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Argentina Must Not Waste Its Crisis

To explain Argentina’s chronic instability and episodic illiquidity, one must look beyond idiosyncratic leaders, temporary external shocks, and specific policy mistakes. The answer lies in the country's political system, which has failed to cement institutions that can support long-term development.

WASHINGTON, DC – If you leave Argentina and come back 20 days later, according to a tragically apt joke, you’ll find everything is different, but if you come back after 20 years, you’ll find that everything is the same. Will the country’s likely next president, Alberto Fernández, finally manage to erase that punch line?

According to the World Bank, since 1950, Argentina has spent one out of every three years in a recession. And the country’s recent credit event may constitute its ninth sovereign default – its third since 2000. This is all the more vexing because only a century ago Argentina was one of the world’s richest countries in terms of GDP per capita.

To explain Argentina’s chronic instability and episodic illiquidity, one must look beyond idiosyncratic leaders, temporary external shocks, and specific policy mistakes. The answer instead lies in a political system that, having oscillated so frequently between military dictatorship and populist majoritarianism, has failed to cement institutions that can constrain short-termism and anchor policies for long-term development.

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