Milei’s Argentina: financialization and export mandate

Abstract

In the last decades, Argentina’s external constraint to economic growth, traditionally dominated by the dynamics of imports of industrial goods compared to agricultural exports, acquired a largely financial character. This article analyzes the main determinants of this new financial constraint in order to address them in the light of the economic policies implemented by the Milei government and its main aggregate results.

Milei’s government has taken the “export mandate” to its maximum expression, given its need to increase the exports based on static comparative advantages, i.e., on natural resources, as the only way to sustain the pillar of the anti-inflationary policy -exchange rate stability- and to be able to pay the foreign debt. This represents a problem in terms of the productive and social structure bias, as well as the environmental liabilities it generates. But it also represents a false solution to the macroeconomic problem of the balance of payments, because the foreign currency generated by exports will not be sufficient if the subordinated financialization of the economy is maintained and deepened. If central problems such as foreign indebtedness, the lack of savings instruments in local currency, the excessive foreignization and, above all, the scarce productive reinvestment of the surplus are not solved, there will not be enough exports to close the external gap.