My understanding is that both countries were very similar economically in the 20’s and 30’s, yet Argentina now has a terrible economy, and Australia is booming. What did Australia do right, and Argentina do wrong in the last century?

Question

My understanding is that both countries were very similar economically in the 20’s and 30’s, yet Argentina now has a terrible economy, and Australia is booming. What did Australia do right, and Argentina do wrong in the last century?

In: Economics

Answer 1

It comes down to governance. Australia has a normal political system. Argentina does not. 

1930s, military coup followed by fraudulent elections. 1943-44, three coups in two years. 1950s, Peron elected followed by another military coup against him, including repudiating current constitution(!).

1960s unfree election followed by coup and military junta in power 1966-1973. 1973-76 elected Peronist government. 1976, another coup with junta in power until 1983 (lost Falklands War).

 By the end of the dictatorship, Argentina owes massive foreign debt of $45 billion and has unsustainable interest rates as a result. Multiple economic crises in 1980s, ultimately hyperinflation in 1989.  

1990s, it’s too complicated but suffice to say attempted popular policies to get debt and inflation under control lead to the infamous 1998-2001 financial crisis and a debt default in 2001 (really a repudiation). Argentina has been effectively in international finance jail since then.