WI: Successful, democratic, G7 member Argentina with a 1928 POD

Welcome on the occasion of your first post. This is actually a What-If I have wondered about in the past and I found your post enlightening.
 
@Salem_Saberhagen: What if the plan of Menem to have Argentina simply used US dollar as sole currency prospered instead being rejected by De la Rua in 2000? I believe that complete dollarization of Argentina would have removed the cost of devaluation that happened in 2002 and further tied up the economy with the US. With dollarization, Argentina cannot anymore print more pesos to fund the needs of its politicians and put the country into a fiscal discipline like any US state.
I believe dollarization could have worked in postponing Argentina's debt crisis since interest rates on the foreign debt being issued would have dropped, allowing the country to weather maybe a year or two more, long enough for export commodity prices to go up and improve the fiscal and trade balances. However, it's a long shot, and the problem of the currency being overvalued remains, so the 2000s would be - at the very best - a decade of uneven, sluggish growth, with persistently high unemployment, and a massive debt crisis regardless once the global financial crisis unfolds. Instead of the 2001 depression, you would have it in 2008-2010, as in Greece or Spain.

The no 1930 coup POD, I agree, would be the best option, but only if it's tied in with Yrigoyen accepting that he's getting too old for the job and thus does not run again. Meaning the Radicals would have to find someone else. That's the only "easy" way I can see the coup avoided. Everything else, well - while they would be doable, they would not have the same impact that a no 1930 coup. The reason? While industrialization was going to happen regardless, without the coup Argentina would have a continued constitutional history
Agreed. Still, the 1940 POD is a salvageable situation, because the political instability wasn't nearly as bad as what would follow. Several countries in the Depression suffered a breakdown in Constitutional rule and managed to regain it in the Cold War.
I agree however that some event that avoids the 1930 coup altogether (like Yrigoyen dying or retiring before his second term) gives the best chances for the future.


As for Convertibility - what should have happened was a basket of currencies, both Latin American and European, instead of tying itself to the dollar. It has been argued by economists that convertibility with the US dollar was a disaster overall from the moment it was conceived, since the original idea was to facilitate Argentine exports to the US - which never really happened. The main reason why, though, was because the convertibility law made Argentina uncompetitive and (much like the tablita of the military dictatorship) overvalued the peso by subjecting it to fluctuations of a completely different set of economic conditions - the US one - so that by the time you have el crisis the peso did not truly reflect reality until the economy got truly pesified. (I should add that these same arguments against convertibility also work well against dollarizing the country - making the US dollar the sole official currency does not solve any problems on that front since unlike those states with smaller economies, Argentina has a large-ish economy akin to South Africa and thus would be a mismatch; dollarization also does not solve the problems of currency manipulation and fluctuations according to non-Argentine economic conditions so it would make economic conditions worse, nor does it solve any problems with corruption or fiscal issues or even "printing" money - in fact, there are ways of printing money which go around the traditional forms.) Thus, to make convertibility workable, the anchor needs to be reflective of reality and thus its actual main export markets. But even that would not have an impact like a no 1930 coup POD would.
I agree. However, if Convertibility had been implemented as I outlined here, as originally intended, with an undervalued exchange rate rather than overvalued (think Hong Kong or even China itself), it would have worked in promoting export growth, lower unemployment, and a proper trade surplus. This, coupled with some sort of free trade agreement with the US (it would need to wait until Bush since Clinton was not given fast-track authority to negotiate them), and a more open Mercosur, would have allowed the system to work as it was originally intended. But as it was in real life, yes, convertibility had all the problems you mention, since the currency was tied at a somewhat overvalued rate to begin with and kept rising in value over the decade. (This was the strongest period of the dollar in recent history, by 2001 1 peso or 1 dollar was worth 1.15 Euros!)

The currency basket idea is a very interesting one and it would have worked as well in saving Argentina from the crisis, there were proposals in that direction in Argentina throughout the decade, mostly by UCR politician Rodolfo Terragno, who came out second on the UCR Presidential primaries in 1999, however he was given the post of "Chief of the Cabinet of Ministers" (a position akin to the French Prime Minister, but in fact has much less power) during De La Rua's fated administration. From there he tried to push his currency basket idea yet again but nobody in the administration would listen to him since they had decided to go for all or nothing on convertibility. If the currency basket had been implemented right then in December 1999 you would probably have avoided the worst of the crisis as well. However, it would have meant breaking up one of De La Rua's core campaign promises and by 1999 the dollar-denominated debt had piled up so you would still have some sort of debt crisis and renegotiation though not nearly as severe.
 
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I think that some sort of economic crisis was inevitable. Just as central Europe's 1990s were largely a matter of recovery from a deep post-Communist recession in the context of massive political changes, so too was the first decade of democracy in the Southern Cone marked by linked economic and political crises.

If we could somehow arrange for a faster recovery, or at least a more consistent recovery without any shock around 2000, Argentina would be much richer. It would be solidly in the rank of high-income economies, say, perhaps a bit like Poland or even approaching Spain.
 

Thomas1195

Banned
I don't know but several successful countries like South Korea only moved to democracy after industrialization.
 
The problem with Argentina is that it followed a different trajectory, from relative wealth to relative poverty, not the other way around. Argentina's economic and political failures were linked.
 
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