The focus of this paper is lay bare the integral steps that were enacted to create the economic disaster that occurred in 2000-2001 which ultimately brought Argentina to default on almost half of its International Monetary Fund (IMF) debt of $180 billion dollars in international debt (Burbach, 2004)…
Three years after the fiasco, Argentina's economy is growing steadily. The growth is still under 10%, but there is growth and a growing sense of safety and responsibility from the government, creating a very positive outlook for Argentina to emerge in years to come as a dominant presence in Latin America.
Globalization is a series of links that a country has with foreign countries. Globalization in essence links a country's economy to other economies so that there is a web of interdependence throughout all linked economies thereby creating a global economy.
In a recent report in Latin Business Chronicle (LBC), Argentina was ranked as the 'least-globalise' country in Latin America (Bamrud, 2005). LBC utilized 6 factors to measure each country's level of globalization. These factors included:
This is an important Index that LBC created in that it allows investors, and other interested parties an opportunity to view Argentina in an extremely objective light. Remittances, money sent back home by family members working abroad, is an area that is steadily growing for Argentina. A report prepared by the American Immigration Law Foundation (AILF) states, 'remittances area sign of family values, a part of human nature. They are a form of helping one's family. Remittances increase both the income of the recipient and the foreign exchange reserves of the recipient's country. "If remittances are invested, they contribute to output growth, and if they are consumed, then also they generate positive multiplier effects," notes economist, Dilip Ratha in Global Development Finance 2003, a World Bank publication ("Role of Remittances", 2003).
By using this 6-step process to cull globalization indexes, one can get a larger view of the financial status of Argentina. LBC report states that Argentina has the lowest import rates in Latin America, it has a low export rate, foreign investment is low (1.2% of GDP) and it has one of the lowest remittance rates in the region as well. Even tourism levels are down (Bamrud, 2005). While Argentina is not facing imminent meltdown, it is still toddling its way back from its financial disaster 3 years ago.
However, its economy is rallying. According to the U.S. Department of State's website, Argentina had an annual real growth rate of +9% in 2004, and their GDP stands at $150.0 billion. To give a bit more background, globalization is supposed to help keep countries in line and disciplined because if they have solid economic practices, the assumption is that government will be favoured by foreign investment. If the government does not practice sound economic policies, the reverse is supposed to be true - monies will either not be invested, or will be pulled from that country (Blustein, 2003). This did not happen in Argentina in the years leading up to the crisis, in fact, due to inflated expectations and selective reporting of the country's true financial state, globalization helped to create the massive Argentine downfall.
II. What Happened ...
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(Argentinian Financial Crisis Essay Example | Topics and Well Written Essays - 2000 Words)
“Argentinian Financial Crisis Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/business/303988-argentinian-financial-crisis.
Student Name: Course: Instructor Name: Date of Submission: Financial Upheavals Financial crises are inevitable and seem to be a usual and reasonably invariant characteristic of such business cycle. The economic system of any country is subject to discrete business cycles that lie on the boom-depression continuum.
According to this discussion the banks and the financial institutions suffered from the crisis. The governments of almost all the nations had to come up with packages that are required to move out from such a situation. The financial crisis will shed its impacts around the globe due to globalization.
Global Financial Crisis of 2007 had its beginning in United States of America with the crash of the home loan or credit market during July 2007. This credit crunch which happened in United States during 2007 rapidly spread to other global economies thus jeopardizing the global financial system.
The global financial crisis have affected and will continue affecting the livelihoods of nearly everyone in the increasingly inter connected globe. As a case study, I will view the economic situation the United States, its progress, and downfall caused by the global financial crisis.
However, Wallison (2012, p. 71) expressed the view that “in a true sovereign debt crisis, a country cannot meet its debt obligations, largely because it does not have enough of the currency in which its debt is denominated.” The European sovereign debt crisis began in 2008 with the banking crisis in Ireland with the contagion of the crisis spreading out to Greece, Ireland and Portugal in 2009 (Investopedia 2012).
Many have assigned the year 2004 as the year of the great credit crisis that first had a toll on the United States’ financial sector before other parts of the globe had its impact. However, there are indications that the credit crisis of the year 2004 was just a climax of a historically influenced turbulence in the world’s financial market that began with the end of “the golden age of capitalism in 1970’s” (Kapadia and Jayadev 33).
One of the most significant causes of the financial crisis disclosed by the author is the market instability. This was related with the poor credit lines which had deteriorated the money supply while limiting the economic growth. Individuals and businesses were unable to pay back their loans which also affected the assets and cash reserves.
put a large amount of capital in the financial markets, but as the situation in 2008, the situation had worsened with a crash in the global stock markets. The consumers, being in fear of the effects that this crisis would produce, held up their credits. The financial