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Economic contradictions: Argentina as an example
Economical 10/17/2024
Yasser Al-Metwally
What is the wisdom behind exposure to global economic experiences?
Here at Al-Sabah Economy, we are accustomed to reviewing global economic experiences and researching the reasons and ways for the success of some of them and the failure of others, with the aim of benefiting from the successful experiences and avoiding the reasons behind the failed ones.
In this article, the choice fell on the Argentine experience, which is considered unique in terms of failure and failures over the course of 200 years, according to international studies.
Here, it is necessary to trace the reasons that led to this failure with the aim of overcoming them in the experience of the Iraqi economy, which is what such topics aim for.
Argentina
is the third largest economy in Latin America and
enjoys huge wealth, in addition to its
strategic location on a large coast of the Pacific Ocean,
fertile arable land, and
large areas, with a
small population size compared to its area. Official reports indicate that it has
defaulted nine times on its foreign debts and
is almost bankrupt in 2022.
Economists attribute the reason for its annual decline to economic mismanagement and not to a lack of economic resources.
Argentina exports wheat, soy, meat, and fish, and agriculture constitutes 7% of the gross domestic product, and agricultural manufacturing constitutes 25% of it, and
it depends on the agricultural economy.
However, the Argentine economy has been subject to fluctuations for years between growth and contraction, which has resulted in a decline in income and opportunities. Work and the monetary value of goods and services.
This fluctuation led to a lack of confidence in the economy.
This is because it - that is, the economy - suffers from a twin deficit.
The twin deficit is defined as a deficit in the state budget and another in the external balance, and financing this deficit is the reason for the decline of the economy..
How?
The state resorts to external borrowing, and
this borrowing is accompanied by an increase in government spending and an increase in foreign imports, followed by an increase in inflation over the years.
Economists attribute the reason for this deficit to the increased and false government spending for electoral purposes, which has made the citizen dependent on the state for everything and has become a continuing habit, and
this continuous spending has continued to be at the expense of the people’s wealth in the medium and long term.
To address this permanent deficit, Argentina resorts to printing money or inflation financing, which causes price inflation to rise and Argentine goods to lose their global competitiveness.
To compare the Argentine economy and the economy of South Korea, the ratio of exports to GDP in Korea is 80%, which is equivalent to two trillion dollars, including one trillion and 600 billion dollars, the volume of its exports, while Argentina’s exports amount to 100 billion dollars.
With the great difference in the wealth that Argentina possesses, its area, and its bodies of water, as you find them only equal in population size between the two countries,
from here the importance of good management of the South Korean economy and bad management in Argentina appears despite the difference in Argentina’s distance from the bloody events, its stability, the status of South Korea, and the threats of neighboring North Korea..
Therefore, one of the reasons for overcoming wrong policies is to always look at global experiences.
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Economical 10/17/2024
Yasser Al-Metwally
What is the wisdom behind exposure to global economic experiences?
Here at Al-Sabah Economy, we are accustomed to reviewing global economic experiences and researching the reasons and ways for the success of some of them and the failure of others, with the aim of benefiting from the successful experiences and avoiding the reasons behind the failed ones.
In this article, the choice fell on the Argentine experience, which is considered unique in terms of failure and failures over the course of 200 years, according to international studies.
Here, it is necessary to trace the reasons that led to this failure with the aim of overcoming them in the experience of the Iraqi economy, which is what such topics aim for.
Argentina
is the third largest economy in Latin America and
enjoys huge wealth, in addition to its
strategic location on a large coast of the Pacific Ocean,
fertile arable land, and
large areas, with a
small population size compared to its area. Official reports indicate that it has
defaulted nine times on its foreign debts and
is almost bankrupt in 2022.
Economists attribute the reason for its annual decline to economic mismanagement and not to a lack of economic resources.
Argentina exports wheat, soy, meat, and fish, and agriculture constitutes 7% of the gross domestic product, and agricultural manufacturing constitutes 25% of it, and
it depends on the agricultural economy.
However, the Argentine economy has been subject to fluctuations for years between growth and contraction, which has resulted in a decline in income and opportunities. Work and the monetary value of goods and services.
This fluctuation led to a lack of confidence in the economy.
This is because it - that is, the economy - suffers from a twin deficit.
The twin deficit is defined as a deficit in the state budget and another in the external balance, and financing this deficit is the reason for the decline of the economy..
How?
The state resorts to external borrowing, and
this borrowing is accompanied by an increase in government spending and an increase in foreign imports, followed by an increase in inflation over the years.
Economists attribute the reason for this deficit to the increased and false government spending for electoral purposes, which has made the citizen dependent on the state for everything and has become a continuing habit, and
this continuous spending has continued to be at the expense of the people’s wealth in the medium and long term.
To address this permanent deficit, Argentina resorts to printing money or inflation financing, which causes price inflation to rise and Argentine goods to lose their global competitiveness.
To compare the Argentine economy and the economy of South Korea, the ratio of exports to GDP in Korea is 80%, which is equivalent to two trillion dollars, including one trillion and 600 billion dollars, the volume of its exports, while Argentina’s exports amount to 100 billion dollars.
With the great difference in the wealth that Argentina possesses, its area, and its bodies of water, as you find them only equal in population size between the two countries,
from here the importance of good management of the South Korean economy and bad management in Argentina appears despite the difference in Argentina’s distance from the bloody events, its stability, the status of South Korea, and the threats of neighboring North Korea..
Therefore, one of the reasons for overcoming wrong policies is to always look at global experiences.
[You must be registered and logged in to see this link.]
