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