Governed by Emergency: Economic policy-making in Argentina, 1973--1991

The economic and political crisis, which Argentina experienced in 2001 and 2002, was arguably the worst in the country's history since independence. A lot of attention has focused on the immediate reasons for collapse, including the faulty design of Convertibility (the pegging of the peso to the dollar at parity), and the alleged corruption of former president Carlos Saul Menem and his entourage. This study holds that we need to look at the crisis in its historical context in order to understand not only the economic but also the political and institutional disintegration, which Argentina experienced at the beginning of the third millennium.; This study argues that the 1970s were a critical decade for Argentina. The decade brought important structural changes, which led to a profound crisis of the very model of the political system and economic development, which had dominated the postwar era, and represents the beginning of a new phase of worldwide economic integration now commonly referred to as "globalization". Argentina failed to seize the new opportunities the transformation of the world economy offered countries to export and grow. Instead, it became trapped in a permanent struggle over how to adapt to the new challenges during the critical decades of the 1970s and 1980s. This strategic indecision was exacerbated by an almost uninterrupted series of economic and political crises, which led the government to adopt short-term and often contradictory economic measures in a desperate effort to gain breathing space. These measures, which were political expedient and helped stabilize the economy in the short term, oftentimes had important unintended consequences which would aggravate economic problems and call for ever more extreme emergency measures. The consequences of a long sequence of unstable governments imposing short-term measures under this "logic of emergency economics" and breaking supposedly inviolable commitments with ease displaying little respect for constitutional rights and individual property were far-reaching. They further undermined the institutional structure of the country and prepared the ground for a system of "crony capitalism".