When Argentina first became independent in the early 19th century, the population of the country was only about 600,000. However, by the end of the 19th century, Argentina's population had grown rapidly to around 1.9 million. This country of less than 2 million people is blessed with vast pampas grasslands, which provide unique conditions for the development of animal husbandry and textiles. At that time, Argentina was the world's largest exporter of cattle and sheep, and had the world's most advanced textile technology. Argentina's agricultural exports make its economy the eighth largest in the world.
During the period of economic take-off, Argentina actively invested in infrastructure development, building a network of roads and railways. However, the construction of the railway was so costly that Argentina had to borrow to meet its financial needs. Shortly after the completion of the construction of the first railway, World War I broke out. Argentina was originally almost entirely dependent on agricultural exports to Europe, but with the outbreak of the war, the export market almost came to a standstill. At the same time, Argentina spent about 45% of its GDP on railway construction, which put enormous pressure on the country's finances.
Due to the dependence of Britain for industrial development and technology, when World War I broke out, Argentina had to withdraw its industrial facilities to London. This was followed by the collapse of the industrial system, and the accumulation of wool that was supposed to be exported to Europe was also huge. In addition, Argentina is in a debt crisis. At that time, due to doubts about the country's creditworthiness, credit fell to a freezing point, and people ran on assets, resulting in a loss of funds. Argentina had to borrow again, but as the debt increased, so did the interest on the borrowing agreement with the United Kingdom. Although Argentina has attracted some investment, the country's credit remains low and its economy is in trouble.
Faced with external competition and internal turmoil, Argentina decided to develop light industry and focus on consuming wool production capacity. However, the rapid development of the Asian economy and the rise of the Asian Tigers have changed the global economic landscape, and orders from almost all developed European countries have flowed to these emerging countries and regions. At the same time, the gap between Argentina and the Asian tigers is widening.
Argentina is also facing an internal instability situation. In the last 30 years, Argentina has changed 25 times, and even changed 5 places in a month. This series of political changes has further exacerbated economic instability. From the beginning of the 19th century to the present, Argentina has experienced more than 200 years of history, with a population growth of 4600 million. However, economic growth has not kept pace, and per capita income levels have continued to decline. The Argentine economy is stuck in the middle-income trap, with many people falling into a cycle of bankruptcy and poverty after becoming the middle class.
First of all, a country's economic development cannot be completely dependent on natural resources. While Argentina has abundant pampas and agricultural exports, relying solely on agriculture poses significant risks. In the period of economic transition, we should think about how to develop diversified industries and avoid falling into the dilemma of resource dependence.
Second, political stability is an important foundation for economic development. Frequent political upheavals in Argentina have led to economic instability and discouraged external investment. A country should establish a stable political system to ensure sustainable economic development.
In addition, the adjustment of the industrial structure should match the market demand. Argentina's choice in terms of industrial development played an important role. When the global economic landscape changed, Argentina failed to adjust its industrial structure in a timely manner, resulting in a decline in competitiveness. In the course of industrial development, it is necessary to pay attention to the changes in market demand and adjust the industrial structure in a timely manner to adapt to the new economic environment.
Finally, it is important to point out that while Argentina and the United States share similarities in some respects, there is a clear gap between the two in terms of overall economic strength and international status. Although Argentina was once the only developed country in South America, it unfortunately fell into economic difficulties. In contrast, the United States has achieved the status of the world's largest economic power through continued innovation and development. Argentina's experience reminds us that developing the economy requires the right development strategy, constant adaptation to the changing global economic landscape, and the maintenance of political stability and a favourable international environment.