Theses Bachelor's

The 'Maradona' of the Economy: The Rise and Fall of Cavallo's Integrated Argentine Economy

Servideo, Lucas

In early 1991, ten years before Argentina defaulted on its international debt and devalued its currency, an effort was made to address the economic crisis caused by runaway inflation. The subsequent decade, that is the years after 2000, saw the failure of the policies then put in place and marks one of the most tragic periods in the country’s economic history. During the 90s, the country underwent ‘neoliberal’ market reforms centered on open trade and access to capital markets, fiscal responsibility, and a stable currency. According to Joseph Stiglitz, a Nobel Prize winner in the field of economics and author of Argentina, short-changed: Why the nation that followed the rules fell to pieces, the policies implemented during the 1990s were doomed to fail. The most influential piece of the policy reforms was the convertibility law, which equated the Argentine peso with the US Dollar. Maintaining this exchange parity was of the utmost importance to the country at the time and depended on two measures: the sale of state assets and international borrowing.
In this thesis I will study the relationship between these two policies through an analysis of Domingo Cavallo’s account, Argentina’s economic minister from 1991 to 1995. By examining his speeches, articles and interviews, and by studying the process of selling state assets in it of itself, I argue that the minister believed that privatization made access to capital markets possible. The story I am telling and my analysis of it obviously have a deeper history that is essentially social and political, but this thesis does not try to place the policies or Cavallo himself in that history except by implication. Instead, I am focusing on the monetary and fiscal history itself: how privatization worked, how it made it possible for Argentina to borrow in international markets; to the extent possible from published data, I am also assessing the extent to which the combination of privatization and borrowing actually worked to restore fiscal health – and when it no longer did.

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More About This Work

Academic Units
Thesis Advisors
Howell, Martha C.
B.A., Columbia University
Published Here
May 30, 2014