Argentina

1
Argentina

• Jake Mullen
• Jordan Pearce
• Brad Harris
• Branden Espinoza
• Brad Lauritzen

2
Background Information

• Jake Mullen

3
Argentina

• Name comes from the Latin word Argentum
• Capital Buenos Aires
• Official Language Spanish
• Declared independence from Spain in 1816
• 23 Provinces

4
Population

• Estimated 39,921,833
• 3rd in South America
• 32 in world
• 14 inhabitants per square kilometer.
• Buenos Aires 14,000 inhab/km2
• Province Santa Cruz has less than one

5
Demographics

• Population is of European origin
• 97 of the population is European (Highest rate
  in the Western Hemisphere)
• Majority form Spain, France, Italy
• Indigenous population .8

6
Immigration

• Net positive migration rate
• Argentina believes there are over 1 million
  illegal immigrants
• Many are from Bolivia, Paraguay, Peru, Ecuador,
  China, West Africa
• Launched Partria Grande Greater Homeland

7
Urbanization

• 2.7 million people in Buenos Aires
• 11.5 million in Greater Buenos Aires
• Most immigrants settled in cities for jobs,
  education and other opportunities that allowed
  them to enter the middle class
• Moved to towns along the rail system to live in
  city but work in rural areas
• Have a European look, built in a Spanish-grid
  style around a main square

8
Religion

• 80 declare themselves Roman Catholic (most are
  not practicing)
• Catholicism is supported by the Constitution
• 330,300 LDS members in 2005
• Has the largest Jewish pop in Latin America at 2

9
Education

• Literacy rate 97.5
• Primary school 6-7 years
• Secondary school 3-5 years (moving more towards
  5)
• Education is free at all levels except graduate
  studies

10
Government

• Federal Republic
• Argentine Constitution of 1853 mandates
  separation of powers
• Legislature consists of Senate and Chamber of
  Deputies
• Supreme Court has 9 members appointed by
  president and Senate

11
History

• Corn-based Civilizations Developed in 1 AD
• Europeans arrived in 1502
• Spain established the colony of Buenos Aires in
  1580
• British launched 2 invasions but failed
• Revolution began after Napoleon defeated King
  Ferdinand VII
• Helped Chile and Peru to become free nations

12
History

• Enjoyed increasing prosperity through early
  1930s
• Government went from conservative to Radical back
  to Conservative
• Several Internal conflicts
• Economic situation began to deteriorate
• Government became protectionists

13
Current Situation

• Jordan Pearce

14
Economy of Argentina

• Benefits from natural resources, a highly
  literate population, an export-oriented
  agricultural sector, and a diversified industrial
  base.
• Economic performance historically uneven.
• Upper-middle income country.
• Most economically developed country in South
  America (measured in GDP per capita and HDI)

15
The Economic Crisis

• In January 2002, the plan that pegged the peso to
  the dollar was abandoned.
• Peso depreciated 75.
• Poverty rate grew from 35.9 in May 2001 to 57.5
  in October 2002.
• In 2005, the poverty rate returned to 33.8.
• Unemployment also rose, but is now back to normal.

16
The role of the IMF

• In 2004, President Kirchner asked for a
  structural redesign of the International
  Monetary Fund
• President Kirchner was warned that Argentina must
  come to a debt-restructuring agreement, increase
  its primary budget surplus to pay more debt, and
  impose structural reforms to regain the trust
  of the world financial community

17
Statistics

• GDP ranking 23rd (2005)
• Inflation 10 (2006)
• Unemployment 10 (Feb. 2006)
• Public debt 124 billion
• Population 39,921,833 (June 2006).
• Ranked 3rd in South America in total population
  and 32nd in the World.
• Population growth rate 0.96
• Only country with a net positive migration rate.
  (0.4 migrants/1,000 population)

18
President Néstor Kirchner

• Heavy taxes on exports.
• Aggressively expansive monetary policy.
• The Central Bank has injected large amounts of
  money into the economy and bought dollars from
  the free currency market in order to accumulate
  reserves.
• Fiscal policy is also expansive.
• Inflation has again become a concern.
• Price-freeze agreements.

19
Economic expansion

• A high rated dollar in comparison to the local
  currency allowed Argentina to produce goods with
  competitive prices and some industries have begun
  to flourish once again.
• According to the Heritage Foundation, the states
  role in the economy has expanded since the
  Kirchner administration primarily through price
  fixing, a state-owned airline, and a state-owned
  energy company.
• 3.3 economic freedom ranking on a scale from 1 to
  5. Ranked 109 out of 157 rankings.

20
International Aspects

• Bradley Harris

21
International Aspects

• How it all began
• Argentina set the peso equal to the dollar in
  1991
• Capital expenditures increased as a result of the
  lower exchange rate

22
International Aspects

• Trade Deficit and Surplus
• Prior to the collapse of the economy
• 1998 Trade Deficit of 5000 million
• 1999 Trade Deficit of 2200 million
• 2000 Trade Surplus which resulted as a result of
  decreased demand for imports in other countries
  as a result of a recession

23
International Aspects

• Trade Deficit and Surplus
• After collapse of the economy in 2001
• Large decrease in imports
• Completely flipping their economy from a trade
  deficit to a trade surplus.
• Finally, in 2003, imports began to recover

24
International Aspects
25
International Aspects

• Exchange rate balanced to 3 pesos/dollar
• Exports began to grow as their exports became
  cheaper for other countries.

26
International Aspects

• Argentina as a member of Mercosur
• Mercosur formed January 1st, 1995 as a customs
  union of Argentina, Brazil, Paraguay, Uruguay
• Chile and Bolivia joined as associate members
• Primary focus of Mercosur is trade between the
  countries.

27
International Aspects

• Trade/Exports
• Soybean products 22.2
• Cereals 8.5
• Petroleum 20
• Bovine Products (beef, leather, milk) 7
• Siderurgical 3.4
• Industrial Manufacturers 11
• Other 27.9

28
International Aspects

• Investments
• Prior to collapse
• United States, Canada, Europe, Chile, Brazil main
  investors
• United States approached 16 billion by the end of
  1999

29
International Aspects

• Investments
• After Collapse
• 2004, China announed 20 billion investment in
  Argentina
• 2005, Argentina attracted only 2.4 billion in
  foreign investment

30
Special Problems

• Branden Espinoza

31
Problem 1 Economics or Politics

• Public Debt is 30 of GDP
• In particular, the federal government and the
  states have to find a way to adjust their
  spending to available tax revenues, or do a
  better job in generating revenues while at the
  same time not hurting incentives to economic
  activity.
• -Carol Graham VP of Governance Studies at the
  Brookings Institutions Center on Social and
  Economic Dynamics.

32
Problem 2 Capital Asset Investment

• Investment necessary for future growth.
• Investment in equipment, machinery increased 45
  percent in 2004.
• First quarter 2005, the import of capital assets
  has grown over 100 percent.

33
Problem 3 Stem Inflation

• Trade Surplus caused influx of moneys.
• GDP has increased dramatically.
• Employment has increased.
• Foreign investment has increased.
• Option 1 Central Bank can buy Dollars.
• Option 2 Offset Surplus with Imports.

34
The Future

• Brad Lauritzen

35
The Future of Argentina
36
How do you measure economic freedom?

• Trade policy
• Fiscal burden of government,
• Government intervention in the economy,
• Monetary policy,
• Capital flows and foreign investment,
• Banking and finance,
• Wages and prices,
• Property rights,
• Regulation,
• Informal market activity.

37
Economic Freedom
Is debt destiny for Argentina? The score shows
hope of increasing, but will Argentina ever be
able to obtain economic freedom?
38
Imports, Exports and Inflation

• The amount of imports vs. the amount of exports
  is detrimental to the economy.
• Argentina needs to focus on increasing the amount
  of imports.
• If this is not done, complete inflation is their
  destiny
• They will continue on the path of being
  economically UN-FREE.

39
Where are they heading?
40
Future Economic Growth

• China will be investing over 20 billion in oil
  over the next 20 years.
• Argentina is getting more involved in the
  production of ethanol, due to increases in oil
  prices.
• Bill Gates and Google owners are investing in
  Argentinas emerging ethanol sector.