While some blame Argentina’s current economic woes on the country’s embracing the free market, experts say the problems begin with its dilapidated political and legal institutions.
Experts point out it wasn’t always this way. But since the two presidencies of Juan Peron, the first beginning in 1946, statism has become such a fact of life that even the economic reforms and privatisation attempts of the 1990s haven’t dented it.
As the public sector ballooned, the legal system collapsed. Without a reliable legal system, investors are scared away, and risks caused by delays and uncertainty drive up interest rates. In one province it takes an average of five years to foreclose on a commercial mortgage.
The answer to Argentina’s problems lies in both the removal of statist controls and the creation of sound institutions, experts say.
Source: Brink Lindsey (Cato Institute), How Argentina Got Into This Mess, Wall Street Journal, January 9, 2002.
For text (WSJ subscribers)
http://interactive.wsj.com/article/SB101053689772528800.htm
For more on Argentina http://www.ncpa.org/iss/int/
FMF Policy Bulletin\21 January 2002
