The economic history of Argentina is one of the most studied, owing to the "Argentine paradox". As a country, it had achieved advanced development in the early 20th century but experienced a reversal, which inspired an enormous wealth of literature and diverse analysis on the causes of this decline. Since independence from Spain in 1816, the country has defaulted on its debt nine times; inflation has often risen to the double digits, even as high as 5000%, resulting in several large currency devaluations.
Argentina possesses definite comparative advantages in agriculture because the country is endowed with a vast amount of highly fertile land. Between 1860 and 1930, exploitation of the rich land of the pampas strongly pushed economic growth. During the first three decades of the 20th century, Argentina outgrew Canada and Australia in population, total income, and per capita income. By 1913, Argentina was among the world's 10th wealthiest states per capita.
Beginning in the 1930s, the Argentine economy deteriorated notably. The single most important factor in this decline has been political instability since 1930 when a military junta took power, ending seven decades of civilian constitutional government. In macroeconomic terms, Argentina was one of the most stable and conservative countries until the Great Depression, after which it turned into one of the most unstable. Despite this, up until 1962 the Argentine per capita GDP was higher than that of Austria, Italy, Japan, and of its former colonial master, Spain. Successive governments from the 1930s to the 1970s pursued a strategy of import substitution to achieve industrial self-sufficiency, but the government's encouragement of industrial growth diverted investment from agricultural production, which fell dramatically.
The era of import substitution ended in 1976, but at the same time growing government spending, large wage increases, and inefficient production created a chronic inflation that rose through the 1980s. The measures enacted during the last dictatorship also contributed to the huge foreign debt by the late 1980s which became equivalent to three-fourths of the GNP.
In the early 1990s, the government reined in inflation by making the peso equal in value to the U.S. dollar and privatized numerous state-run companies using part of the proceeds to reduce the national debt. However, a sustained recession at the turn of the 21st century culminated in a default, and the government again devalued the peso. By 2005 the economy had recovered, but the country again defaulted in 2014 and 2020.
Colonial economy
During the colonial period, present-day Argentina offered fewer economic advantages compared to other parts of the Spanish Empire, such as Mexico or Peru, which caused it to assume a peripheral position within the Spanish colonial economy. It lacked deposits of gold or other precious metals and did not have established native civilizations to subject to the encomienda.
Only two-thirds of its present territory were occupied during the colonial period, while the remaining third consisted of the Patagonian Plateau which remains sparsely populated to this day. The agricultural and livestock sector's output was principally consumed by the producers themselves and by the small local market. They only became associated with foreign trade towards the end of the 18th century.
The period between the 16th and the end of the 18th century was characterized by the existence of self-sufficient regional economies separated by considerable distances, a lack of road, maritime or river communications, and the hazards and hardship of land transport. By the end of the 18th century, a significant national economy came into being as Argentina developed a market in which reciprocal flows of capital, labor, and goods could take place on a significant scale between its different regions, which it had hitherto lacked.
In the colonial period, the territories that now make up Argentina were subject, like the rest of the Spanish territories in the Americas, to legal restrictions regarding how and with whom trade could be conducted. Throughout the 17th and 18th centuries, trade directly through the port of Buenos Aires, rather than via the official system of fleets out of the port of Lima in modern Perú, was forbidden except through special permission from the Crown. In practice, however, this did not mean that the colonial economy of what is now Argentina was closed to trade.