RE: Argentina (fwd)

["Leticia Arroyo Abad" <asecon@xxxxxxxxxxxxxx>]

> > >Since we have a few Argentines on PKT, and some non-Argentine students
of
> > >the country, maybe someone knows the story behind the World Bank's
> > >mysterious upgrading of Argentina's per capita GDP figures. In the
1987
> > >World Development Report, Argentina's per capita GDP was given as
$2,130,
> > >just behind South Korea and just above Mexico. In 1992, Argentina's
income
> > >was $2,370, way behind Korea's $5,400 and about $100 below Mexico. In
the
> > >1997 WDR, Argentina clocks in at $8,030, more than twice Mexico's
$3,320,
> > >and not that far behind Korea's $9,700. Does this make any sense to
anyone?
> > >
> > >Doug
>
> In 1992 (or 1993) there was a sharp redefinition of the argentine GDP,
> following IDB and WB guidelines.  In this new calculation (currently
> covering the 1980-1997 period with 1986 price structure), more weight was
> given to the services sector, thus attempting to correct for operations
> previously hidden in the "second" economy. In the MECON www there is a
> complete dataset of the new accounts, and an incredibly poor explanation
> of the methodolical changes introduced.  I do not know of any publication
> --officcial or not-- extensively analyzing the rationale or methodology
> for this redefinition.  I think, however, that the new accounts are more
> realistic than the previous ones (i think they used the 1970 price
> structure), in that they are more likely to reflect the real economic
> activity of the country (see an edited book called "the second economy of
> Zaire" for a good [political more than economic] analysis of the effects
> of underestimating GDP on the economic policy and performance of a
> developing country--would't it be nice to have something similar to
> that for the Argentine case?)

Well, I've been doing some research and I found a whole book that tried to
explain the new estimations of Argentina GDP.
The main differences are:
a) production subestimation (33%)
b) high growth in three years (25%)
c) US inflation between 1986 and 1992 (25%)
d) drop in the exchange rate between 1986 and 1992

In a) there was a more accurate estimation of the informal economy (not
estimated nor informed of non criminal activities), as far as I know US
estimate this by a method called reserves-sight deposits ratio (Is this
correct?).
In 1980 the GDP corrections led to more participation to the real economy
(2 percentage points more), but the evolution of the economy reverted this
initial correction.

Other problems arose in this new estimations, for example they are more
volatile tahn they used to (and we couldn't find an explanation).

>So what's your sense - is Argentina closer to Mexico or Korea in its level
>of economic "development"?

It's not an easy question to answer. As you know, growth it's not the same
as development. For example, Argentina and Mexico are quite similar form
macroeconomic point of view (this was shown in the Tequila crisis), the
foreign investors felt that we were "too" similar and ran away from the two
countries!! The advantage that Mexico has is that it's US neighbour and
this made a difference in the crisis. In perspective, what do you think it
would have happened if the crisis in 1994-95 was not a "Tequila" crisis but
a "Tango"crisis.

Lety
asecon@xxxxxxxxxxxxxx