The situation in Argentina cannot be understood without understanding economic history.

This week, and even throughout the month, you will see a huge amount of analysis of the economic (and political) situation in Argentina. It is important that you read them all based on the following.

The debate over Argentina’s historical prosperity centers on GDP per capita. Despite the methodology debates, it’s generally agreed that Argentina was among the world’s richest nations in the late 19th and early 20th centuries. In 1896, Argentina was considered the world’s wealthiest country. However, newer data challenges this claim, ranking Argentina sixth in 1896. Despite this, Argentina started the 20th century as one of the world’s wealthiest nations and was a top-10 economic power before WWI.

Argentina’s economic decline is often linked to the rise of Peronism, starting in 1946. The economist Fausto Spotorno pointed out that Argentina’s economic growth began to slow from 1930 due to global crises and the first military coup. However, it’s clear in the data that problems escalated during the Peronist era, marked by inflation. This inflation was partly caused by increased government spending, which Perón financed by nationalizing the Central Bank and printing money, leading to a vicious cycle of inflation and deficits.

While the Peronist era played a role in Argentina’s economic problems, some argue that its decline started later, around 1975, coinciding with the last military dictatorship and its neoliberal policies. This period led to severe economic issues, including hyperinflation. Some scholars suggest that the root of Argentina’s economic troubles lies in its unstable political institutions, marked by numerous military coups and a lack of respect for institutions and fiscal discipline.

Argentina’s ever-changing economic policies, oscillating between nationalism and neoliberalism, protectionism, and free markets, have contributed to its economic challenges. Furthermore, the lack of continuity in economic policies, with frequent and radical shifts, has hindered the nation’s ability to sustain long-term economic development.

This pattern of erratic policy changes continues to influence Argentina’s political landscape, where candidates like Sergio Massa, Patricia Bullrich, and Javier Milei hold differing views on the role of the state in the economy, reflecting the country’s historical economic pendulum.