Modernization of Third World Countries: The Case of Argentina

Many third world countries around the world are struggling with a number of issues, including political, social and economic impediments that have prevented them from achieving a fully modernized status. The understanding of how some countries which were once classified as the third world managed to organize their structures and moved from being poor to a middle size economy is crucial in terms of understanding why others have not. The end of the Cold War between the United States and the former USSR in the early 1990s and the spread of democratic rule led to a number of Third World countries pulling themselves economically to become some of the wealthiest countries in the world. There are thus examples of countries that were once considered the Third World but managed to organize their social, economic, and political structures in order to join the developed countries in the world. They are commonly referred to as emerging economies in the world. Such countries include Brazil, Singapore, and Argentina. This paper discusses the social-political and economic obstacles that Argentina had to get around to be where it is today. The paper explores the social, political, and economic history of Argentina, and how the country overcame the various challenges that are characteristic of Third World countries.

The Current Status of the Country

Argentina is among the few countries that attained social, political, and economic independence after a long struggle which involved a political uprising. Argentina can be classified as a developing country that has well-established institutions in almost all sectors of the economy. The agricultural sector is particularly vibrant as a result of the vast fertile lands that the country has. The social structures are well organized and maintained which places Argentina among the countries of the world with well-furnished social amenities. Politically, the country is stable and embraces democratic leadership with top leaders in the country, including the president being elected by the people.

Furthermore, Argentina embraced an open economy as early as in the 1950s. This led to the country enjoying high shares in exports and imports within Latin America. Before World War I, Argentina experienced a strong economic development, especially due to the exportation of farm produce, such as corn and beef, causing the country to witness an increase in the number of immigrants and an abundance of foreign capital. This is also the time when the country experienced tremendous development in technology to the extent that Argentina was producing jets and exporting them to other countries.

Due to the vast lands, the population of Argentina has remained relatively low over the years as compared to other developing nations. Between 1895 and 1914, the country’s population grew from 4 million to almost 8 with the annual GDP growth per capita of 2.8 percent being realized during the same period. Additionally, the country’s per capita in relation to other developed countries during that time was far much higher with percentages ranging between 60 and 80. When compared with the developed countries, Argentina has a higher distribution of income when measured as a proportion of wages in income per capita and this compared fairly with developed countries like Great Britain and the United States. However, the upward growth of Argentina was disrupted by the 2001 economic collapse, even though the country has managed to pull itself out of it because of its dependence on agriculture. Further obstacles in social, economic, and political development are associated with the country’s dependence on the export of agricultural products and imports from China, Brazil, and the United States.

The Rise of the Country and Its Challenges

It is obvious that both the positive as well as negative historical events in the country have ultimately contributed to the current situation that Argentina finds itself in. Though the country had qualified to be among the best performing economies in the world from as early as the beginning of the 20th century, the country has experienced the adverse political situations for almost half a century. Therefore, Argentina has had to endure adverse conditions that have contributed to the collapse in the development course that the country had embarked on. Nevertheless, it is essential to note that Argentina, like any other developing nation in the world, continues to address the challenges through innovation in its agricultural sector and technology, finance, and education which have seen to slowly coming back to the course of achieving the economic independence.

The economic, social, and political development of Argentina was well ahead of the current superpower economies at the dawn of the 20th century. The decline only came up in the middle of the 20th century, when the country started experiencing political unrest characterized by frequent military coups and insurgency from civilians. The country continued to suffer economically while experiencing intermittent growth between 1950 and 2000, but the growth was derailed by the sudden changes in the economic models that disrupted the long-term sustainability in the country. This is what made it experience a longer period of stunted or reversed development. Even more devastating was the 2001 economic and social crisis that hit the country leaving it unable to provide social amenities and plunging the political situation of the country into limbo.

For the last fifty years leading to the dawn of the 21st century, Argentina has experienced a lot of volatile situations both in the economic and political structures, thus leading to persistent institutional fragility. This condition has caused subsequent governments to be able to establish long-term economic policies. Thus, the economic and political development of the country has been one of the substantially uncertain among the developing countries.

Despite such challenges, Argentina has managed to rise against all odds to become one of the most influential countries in Latin America and around the world. The rising of Argentina to the world stage as a member of the G-15 is a result of several factors acting together, including culture and sports. Through these factors, Argentina has been able to rise economically to become one of the emerging economies not only in South America but also around the world. Additionally, the stabilization of the Argentine political structures has also played a significant role in bringing the country to the world stage.

The economic and political development of Argentina occurred in phases. The evolutionary total factor production in the country occurred during the period between 1962 and 2000. The two scholars note that the country witnessed a growth of less than 1 percent in the economic development between 1962 and 1974. The years following this period and ending in 1990 comprised one of the worst periods in Argentine contemporary history because the economy of the country experienced negative growth. This means that the country was losing some of the economic indicators and infrastructures that had been put in place. Several factors contributed to this negative growth, some emanating from the internal and political turmoil that the country was going through and others caused by the world economic conditions that led to the country losing of its trade partners. However, the country managed to experience a significant level of growth in its economy. The country’s economy grew at 2.9 percent up to 1998, when the trend was again changed because of the difficult external conditions that were affecting many developing countries around the world.

A number of factors contributed to the uneven growth that the country experienced during this period. For instance, the 1962-1974 growth spurt was characterized by persistent inflation and a high rate of recurrent repayment, that the country was experiencing. During this period, the country also underwent several political crises that interfered with the economic activities which resulted in displacing people from their normal social life. Therefore, after having been affected, people were not able to engage in any meaningful economic activities. Thus, the country became dependent on agriculture, and most commercial activities were put on hold as the political situation did not allow people to produce in their place of work. However, the manufacturing industry provided the 2.9 percent growth that was experienced during this period. This was made possible irrespective of the political unrest since most factories were located in the capital city allowing the produced goods to be exported abroad.

Moreover, the manufacturing industry was shielded from the political situation at that time, together with the protectionist policies and industrial promotions that were being supported by the government. Whereas the economic situation of the country during this period was entirely closed to imports of goods that could be produced locally, the government allowed the direct foreign investments in the country and the technological inflows from outside, together with the entry of free-duty imported goods into country’s market. Ultimately this gave the impetus for citizens to continue expressing their political dissatisfaction since part of the reasons for protectionist policies were politically instigated.

Irrespective of such forms of unrest, the government’s incentive to foreign investment led to substantial economic growth in the fixed investments. During this time, Argentina also experienced an upsurge in the local entrepreneurs as local products produced by the locals themselves started hitting the Argentine market. However, this new developmental course was short-lived, since the subsequent years resulted in a totally negative growth of the economy, coupled with poor government policies and a more volatile political situation in the country.

However, the adoption of the Convertibility Plan in 1990, necessitated by the two difficult periods that the country had undergone, led to the return on the course of economic development. In addition, there were also far-reaching structural reform programs that were put in place, including the liberalization of trade, market regulation, and privatization of governmental firms. The further liberalization of foreign investments and technology transfer, which was started by the military government in 1976, continued to contribute towards innovation among the people. The alignment of domestic policies with international standards also allowed the country to achieve better practices in financial management. For instance, the Basel regulations brought sanity in the management of the financial institutions allowing people to access financial loans at lower interests. Equally, the government measures coupled with other measures that were coming from external sponsors, such as an increase in foreign aid from Spain, contributed to the economic growth that the country experienced during the subsequent ten year period.

The establishment of the MERCOSUR with neighboring countries also gave an impetus and stimulus to the economy of Argentina, since the countries could support one another through favorable policies and incentives to the traders and business people from every country. The formation of the trading block was mainly aimed at aiding Argentina to boost its productivity in its economy while strategizing the country as a reliable partner among the international donors who had pulled out of the country because of the poor economic conditions. Such mechanisms, as were put in place by the government coupled with the overwhelming support that Argentina received from the international community, made the country be able to attain the economic objectives that were set in a period of ten years.

The economic growth in this period was supported by the growth in financial markets and the continued deepening of capital investments from international donors. The foreign investment played a key role in offsetting the financial balance of payment together with more unstable range inflows. This period also saw a return in the advancement in technology and the modernization of production processes, including agriculture which had stalled in the years preceding the1990’s change in policies. For instance, the import of capital goods and transfer of technology became vital elements in the wake of the economic policies that, consequently, were put in place which allowed restructuring of the economic infrastructures in the country. The banking sector was entirely transformed to reflect the new policies that the government was implementing and which were aimed at increasing the participation of all sectors of the economy in instituting new life in the economic activities in the country.

Thus, the country turned to massive privatization in all public facilities, fuel, and energy. These programs produced remarkable improvements in the level of productivity from the country’s manufacturing sector which had hitherto been spared of the devastating economic conditions that other sectors were struggling with. Further evidence was seen in the improvement in the quality of the output in all sectors which led to the acceptance of Argentine products to the international market. The business environment was still not favorable enough, but it contributed towards the stabilization of the economic conditions that the country had gone through in the last three decades.

The government policies were also evident in other sectors, including mining and agriculture which enjoyed incentives from the government and other support institutions. The country started using high technology in agriculture, including the introduction of genetically modified foods. The use of technology in the agricultural sector nevertheless pushed many people out of their livelihood as they had to abandon the traditional production methods in favor of the new ones. However, the majority of the people were having a problem adjusting to the new agricultural ways that were being supported by the government.

Conclusion

The development of Argentina from a country that faced a political and economic turmoil to one of the aspiring emerging economies of the world is not a considerable evolution. Argentina is among the G-15 Member states, and its contribution to the world market is becoming more influential. The country is the third-largest economy in Latin America, and the political stability that the country has recorded since the beginning of the 21st century is promising to provide better economic conditions in the future. However, the political leadership in the country is being accused by the conservatives of being too much dependent on the export to China, the United States, and Brazil whose collapse will lead to devastating effects like those witnessed in 2001, when there was an economic collapse in the country. Since then, the political leaders have been warned to trade carefully, because a disruption in the NYSE or Jones Downes is likely going to have double economic effects to Argentina. Meanwhile, almost all countries around the world are affected by the global economic slowdown; Argentina has managed to maintain its annual GDP. This indicates that the country does not rely exceptionally on the international market but on the agricultural sector which is almost protected from the financial crisis that led to the slowdown in the economic growth in many countries around the world.