IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Role of Political Institutions in the Resolution of Economic Crises: The Case of Argentina 2001-05

Listed author(s):
  • Andres Gallo
  • Juan Pablo Stegmann
  • Jeffrey Steagall

Many financial crises during the last decade have derived more directly from political than purely economic problems. When democratic institutions, government transparency, regulatory oversight or the rule of law break down, the likelihood that politicians will implement unsustainable economic policies rises. The economics literature analyses the role of poorly functioning government institutions in allowing a nation to slip into financial crisis. However, the literature on the effectiveness of post-crisis reforms focuses almost exclusively on whether the stated post-crisis policies are appropriate from an economic viewpoint. Oddly, that literature fails to examine the status of the underlying governmental deficiencies, assuming implicitly that they have been remedied. Because economic reforms are feasible only with wide political and social consensus, two important post-crisis issues are essential to the success of such reforms; namely, the political situation and politicians' management of economic policy. Political failures are particularly relevant to the Argentine financial crisis that began in December 2001. This paper identifies those political issues, which derived from an unstable political structure characterized by corruption and fragmented power between provinces and the federal government. Critically, the rule of law had been undermined in 1991. Interestingly, these same shortcomings still pervaded Argentina in 2004. The resultant lack of political consensus continues to delay implementation of the structural reforms necessary to return to sustainable economic growth. Social confidence in the government is low; the independence of the Supreme Court has been shattered; and the rule of law continues to be eroded, as the government tramples on the property rights of private firms and public debt-holders. Because it seems unlikely that Argentina can overcome its political deficiencies in the near future, its prospects for full economic recovery are limited, regardless of which economic reforms it implements.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal Oxford Development Studies.

Volume (Year): 34 (2006)
Issue (Month): 2 ()
Pages: 193-217

in new window

Handle: RePEc:taf:oxdevs:v:34:y:2006:i:2:p:193-217
DOI: 10.1080/13600810600705098
Contact details of provider: Web page:

Order Information: Web:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Werner Baer & Pedro Elosegui & Andres Gallo, 2002. "The Achievements and Failures of Argentina's Neo-liberal Economic Policies," Oxford Development Studies, Taylor & Francis Journals, vol. 30(1), pages 63-85.
  2. Luiz Fernando R. De Paula & Antonio José Alves, Jr., 2000. "External Financial Fragility and the 1998-1999 Brazilian Currency Crisis," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(4), pages 589-617, July.
  3. Lee Alston & Andres Gallo, 2002. "The Political Economy of Bank Reform in Argentina Under Convertibility," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(1), pages 1-16.
  4. A. Liasko, 1999. "The Economic Crisis and Its Consequences for the Budget System of the Russian Regions," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 42(7), pages 6-22, November.
  5. Masahiro Kawai, 1998. "The East Asian Currency Crisis: Causes And Lessons," Contemporary Economic Policy, Western Economic Association International, vol. 16(2), pages 157-172, April.
  6. Shalendra Sharma, 2001. "The Missed Lessons of the Mexican Peso Crisis," Challenge, M.E. Sharpe, Inc., vol. 44(1), pages 56-89, January.
  7. Steven Radelet & Jeffrey D. Sachs, 1998. "The East Asian Financial Crisis: Diagnosis, Remedies, Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 1-90.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:oxdevs:v:34:y:2006:i:2:p:193-217. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.