Review the economic setback to grow again

“Argentina has gone from being one of the top 10 countries in the world to 60th in the world rankings.” “It’s the fault of Peronism.” “The army sank us.” “Democracy is in debt. These types of affirmations are so recurrent that they have started to ripple through our minds and affect our expectations and decisions.

The question we ask ourselves is how much truth there is in them. I foresee that, to the regret of many compatriots, things are more nuanced. Let’s see.

If we take the GDP per capita in purchasing power parity (PPP) between 1913 and 2020 (Geary-Khamis index of $1990) for 121 countries for which data is available, it turns out that Argentina fell from 9th place in 1913 to 43rd in 2020. A considerable drop. Now, can the responsibility be attributed to Perón, to the military junta or to democracy? Paraphrasing Mario Vargas Llosa, “When did Argentina get screwed?.

The surprise I have for you is this. The country began its decline in the ranking in 1913. It gradually lost one or two places every five years with two exceptions, 1929 and 1975, until reaching 23rd place this last year. This dismisses the idea that the country has been collapsing since 1930 or 1945. What happened next? The question is more varied and interesting.

From 1975 to 1980, the country lost 5 places, equivalent to the entire decline between 1955 and 1975, that is to say, it did so 4 times faster. Between 1980 and 1985, 3 places, and between 1985 and 1990, another 6. In short, between 1975 and 1990 we went from place 23 to 37. Between 1990 and 1995 we recovered 3 positions, to number 34, which is remained until 2015, and between that and 2020, we passed 8 stages.

As we can see, things are not as linear as they seem on either side of the ideological divide: 1) The country gradually retreated between 1913 and 1975; 2) there was a first critical collapse between 1975 and 1990 (from Rodrigazo convertibility); 3) we had a slight recovery and subsequent stability for 15 years; 4) finally, a sharp drop between 2015 and 2020.

Who is guilty? I suggest you think about it from another angle, that of finding a plausible explanation based on relevant data.

Firstly, many countries that have overtaken us in these 103 years are the Europeans, the oil tankers and the Asian tigers, which cannot surprise us, since, respectively, they have successfully undergone processes of economic integration, boom hydrocarbon prices or international integration through export in a very specific geopolitical context. Argentina did not participate in any of them.

Second, the first 15 years of sharp decline (1975-1990) cannot be attributed to a single regime or political partybut rather to a cluster economic, social, political and international failures like never before. However, and even if it’s hard to believe, the countries that have passed us this time are the European new rich, some oil companies, a couple of Asian tigers, Uruguay and Costa Rica. What’s new? So seen, none, since that is what has been happening for decades. The difference is in their depth and speed, and that’s where our groups crisis.

Finally, the collapse of 2015-2020 is different, because international conditions were exceptional, the economy had been growing for more than a decade, we had democratic governments and a recovery in social resilience. In this case, one can think that, at least part of the responsibility, were the flawed government decision-making processes.

In conclusion, the probability of avoiding the drop in the world ranking was not as high as it is said. It’s not that it was impossible, but another quality of leadership would have been needed in critical moments. For this reason, in a context like the current one, it is important not to start from false premises about the country’s history and that the political leaders we choose are up to it.

The author is director of the Research Institute of the Faculty of Economics and Commercial Sciences of the University of El Salvador (USAL)

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