1. Argentina + Brazil Social and Economic Development Part I
Where are they coming from?
Where are they going?
Part I

2. Developmentalism Growth
Argentina’s Story
Developmentalism Growth
Oil Crisis
Coup d’état
Neoliberal Reforms
The Falling Peso

3. Reducing the debt burden
Brazil’s Story
ISI policies
Rapid economic growth
Oil Shocks
The Lost Decade
Reducing the debt burden

4. Argentina

5. The 1998-2002 Recession Worst recession in 1998: Pegged Exchange Rate
Public Debt
Banking Difficulties
Debt Default in 2001:
$93 Billion Dollars
Bank Run
Decreased Confidence in Economy in 2002

6. GDP in Argentina
earthtrends.wri.org/pdf_library/country_profiles/eco_cou_076.pdf
earthtrends.wri.org/country_profiles/fetch_profile.php?theme=5&filename=eco_cou_032.PDF

7. Annual Growth Indicators in Argentina

8. Crisis Recovery Economic Policies
Recovery in mid-2002
Expansionary Fiscal Policy
Interventionist Government Policy
“shunned the IMF and shafted private bondholders; kicked out foreign companies and set up new state-owned ones; imposed price controls; and even doctored the inflation figure.”
The Result
Strong External Sector
Growing faster than any other big economy except China, at an average rate of 9% annually for the five years subsequent to the economic crisis of 2002

9. Argentina: Balance of Payments

10. Argentina

11. The Problem of Inflation
Government has sacrificed sustainability for growth
Aggregate demand not met by sufficient supply
Inaccurate reporting of official inflation

12. Annual Inflation

13. The Forecast for the Argentine Economy
Inflationary problems still persist.
Recession in the US in will cause GDP growth to slow to a medium-term rate of below 4.5%
Political difficulties

14. The Economy in the Global Recession
For your viewing pleasure!

15. Brazil

16. GDP in Brazil

17. Ingredients for Economic Success
Economy- agricultural, mining, manufacturing and service sectors.
financial problems
2008: more capital inflow, appreciation of the “Real” (as a result exports slowed)
Growth- employment and real wage
Brazilian resilience: ingredients:
1) Commodity-driven current account surpluses
2) Great macroeconomic policies
Economic strengths come from:
1)floating exchange rate
2) regime targeting inflation
3) tight fiscal policy
Floating exchange rate
2003 to 2007: trade surpluses and current account surpluses
Jump in exports why?
2006- Brazil improved debt profile
Economic reforms, tax reductions and infrastructure investment increases.

18. Ingredients for Economic success cont’d
2008- Brazil got the rating conducive to foreign investment.
Problems: growth + reducing debt= some inflation
For the most of the Central bank tried to control the restrictive monetary policy.
Since the Global crisis in September- their currency and stock market have lost value, “Bovespa” down -41%. They had another current account deficit resulting from reduced commodity prices at the end of 2008

19. Inequalities
Colonial structure of exclusion and inequality always existed
1950’s: Military Government : sustained economic growth and industrial expansion through ISI
Negative effects: massive urban migration without proper infrastructure development and social programs
Result : rapid growth of “favelas”
Rich got Richer, Poor got poorer

20. Foreign aid Long-term aid Retired debt to IMF 2005
Why? growing INTL reserves and higher commodity prices
Brazil’s ratio of international reserves to external debt went from 12.7% to 44.2% in 2006.
Surpassed budget surplus targets in recent years- fiscal austerity measures.
Does not have balance- of-payments issues
Growing Brazilian government surplus in millions of Reals as a percentage of GDP
High surpluses: domestic reinvestment, saving for a rainy day
Macroeconomic: accumulation of INTL reserves
Investment in human capital and infrastructure development.

21. Brazil: Balance of Payments

22. Brazil

23. LULA Elected in 2003 (first time)
Strong welfare agenda to attain MDG goals
Focus: ending hunger and poverty among other social programs
Democratic well-established institutions, gains in prosperity and improvements in macroeconomic stability

24. Troubleshooting Difficulty with coordination
Brazil is a federation consisting of 27 states and 5,562 municipalities.

25. Solutions
2003- UNDP and the Brazilian government adopted a campaign to promote the MDGs
Brazilianize?
What does it mean?
Focused:
localized attention
+ civil society organizations
+ private organizations__
successful partnership

26. Macroeconomic stability
Improving macroeconomic stability
used to suffer from chronic inflation
Plano Real - mid 1990s
Currency: Brazilian Real; independently floating.
Brazil is classified as an open economy.
A member of the MERCOSUR Customs Union: Common external tariff that ranges from 0% to 20% depending on the import.
Top foreign direct investors in 2008 are: the Netherlands, the United States, Luxembourg, Spain and Germany.
Brazil is an appealing market for FDI
It is important to note Brazil’s recent and important role as a source of FDI abroad. Brazil’s outward FDI flows exceeded inward flows in 2006: it is now the 2nd largest source of FDI among developing countries after China.

27. The Divide
Northeast- Southeast Division
Favelas: Inner City Poverty

28. Brazilian Economy Roars
Another video for your pleasure!

29. Inflation

30. External Debt

31. Total GDP

32. Argentina
Brazil

33. Median Household Income