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CRS – Argentina’s Post-Crisis Economic Reform: Challenges for U.S. Policy

Argentina’s Post-Crisis Economic Reform: Challenges for U.S. Policy. J.F. Hornbeck, Specialist in International Trade and Finance,March 26, 2013

  • “U.S.-Argentine economic relations have long been mutually beneficial. In recent years, however, they have been strained at times, in part because of Argentina’s struggle to maintain macroeconomic stability, and also because of specific policy choices that have made the business environment difficult to navigate since the country’s 2001 financial crisis. Following a steep currency devaluation and the largest sovereign default in history, Argentina entered a deep recession with high unemployment and social upheaval. It brought to power a new government, and with it a shift in economic policy away from market-oriented policies toward greater government management of the economy in pursuit of the stated Argentine goal of “social equity.” The initial policy responses intended to restore order and address the most pressing social problems evolved into permanent social programs. Government policies introduced many distortions into the economy, including high inflation, which have required regular adjustments in the international accounts to maintain economic stability. These include managed trade, capital controls, and limited currency conversion, among other policies that have earned the ire of international stakeholders.”
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