies. These policies included privatization of state enterprises, labor market reforms, deregulation of the private economy, and trade liberalization to have a more free market economy. The reforms caused a period of success followed by worse conditions. These policies made the rich get richer and the poor get poorer.

    Towards the end of the 1990s the country experienced rising unemployment and decreasing wages. The privatization of industries in addition to the international debt and government corruption led to many citizens distrusting the government and failure to pay taxes thus keeping the problems still at large. Unfortunately, the fragile Argentine economic infrastructure, while seemingly strong, was not able to withstand the downturn in the world economy after the severe correction of the both the Dow Jones Industrial Average and NASDAQ stock markets in the United States in March 2000 and the terror attacks of September 11, 2001.

    The widespread economic failure caused the Argentine peso to become devalued and this caused extreme inflation in prices. In June of 2002 the peso was valued at just $0. 26 of a U. S. dollar. The unemployment rates skyrocketed as well hitting over 25% in most parts of the country and the poverty rate increased from 30% in 1999 to over 50% in 2002. The benefits of globalization in Argentina were short-lived but still vital in the countries development. The benefits of globalization in Argentina at the time were economic growth, prosperity and increased productivity during the 1990s.

    Argentina is considered a great place for foreign companies to offshore production and services. This is because of the cheaper wages and close proximity to the U. S. and Europe. The impact of globalization has also created a boom in Argentina’s tourism industry because Americans and Europeans can easily and cheaply visit the country. Along with the increase in tourism, now a greater number of imported consumer goods are available in Argentina. In addition to the increased consumer goods the country also produces more food than needed so they export domestically and internationally. The main exports are soybeans, corn, wheat, and meat.

    Trade is an important economic element for the country. Now the GDP is increasing and the economy is in the recovery state. While the late 1990s seemed to be a time of great promise throughout much of Latin America and the world, all was not what it seemed. The negative benefits for Argentina are greater than the positives. The governmental corruption led to the economic downturn. The policies put in place benefited the upper class and hurt the lower and middle classes. The corruption has also led to the people of Argentina to no long trust its elected officials and this had led to 5 different presidents since 2001.

    The governmental turmoil has made citizens stop paying taxes. Without trust in the government people will not pay taxes since they do not know where their money is headed and without the tax money the government is still in debt. Argentina, like many other countries in Latin America and throughout the world, found itself getting wrapped up in the technology bubble of the late 1990s, early 2000. The use of technology did not help Argentina. The recent economic crisis in Argentina has dispelled the myth that all problems experienced in growing economies could be compensated for by the use of technology.

    The lives of Argentine people are different from pre-crisis to today. Before the crisis Argentina was known for their large middle class compared to other Latin American countries. During the first part of the 1990s the middle and upper-middle class enjoyed unprecedented wealth when the currency peg between the Argentine peso and US dollar provided for macroeconomic stability and stable inflation rates. During this period, Argentina finally seemed to join the select group of developed countries. The crisis put an abrupt end to this first world life.

    Particularly the middle class was hard hit by these developments. Local businesses lacked financial resources to buy input products since imported goods became extremely expensive, economic growth turned negative, and several big factories and companies went bankrupt or withdrew from Argentina, which in turn triggered major lay-offs. As result, many people fell from the middle class into the lower income category. Traces of the crisis are still present everywhere people still mistrust banks and politicians. Widespread, many people still live on the street and struggle to find or keep a job.

    Throughout the 1990s, Argentina was considered globalization’s model of economic success. However, an unbalanced public fiscal budget, high foreign debt levels, and an uncompetitive currency level increasingly strained the economic system. The result was a dramatic loss of confidence in the Argentine peso, leading to bank deposit freezes, public debt default, widespread protests in the streets, and the resignations of the finance minister and the president. The banking sector has yet to regain the confidence of the public and a weak currency has made it expensive for Argentines to purchase imported goods or travel abroad.

    Even with these negatives, Argentina has seen rapid economic recovery and has reason to be optimistic about its prospects within the international economy. The impact of globalization on Argentina is one that will not go away for a long time the economical impact is the one seen by most but the social impact is much greater. The inability for a society to trust its government is an impact that will last in Argentina for many years until a stable government is in place. The recent crisis is being dealt with and the country is recovering. Overall I would say globalization has been good for this country but the corrupt government ruined its appeal.

    References:

    “Argentina. ” InterKnowledge Corp. URL: http://www. geographia. com/argentina/index. html. “Argentina”. CIA- World Fact Book. URL: https://www. cia. gov/library/publications/the-world-factbook/geos/ar. html. F. Luthans, and J. P. Doh. International Management: Culture, Strategy, and Behavior, 8th Ed. , McGraw-Hill Irwin, 2012. Lehmann, Jean-Pierre. 2004. Argentina Stuck on the Periphery of a Globalized World. Yale Global, advance online publication February 20.

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