Revista del CEI - Centro de Economía Internacional

In Argentina, in spite of the trend reversal over the past four years, the investment required by economicgrowth and that called for in order to overcome the social situation arising from the crisis, require an evenhigher savings coefficient than the current one, considering the public debt repayment needs, the need forsufficient investment to guarantee continuous growth, and the recovery of the social pattern whichcharacterised the country in the past. In this respect, the fact that the normalisation of foreign borrowingwill still take considerable time has to be taken into account, since this implies that investment financingwill have to be based mainly on domestic resources and foreign direct investment.In Australia, indebtedness and foreign liabilities indices are within manageable parameters. However, ifthe tendency described is to persist, it could compromise economic policy management in the future,requiring important social adjustments in order to restore the balance between domestic investment andsavings.4. The Future1. A New Trend?Over the past years, substantial political changes have taken place in Argentina. These changes followedthe recession between 1998 and 2001 that ended in a social and economic crisis of almost unprecedentedseverity. The 2002 provisional government and the 2003 elected administration made a series of decisionswith the aim of reversing the cyclical economic behaviour, modifying the regressive income distributionand improving the quality of institutions. The fourth implementation year of the execution plan is currentlyunderway with significant results in the different fields mentioned.At the institutional level, a far-reaching reform of the judiciary was undertaken, including the appointmentof new justices. The goals were to consolidate the independence of powers, to guarantee the transparentoperation of the judiciary, and to assure the rule of law for society and economic actors.Economically, the most significant aspects have been a strong fiscal discipline, a floating exchange rate,implementation of export duties for tax collection and income distribution purposes, a moderatelyexpansive monetary policy and the adoption of active industrial policies and infrastructure investment bythe federal and provincial governments. Once the highest peak of the crisis was overcome, new long-termsocial policies began to be outlined, mainly regarding investment in public health care and educationfunding. The corresponding bill creates an increase in the budget share of education, from 4.5% to 6% ofGDP over the following four years. The goals are the enhancement of teachers’ professional wage parity,the coordination of programs at the federal and provincial levels, the eradication of any remaining illiteracy,universal secondary schooling, and the re-launch of technical education. Together with the increase in thebudget for science and technology, this represents one of the first hints, after a long time, of the launch oflong-and mid-term programmes, agreed upon through negotiations involving all the relevant social sectors.As for economic policy, the investment component of the federal budget was gradually increased parallelto the implementation of exchange rate floating and strict fiscal discipline. The domestic and foreigngovernment debt was restructured so as to obtain a substantial reduction in capital and the reschedulingof payments on a long-term basis. Relative price changes as a result of devaluation and greaterinvestment in infrastructure favoured domestic production competitiveness, which was seen in thesignificant expansion of exports, the increase in consumption and investment demands, and inemployment.The early results, considering the indicators between 2002 and 2006, show that a slightly lowerdiscrepancy can be seen in the large production, investment and consumption aggregates betweenAustralia and Argentina. The GDP per capita growth in Argentina from 2001 to 2006 was in the region of16.0%, including the effect of the crisis; while in Australia it amounted to 8.7%. Consequently, the ratiobetween both GDP’s per capita at purchasing power parity climbed from 37.1% in 2001 to 39.8% at the