The Argentine economy is becoming increasingly distorted
The government's handling of the exchange rate is leading to increasing distortions in the economy, affecting both exports and imports. In terms of exports, the production of goods is becoming increasingly discouraged by the taxes imposed on it and by the arbitrary restrictions on imports of intermediate products. The growth of industrial exports is closely linked to the viability of value chains that integrate parts and services produced in different countries. Amidst the bureaucratic and arbitrary administration that the government is carrying out for import licenses, it is becoming impossible for industrial exporters to compete on a level playing field.
If the current organization of the exchange market were to continue after the elections next year, the next stage would probably be the nationalization of foreign trade that statist ideologues championed in the decades between the 1950s to the 1970s. That would mean the confinement of the Argentine economy and its virtual international isolation.
Minister Massa's team and the Central Bank could avoid this risk and prepare the ground for unification and liberalization of the exchange market (which can be implemented only by the next administration) that would allow the reopening of the economy and the defeat of inflation just by understanding the virtues of free markets. Only if that is the course imposed on the economy from 2024 on, will it be possible to think that in a few years the quality of life of families can improve and the economy can create enough productive jobs to include the entire population in the distribution of the benefits of progress.
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