The Substitution of Imports for National Production and the Culture of the Gift Destroyed Argentina

Member of the Academic Council of Libertad y Progreso. Degree in Economics from Universidad Católica Argentina. He is an economic consultant and author of the books "Economía para todos" (Themes, 2002) and "El SindromeArgentino" (Ediciones B, 2006). He serves as a columnist in the newspaper La Nación. Previously, he worked the same task for the newspapers La Prensa (1985-1992), El Cronista Comercial (1992-2001) and La Nueva Provincia de Bahía Blanca (1992-1998). He's the host of the cable TV show "The Economic Report." Lecturer in Applied Economics of the Master of Economics and Administration of ESEADE, senior lecturer in Macroeconomic Theory of the Master of Economics and Administration of CEYCE. President of the Center for Economic and Institutional Studies. He was Economic Adviser to the Argentine Chamber of Commerce (1983-2002) and to the Argentine Chamber of Importers (1992-1993).

INFOBAE – A study from last year based on World Bank data shows that Argentina was the country with the longest recession between 1961 and 2018, it was 22 years of the 57 years considered, followed by the Democratic Republic of the Congo; Zambia, Haiti, Chad, Burundi and Guyana.

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This data generates the trigger to go back to older data based on statistics from the North and South Foundation. If it is taken from 1880, the year in which it is agreed that national consolidation is achieved, until 2003 because historical cuts can be made that, as such, can be debatable and for debate, but serve to locate different rules of the game, a clear expansionary period is observed until 1916, which was the period in which what is known as the generation of the 1980s or the National Autonomous Party ruled.

Then comes the cut between 1916 and 1945 in which radicals, military and conservatives rule. The other cut is the one that corresponds to the first two governments of Peróny, after 1955 to 2003, which takes the podium with the longest in recession.

As can be seen in the preceding table, the percentage of years in recession grows throughout the century in close relation with the abandonment of the policies that inspired the Constitution of 1853/60 and as the State acquired more intervention in the economy and populism was gaining more and more strength. The percentage of years in recession is growing throughout the century in close relation with the abandonment of the policies that inspired the Constitution of 1853/60 and as the State acquired more intervention

But it is also noted that to the extent that Argentina was more open to the world, it had fewer recessive impacts and, conversely, in the period that went to the model of import substitution for national production, to “live with our own”, the recession time increases, which seems to deny that an economy open to the world is more fragile to international problems.

In the preceding graph it can be clearly seen how between 1900 and the middle of the last century, Argentine exports represented between 2% and 3% of the world total. From the moment the country closes and intends to “live with ours,” that share falls to currently represent just 0.3% of the total.

Obviously, legal insecurity, lack of currency, credit, and targeting an internal market caused the investment rate to decline in relation to GDP, and with it the productivity and competitiveness of national production with the rest of the world.

Investment is the key to economic growth

During the period of the generation of the 80 the Gross Domestic Fixed Investment in relation to the GDP was located at a floor of 20% and a ceiling of 40%, with years in which it exceeded it.

Then, with the Great War, that process is halted, to recover for a time, but later it falls to a range of 10% to 20% of GDP. With the arrival of populism and its legal insecurity, plus the closure of the economy, the investment fell by half, and gradually the levels of poverty, indigence and unemployment began to rise steadily

The series of times reveals that with the arrival of populism and its legal insecurity, plus the closure of the economy, investment fell by half, and gradually the levels of poverty, indigence and unemployment began to rise steadily, with double-digit rates high in the first case.

From all of the above, it follows that it is no coincidence that the period of greatest growth was recorded during the generation of the 1980s, today so attacked or ignored by the progressives and populists who want to hide the liberal republican values ​​that prevailed in those years, even with its defects, but that managed to transform a desert into a prosperous country, to the point that in 1895 and 1896 Argentina had the highest per capita income in the world, according to data from the Angus Maddison project. It is no coincidence that the period of The greatest growth has been recorded during the generation of the 1980s, today so attacked or ignored by progressives and populists who want to hide the liberal republican values ​​that prevailed in those years, even with their shortcomings.

Note that with the wind in favor of soybeans from 2003-2016, it was only possible to grow at 2.4% annually and have an investment rate that at the best moment reached 20% of GDP, the investment rate floor that they achieved the institutional conditions that governed when the Constitution of 1853/60 prevailed.

Moreover, the growth rate of the K era, with the wind in its favor, only reached half of what was recorded between 1880-1916 when the liberal republic that Juan Buatista Alberdi designed ruled and men like Julio Roca, Carlos Pellegrini, José Uriburu, Manuel Quintana and Roque Sáenz Peña, to name a few of them and without forgetting their predecessors such as Bartolmé Miter and Nicolás Avellaneda.

With the wind in favor of soybeans from 2003-2016 it was only possible to grow to 2.4% per year and have an investment rate that at the best moment reached 20% of GDP (Reuters).

In short, not only Argentina broke the record for periods of recession between 1961 and 2018, as shown in the first graph, but history shows that it also broke the record for decline when the culture of work was replaced by the culture of giving and it was decided to abandon the incorporation to the world and begin to replace imports.Not only Argentina broke the record for periods of recession between 1961 and 2018 as the first graph shows, but history shows that it also broke the record for decline when the culture of work was replaced by culture of the gift

The way out of the long decline is very clear. What is missing are politicians of the stature of Miter, Sarmiento, Avellaneda, Roca, Pellegrini, Uriburu, Quintana, etc. that they had stature of statist and none of them looked for the reelection, except for Roca who was twice president allowing two periods to pass before assuming again.

That is to say, it was a generation that dedicated itself to building a country and, for decades, we have politicians who are dedicated to doing a business of politics and to making a clean sweep of the republican principles of the Constitution of 1853/1860 in order to implement the business of politics based on clientelistic populism.

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