By: Jack Wood, ’14
This paper focuses on the long-term negative effects of Argentina’s populist economic policies have had on entrepreneurs. Micro, small and medium sized enterprises (MSMEs) are an important part of Argentina’s economy employing 65% of the working population and generating 40% of the gross national product (GDP). Entrepreneurs create the start-up businesses that become MSMEs. Fostering entrepreneurs and their businesses can have a major impact on GDP growth and the standard of living of the people of Argentina.
Working out of the financial crisis in 2001-2, the new populist government focused on reducing poverty and income disparity through a series of large government social programs including employment, pensions, education and healthcare. With a strong global economy and export market, Argentina successfully transitioned reducing poverty while increasing GDP. The large government influencing many economic areas became increasingly unstable as the global economy suffered in 2008. Costly policies had to be paid for with dwindling revenues. Money was printed eroding the value of the peso overtime.
The uncertainty first with the radical change of government in 2002 and the abrupt changes in policy since have not promoted an innovation driven economy. While improving income disparity and poverty rates for the Argentinean people, the government’s continual political and economic instability, monetary policy, prohibitive regulations, and interference with free trade, has restrained the entrepreneurial class.