Fiscal Freedom
Country Hong Kong
Change from 2007
Overall Score
World Rank 1 5 108 126 157
90.3
-0.3
88.2
95.0
92.8
93.1
87.2
90
90
90.0
83.0
93.3
Unite d States
80.6
-0.3
2009
1CIA
23.41
0
2Fields,
World Factbook, 2009 Sanchez-Puerta
2005
Poverty and Inequality
Explaining the crisis
•Argentina’s National Debt was 135 Billion USD and growing.
Executive Summary of the Index of Economic Freedom
The 2009 Heritage Foundation Index of Economic Freedom
Index of Economic Freedom World Rankings Executive
•Argentina had no choice but to end its 10 year long currerrency to float
•Since investors assigned a risk premium with the Peso, a swift devaluation occurred. Foreign goods were now more expensive, and domestic prices skyrocketed again.
• Solutions:
– return the pension funds to the private organization. – improve the management of the banks and financial system.
Problem and solutions for the Monetary Policy
History through Data
. Distribucion del ingreso, pobreza, y crecimiento en la Argentina. Argentina Ministry of Labor,
Poverty and Inequality
History through Data
91.7
86.8
68.3
59.8
83.7
80
80
90.0
73.0
92.3
Arge ntina
55.1
0.1
63.2
69.6
70.5
80.9
65.0
50
40
30.0
29.0
52.9
China
52.8
1.0
50.0
70.2
66.4
89.7
76.5
30
30
20.0
33.0
62.4
North, korea
3.0
1
0 0 14.7 -7.4 -5.8 -11.6 -3.5
The Official Poverty Line in Argentina is derived from a subsistence basket with a value greater than the 2USD poverty line.2
Population Below Poverty Line (%)
Year 2000 Population below poverty line (%) 361 Change from Prev. Year N/A
2001
2002 2003 2004 2005 2006 2007 2008
371
371 371 51.71 44.31 38.51 26.91 23.41
• Problems: – Argentina became too concerned with inflation fighting, • It gave up export based employment when it adopted the currency board.
•
Economist Intellegence Unit 2008
Poverty and Inequality
History through Data
Gini Coefficient Change fr. prvs. Year N/A -0.01
Under the help of Domingo Cavallo in 1991, Argentina adopted a currency board in order to flight off hyperinflation. Argentina’s currency was largely overvalued, and originally, people from middle class backgrounds enjoyed increased quality of life from increased imports. It also engaged in many free market policies, trade liberalization and decreased regulation. However, later on in the decade, Argentina’s middle class suffered from a decrease in international competitiveness. Hence, inequality increased substantially.
2009
1CIA
2Fields,
World Factbook, 2009 Sanchez-Puerta
2005
Planning Verse Market
• Index of Economic Freedom The Index of Economic Freedom is “a series of 10 economic measurements created by the Heritage Foundation and Wall Street Journal. Its stated objective is to measure the degree of economic freedom in the world's nations. ”
2005
2006 2007 2008
44.31
38.51 26.91 23.41 23.41
-7.4
-5.8 -11.6 -3.5 0
The Official Poverty Line in Argentina is derived from a subsistence basket with a value greater than the 2USD poverty line.2
0
0
0
0
0
0
10
0
10.0
10.0
0
Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2008
Examples for state-owned enterprises and price fixing (A solution to some of Cavallo’s problems)
Poverty and Inequality
History through Data
Population Below Poverty Line (%)
Year
2000 2001 2002 2003 2004 Population below poverty line (%) 361 371 371 371 51.71 Change from Prev. Year N/A 1 0 0 14.7
Labor Freedom Freedom from Corruptio n Property Rights Business Freedom Monetary Freedom Governm ent Size
Financial Freedom
Investme nt Freedom
Trade Freedom
Argentina
Poverty, Equality, Government intervention in markets and Macroeconomics. 1989- Present
Problems, Successes and Suggestions
Brief Facts
• Considered a developing country with developed sectors that are both regionally and globally competitive in trade markets. . – Finance, – Manufacturing – Agriculture According to the UNDP, Argentina was listed as ‘High’ on the Human Development Index in 2007. – 97% adult literacy, Compulsary Education through 17, Free University Education. – Low Infant Mortality Rate （69/1000) and High Life Expectancy (76) – GINI coefficient of 49 (Very High)!