Economic History of Argentina

The economic history of Argentina is one of the most studied, owing to the "Argentine paradox", its unique condition as a country which had achieved advanced development in the early 20th century but experienced a reversal, which inspired a wealth of literature and analyses on the causes of this decline.

Argentina possesses definite comparative advantages in agriculture, as the country is endowed with a vast amount of highly fertile land. Before the arrival of Spanish explorers, present-day Argentina was populated by Indigenous peoples. Those natives were still hunter-gatherer societies, so there was no economic system in their societies. Between 1860 and 1930, exploitation of the rich land of the pampas strongly pushed economic growth. During the first three decades of the 20th century, Argentina outgrew Canada and Australia in population, total income, and per capita income. By 1913, Argentina was the world's 10th wealthiest nation per capita.

Beginning in the 1930s, however, the Argentine economy deteriorated notably. The single most important factor in this decline has been political instability since 1930, when a military junta took power, ending seven decades of civilian constitutional government. In macroeconomic terms, Argentina was one of the most stable and conservative countries until the Great Depression, after which it turned into one of the most unstable. Successive governments from the 1930s to the 1970s pursued a strategy of import substitution to achieve industrial self-sufficiency, but the government's encouragement of industrial growth diverted investment from agricultural production, which fell dramatically.

The era of import substitution ended in 1976, but the same time growing government spending, large wage increases and inefficient production created a chronic inflation that rose through the 1980s. The measures enacted in 1976 also produced a huge foreign debt by the late 1980s, which became equivalent to three-fourths of the GNP.

In the early 1990s the government reined in inflation by making the peso equal in value to the U.S. dollar, and privatised numerous state-run companies, using part of the proceeds to reduce the national debt. However, a sustained recession at the turn of the 21st century culminated in a default, and the government again devalued the peso. By 2005 the economy had recovered: there was considerable GNP growth, renewed foreign investment, and a significant drop in the unemployment rate.