Joe said:
Economics 101 teaches us that blocking off imports is guaranteed to LOWER the quality of national brands. Less competition invariably leads to lower quality.
And higher prices.
The sad thing about these policies is that it sets up the national companies for failure. Once a "market friendly" president takes over and allows imports back in - then the local businesses will not be able to compete and will often be bought by a foreign company at a steep discount and reorganized.
Argentina has seen this cycle many times. It's the only country in history that went from first world status (from the early 1900s) to third world status. Argentina is very unique in that aspect.
Please explain reference to "Economics 101". Did you study the Prebisch-Singer Thesis?
The Argentine Economy has not declined in absolute terms since the 1900s but it certainly has underperformed in terms of the customary comparison with countries of a similar size and resources.* (See footnote reference below) It is relative decline i,e not as fast as other large countries with a similar resource base the classic being Canada or Australia Note not absolute decline as seemingly implied.
Of course for a period in Argentina's economic history there was absolute decline in GNP. This coincides various military dictatorships most of whom were only too happy to remove import restrictions as part of a neo-liberal experiment carried out and in conjunction with close political alignment with the west. Arguably this is what led to the 2001 situation when there was a catastrophic collapse and absolute decline but that was not due to import restrictions far from it more causal were the Menem "reforms".
http://www.scielo.br/scielo.php?pid=S1415-98482007000100001&script=sci_arttext
"Third World Status" is often used as a put down pejorative term. Third World was a term originally used to distinguish nations that neither aligned with the West nor with the East during the Cold War, many were members of the Non-Aligned Movement. Now the term is used to denote nations with the smallest UN Human Development Index (HDI) in the world, independent of their political status. These countries are also known as the Global South, developing countries, least developed countries and the Majority World
I dont think you are referring to Argentina's political realignment away from the Washington consensus but rather to the latter!
Argentina's HDI is 0.797, which gives the country a rank of 45 out of 187 countries with comparable data.
See on this graph which Id like to upload but cant
http://hdrstats.undp.org/en/countries/profiles/ARG.html
Not wonderful but not that bad in recent times!
Yes I certainly agree it would be a big worry is another "market friendly" President comes along and at a stroke removes all import restrictions on uncompetitive industry. That is of course the IMF way as well.
The trick is of course to achieve import substitution to give time for local industry to get competitive al la Raul Prebisch the foe of Peron.
http://www.economist.com/node/13226316
*External Dependence, Demographic Burdens, and Argentine Economic Decline After the Belle Époque
Alan M. Taylora Economics, Harvard University, Cambridge, MA 02138.
Abstract
Once one of the richest countries in the world, Argentina has been in relative economic decline for most of the twentieth century. The quantitative records of income growth and accumulation date the onset of the retardation to around the time of the Great War, and patterns of aggregate saving and foreign borrowing show that scarcity of investable resources significantly frustrated interwar development. A demographic model of national saving demonstrates that the burdens of rapid population growth and substantial immigration depressed Argentine saving, contributing significantly to the demise of the Belle Époque following the wartime collapse of international financial markets.
from:
http://journals.cambridge.org/actio...57A61DB6.journals?fromPage=online&aid=4155536
