Example Of Argentina Economy Essay

Introduction

Traditionally, Argentina’s economy has primarily been based on agriculture however, there is a remarkable growth of its service, and industrial growth has been recorded recently. Argentina economy is considered the third largest in the entire Latin America, and it is an upper-middle economy. Due to its natural resources Argentina has maintained relatively high GDP and high standard of living (Cason, 2011). Apart from its abundant natural resources, Argentina enjoys the benefits of its literate population, diversified industrial growth and its agricultural exports economy. Historically, in the late 20th century Argentina has experience economic constraints with severe recessions, income misdistribution and high rate of poverty. Argentina was ranked as the richest country in the world by the dawn of 20th century and was ranked third largest economy on the entire Southern hemisphere (Della & Taylor, 2003).

Argentina’s GDP

Argentina with its abundant natural resources, agriculture export-oriented sector, and it’s highly educated populous, in 2012 it was adversely affected by the world economy slow down. Regaining from the 2001 economic recession, Argentina embarked on strategic growth that led t its expansion growth of 1.7% based on 2003 financial year to the fall of 2012. Argentina has a well industrial base due to intensive investment on agriculture and the exports activities (Van, 2010). It's literate populous has further increased its technological advancement and innovations in its product production in agriculture products. Figure 1: represents actual values of Argentina’s economy GDP from 2006 to 2014 obtained from the World Bank group. Tremendously, it can be articulated from the graph that despite the 2001 recession and the global economy crisis of 2009 to 2012 Argentina recorded GDP over the years.
Figure 1

Population and Demographics

Argentina’s demographics consist of its vast population density, its economic status and ethnicity in the economic growth and development. Based on 2010 census Argentina’s population had 40,091, 359 and ranked 3rd by population in Latin America and 33rd in the world by population. Its population density is approximately 15 persons/KM2 based on its land mass, less than the world’s mean average 50 persons/KM2. The population intensity or Argentina favors the high standard of living per KM2 (Della & Taylor, 2003). Argentina’s population proportion is well illustrated in the table below.
Figure 2:
Economically from the population proportion of Argentina, the highest percentage is in the gap of 15-64 across the years. The gap is the most active populous involved day- in-day out economic activities. Argentina enjoys the low aged population as it considerably reduces its expenditure of the aged through medical provisions and pension schemes. As the age group of 15-64 involve in economics and others in their college education, the age gap of 0-14 are actively in schools thus providing the continuous workforce in the market. Basing on such statistics Argentina’s economy considerably enjoy the energetic population that are either involved in agriculture sector for its exports while others are in the business.

Unemployment Rate

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Imports and Exports

Historically, it has been pointed out that Argentina primarily relies on its agriculture sector as the only source of her exports. Traditionally, in World War I Argentina capitalized its agricultural produces that cumulatively attained $US 1 billion and in World War II gaining $us 1.7 billion. The statistics articulated here is a clear indication that based on the modern innovations and techniques in farming the imports and exports of Argentina has gone up. Argentina exports 13% of soybean meal, 6.1% of Corn and 5.4% soybean oil. In the industrial sector, it exports 5% of cars and 4.9% of delivery trucks as part of its exports (Cason, 2011).
Argentina imports 6% of petroleum gas followed by the 5.9% vehicle parts and oil at the same percentage and finally 3.4% of telephones in its economy. Due to its natural resources, Argentina has managed sufficiently to provide essential energy to its populous in running its economy. Argentina on its foreign trade it has effectively partnered with countries such as Brazil, China Spain, United States, Germany, and Mexico. Through such international trade, Argentina has intensified its agricultural produce thus increasing its GDP.

Monetary Policy

While a number of monetary policies have largely remained dominated by restrictive measures of inflation mechanisms, Argentina’s legislature in 2012 passed the lay organic that incorporates central bank unambiguous mandates aimed at growth. Argentina have established the basic model in the attempts to control economy based on such factors such as inflation thus maintain relatively affordable prices of essential good to its citizens. More often monetary policy has been associated with political issues due to the government formulates such policies in the economy. Following the 2001 recession Argentina embarked to review its monetary policy on reforms that have institutionalized the central bank to implement the counter-cyclical policies. However, the neoliberals are against such monetization as the ultimate sin in policies in the Argentina’s economy (Baer, Fleischer & Geest, 2011).

Argentina’s Industry and its Tax Rates

The manufacturing sector is the single largest industry in Argentina’s economy contributing to about 16% of its GDP. As pointed early Argentina depends primarily on its Agriculture sector that contributes to at least 5% of the larger domestic and foreign income. The types of industries in Argentina are beverages and food processing industries, refinery products industry, motor vehicles, pharmaceutical and farm machineries (Cason, 2011). The federal government majorly collects tax in Argentina in exclusion of its Argentina provinces governments. Argentina employs the ‘progressive taxation’ model for its collections of personal income which is often collected as the deferred tax. There is a flat tax on business income that comprise of 35% company tax, stamp tax of 1.5% on the real property form of tax. Other types of taxes in Argentina are such as wealth tax of 2.5%, VAT (value added tax) of 21% and banks transactions of 0.6%. Primarily this is the Argentina tax rates with its corporate taxes levied at 35% on both the foreign and domestic companies. However, municipals and provincial governments usually impose different taxes alongside the Argentina’s federal government (Van, 2010).
In conclusion, as Argentina is expected to go to polls October this year, the next government will require better strategy to reduce the current unemployment rate in Argentina’s economy. There is a high need for a better monetary policy that will imminently boost Argentina’s economic growth to enhance better social amenities to its citizens. The 1998-2002 Argentina Great Depression was the greatest economic depression in Argentina, which commenced in 1998 until 2002. The depression started in Russia and Brasilia’s financial crises which were contributed by the fact that many people were unemployed (unemployment). The government was coming down, the default on the country’s foreign debts, alternative currencies rising and the fixed exchange rates of the peso’s to the US dollar. The economy contracts by 28 % as from 1998 to 2002. Looking at the income rate, 50 % of the Argentines were poor and 25% indigent; in every ten Argentine children, seven were poor and almost like the crisis in 2002.

References

Baer, W., Fleischer, D. V., Geest, & L. (2011). The economies of Argentina and Brazil: A comparative perspective. Cheltenham UK: Edward Elgar.
Cason, J. W. (2011). The political economy of integration: The experience of Mercosur. London: Routledge.
Cohen, M. A. (2012). Argentina's economic growth and recovery: The economy in a time of default. London: Routledge.
Della, P. G., & Taylor, A. M. (2003). A new economic history of Argentina. Cambridge: Cambridge University Press.
Van B. (2010). International finance and open-economy macroeconomics: Theory, history, and policy. Singapore: World Scientific.