1. Argentina in the Aftermath of International Financial Crisis: Commodity Booms and the New State Capitalism Sylvia Maxfield Simmons College Prepared for a Workshop to Precede the Montreal International Studies Association Meeting, March 15, 2011

2. Generalizing Across the Region: commodity boom improves external and fiscal balance sheets provides room for counter-cyclical policy transmission mechanism of the crisis is trade not finance You Can’t Have a Credit Crunch if there is No Credit Argentina’s unique situation post-2001 crisis Argentina’s New State Capitalism

3. Regional growth over the century Gold Stand. InterwarUS Postwar Boom Alliance for Progress ISILost Decade Wash. Cons. Wash. Diss. US & LAC on par LAC & Asian Tigers outpace US LAC & Asian Tigers lag US, with incipient recovery LAC lags; Asian Tigers outpace US Slight LAC increase, Asian Tigers take off LAC slides, Asian Tigers accelerat e Cont.2002 LAC starts to outpace US GDP per capita, LAC and Asia relative to US

4. Commodity Prices Against 1970s Base OcaOc Ocampo, Jose Antonio, 2009, Latin American and the global financial crisis, Cambridge Journal of Economics, 33.

5. Argentine Growth 3 rd Highest in Region, 2000-2008

6. Commodity boom helped improve external balance sheet positions throughout the region and created space for counter-cyclical macro-economic policy

7. Argentina’s macro-economic policy response External and government balance sheets aided by pension fund nationalization in Fall 2008 Central bank relaxes monetary targeting rules in 2010 (Fernandez fires Martin Redrado when he refuses to do this – confirmation of his successor required a public advertising campaign to win sufficient congressional support)

8. Transmission mechanism of the crisis is through trade not finance Data on correlation of export decline and GDP decline

9. No banking crises in 2008-2009 Banking crises in 1980-85 (Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay) Banking crises 1995-2000 (Argentina, Brazil, Colombia, Ecuador, Honduras, Jamaica, Nicaragua, Paraguay, Peru) Supervision & regulatory reform; flexible exchange rates (depreciation the norm); central bank independence and price stability

10. Argentina: No credit to crunch Data on credit

11. Impact of crisis on unemployment much lower than in prior recessions Changes in unemployment rate (ILO) Prior recessions: Argentina=1998-2002; Brazil=2001-2002; Chile=1998-1999; Colombia=1998-1999; Mexico=1994-1995

12. Argentina: the “bad” left or an example of the new state capitalism? Kirschnerismo involves increased state ownership & social spending Central Government Expenditures (% of GDP)

13. Room for countercyclical policy and state intervention is shrinking Fiscal and current account balances (% of GDP)

14. Argentine fiscal situation in comparative perspective

15. Growth prospects for remain strong Real GDP Growth 2009-2011 (OECD)