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The challenge of financial crisis to economic of development: impact and solutions- the case of Argentina

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documents in English
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case study
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  1. Introduction
  2. Situation between 1945- 1993
  3. From the resistance to the explosion
  4. The final explosion
  5. The floating of the peso and the consequences of the crisis
  6. Perspectives
  7. Conclusion

The Argentine crisis means the great economic and social crisis that took place in Argentina between 1998 and 2002, whose consequences are felt even today. The Argentine authorities in early 1990 had chosen the technique of the currency board to stabilize an economy with inflation almost continuously since the Second World War. This very special system has withstood the evil and violent erratic market exchange rate that followed the crisis in emerging markets. The recession was extremely violent and led to a dramatic increase in poverty as well as important social movements.

Situation between 1945- 1993
After the Second World War, Argentina is still the fifth largest economy, despite the serious consequences of the crisis of 1929. Under the Peronist regime in place from 1946 to 1955, it quickly lost the luster it had before during the First World War. Peron plays the card of the welfare state by fostering the nationalization of enterprises, the subsidy of public transport, with access to private property and social protection. Thirty years political crisis marked by the proscription of Peronism without that Argentina regained its economic influence among dictatorships and civilian governments kept under close supervision of the army .

[...] The IMF as usual requires drastic cuts in public spending and in fact holds true deflation in exchange for the contribution of several billion dollars. The paradox is that the IMF is totally opposed in principle to currency boards! It works against the use of a system of exchange that is difficult to understand. The IMF is not the only institution to help Argentina: World Bank, Pan American Bank, Spain and even pension funds provide a total of more funds for the IMF. [...]


[...] The floating of the peso and the consequences of the crisis In the months following the government feverishly conceived solutions to try to resolve the crisis. To appease the people, he created an income welfare 100, and 150 pesos later, addressed to unemployed heads of household. The peso continued to vary, and reached to the mid-values nearly 4 pesos per dollar, values stagnated through the support of the currency established by the Central Bank. The corralón stifled as large parts of the economy, the housing market and the automotive industry. [...]


[...] Perspectives Since mid-2003, economic growth has remained high values, which must above all be attributed to the positive effects of devaluation, which strengthened the export and import substitution promoted by the products of Argentine industry. However, the crisis is probably not yet fully completed. The poverty rate ( in January 2007) and the unemployment rate ( in January 2007) are still high. The government is constantly short of funds. The confidence of the international community is absent. The global financial crisis which started in 2007 with the subprime and abruptly worsened in September 2008 with the bankruptcy of Lehman Brothers affects everyone, including emerging markets such as Argentina, contrary to what was time [...]

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