SISHMUN RESEARCH
COMMITTEE: ECOFIN
COUNTRY: ARGENTINA
AGENDA: GLOBAL PARTNERSHIPS OF DEVELOPED
ECONOMIES ACTING AS A THREAT TO A DEVELOPING
OR UNDERDEVELOPED ECONOMY.
POINTS:
GENERAL ->
A developed economy means an economy (country)
with a high level of economic activity characterized
by high per capita income or per capita gross
domestic product (GDP), high level of
industrialization, developed infrastructure,
technological advancement, and a relatively high
rank in human development, health and education.
A developing economy defines a country with a low
human development index, less growth, poor per
capita income, and more inclined toward
agriculture-based operations rather than
industrialization and business.
An underdeveloped economy defines a country
which is characterized by the widespread poverty,
the low economic performances of the economy as
compared to advanced economies and under
utilization of production potential.
Partnerships, often called "strategic partnerships,"
help build relationships between nations or
organizations like militaries.
Global Partnerships supports the practical
implementation of effective development co-
operation principles, it promotes mutual
accountability, and works to sustain political
momentum for more effective co-operation and
partnerships.
Global partnerships have always been looked at as a
path towards world development.
This is because the literature on business
partnerships and networking has tended to
concentrate on developed countries, and this is for a
simple reason - their firms have dominated world
partnering records, at least as currently accounted
for.
Developed economic countries that have much to
offer, often choose not to partner with developing
and underdeveloped economic countries, instead
partner with other developed economic countries.
This can be looked at as a form of conspiracy where
two developed countries form partnerships to help
each other to remain powerful, while the developing
and underdeveloped countries are not able to
improve their economic situation due to lack of
resources and help.
When it comes to trade, the developed countries
prioritize their trade connections with developed
countries and do not give much attention to the
developing and under developing countries.
During the Covid-19 pandemic - The U.S., Canada
and U.K, some of the high-income countries, had
blocked a patent-waiver proposal designed to boost
the global production of Covid-19 vaccines.
The landmark proposal, which was jointly submitted
by India and South Africa in October, had been
backed by more than 100 mostly developing
countries. It aimed to facilitate the manufacture of
treatments locally and boost the global vaccination
campaign. But even after six months of this incident,
the proposal had continued to be stonewalled by a
small number of governments — including the U.S.,
EU, U.K., Switzerland, Japan, Norway, Canada,
Australia and Brazil.
Developing and underdeveloped countries are
behind in technological progress due to the lack of
access to advanced technology. [USED]
Instead of partnering with developing and
underdeveloped countries who have less technology
due to lack of resource and lack of money to buy
resources, the Developed Economies partner with
each other and this acts as a threat as the
developing and underdeveloped economies fall
behind and are not able to catch up with the trends
in the market and be on par with other countries'
technological advancements and thus make them
low on economy level.
Technology helps the governments to access natural
resources and use them in the most effective ways
possible to benefit both the businesses in the
Country and the economy. Thanks to the increased
efficiency of labor with the ever-improving state of
technology, businesses can increase total output,
which in turn leads to higher profits and greater
economic development of the country.
It will help economies in developing and
underdeveloped country to reduce the costs of
production, encourage the growth of new business
and advance communication, increase income, and
on the whole improves the standard of living.
Therefore, it is seen that developing countries have
difficulties catching up with the developed countries
because of the emergence of the developed
countries. They hinder the growth and development
of smaller countries because they block the potential
and the ability to maximize.
Developed economic countries are powerful and
have support from other developed countries, these
acts as threat to the developing and underdeveloped
economic countries during warfare, procurement of
defense goods and funding.
Only Nine countries possess nuclear weapons – the
United States, Russia, France, China, the United
Kingdom, Pakistan, India, Israel, and North Korea.
In this majority are developed countries that possess
nuclear power with one or two developing and
underdeveloped countries in the list. But this again
shows where the concentration of power is - with
the developed countries.
Global partnerships between developed countries
act as a hindrance for the developing and
underdeveloped economies to get proper funding.
This is mainly because developed countries are not
willing to give the necessary equipment and money
required for it.
Developed countries back each other and have a lot
of funding stability which acts a main reason to why
they are very powerful and have access to nuclear
weapons, while developing and underdeveloped
economic countries have a lot of funding instability.
Developed countries back each other as, in times of
hard times for them, they can ask the help of the
other developed country to give them military
support or anything which they don’t have.
Whereas, developing and underdeveloped countries
don’t have the resources which the developed
countries want during their hard times, because of
which, the developed countries always back
themselves.
The industrialized countries are for the most part
more concerned with their own problems. Their
readiness to provide more extensive aid is limited.
Majority of the global organizations are majorly
supported by the developed countries and that acts
as threat as they end up focusing more on the
further development of developed economies more
than the development of the developing and
underdeveloped economies.
Developing and Underdeveloped economies have
also created partnerships like BRICS, with each other
but they still do require help from developed
economic countries.
BRICS is an acronym for the powerful grouping of the
world's leading emerging market economies, namely
Brazil, Russia, India, China and South Africa. The
BRICS mechanism aims to promote peace, security,
development and cooperation.
Another threat that many countries face due to
Global partnerships is Debt Sustainability. Total
external and Government debt in developing
countries as proportions of GDP increased slightly in
2012, to 22.3 per cent and 45.9 per cent,
respectively. External debt service increased from
24.9 per cent of exports. In 2011 to 27.1 percent in
2012.
Currently, there is the ongoing Sri Lankan economic
crisis, wherein it is unable to repay its sovereign debt
to major countries around the world that forced its
economy into a recession. While foreign debt was
about 42% of the GDP in 2019, it rose to 119% of its
GDP in 2021. The overwhelming rates of inflation in
the country were fueled by the Covid Pandemic and
worsened the already poor foreign debt situation.
The inability to adequately resolve excessive
sovereign debt is a threat to global financial stability,
and there is a need to explore the establishment of
an international mechanism for early, cooperative
and comprehensive resolution of sovereign debt
crises.
ARGENTINA ->
Argentina is a developing country. Its economy is the
second-largest national economy in South America,
behind Brazil. [USED]
Argentina benefits from rich natural resources, a
highly literate population, an export-
oriented agricultural sector, and a diversified
industrial base.
Argentina's economic performance has historically
been very uneven, with high economic growth
alternating with severe recessions, particularly since
the late twentieth century. Income misdistribution
and poverty have increased since this period. Early in
the twentieth century, Argentina had one of the ten
highest per capita GDP levels globally. It was on par
with Canada and Australia, and had surpassed both
France and Italy. -> ([Link] -
[Link]
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par-del-contado-con-liquidacion/)
The Argentine Great Depression was an economic
recession that took place from 1998 to 2002. It was
triggered by the currency crises in East Asia and Russia
which sunk foreign investors' confidence to invest in
developing countries. [USED]
To recover from the Great Depression, the
government encouraged exports and allowed
excessive credit for businesses. With the devalued
Peso, Argentine exports became more competitive on
the market and imports were discouraged in the
country. The government also amended the tax
blunder and allocated funds for social welfare, slowly
gaining back people's trust. It also took steps to
stabilize the Peso. [USED]
The World War 2 led to reduced availability of
imports and higher prices for Argentine exports that
combined to create a US$1.6 billion cumulative
surplus, a third of which was blocked as
inconvertible deposits in the Bank of England by
the Roca–Runciman Treaty.
However, the economy declined during the military
dictatorship from 1976 to 1983 and for some time
afterward.
External economic shocks and a dependency on
volatile short-term capital and debt to maintain the
overvalued fixed exchange rate diluted benefits,
causing erratic economic growth from 1995 and the
eventual collapse in 2001. That year and the next,
the economy suffered its sharpest decline since
1930; by 2002, Argentina had defaulted on its debt.
Its GDP had declined by nearly 20% in four years,
unemployment reached 25%, and the peso had
depreciated 70% after being devalued and floated.
The pandemic caused by the spread of COVID-19,
around the world, impacted many countries during
the first half of 2020. The main impacts were not
only of a sanitary, social, and psychological type but
also economic. The current crisis has started in
China, where the virus originated, and spread across
the Asian region, the United States, Europe, and
other developed and developing economies. The
economic crisis that followed was due to the need to
restrict the physical contact between people to
reduce the spread of the virus. [USED]
In many economies, a large part of manufacturing
systems, commercialization, and distribution of
goods and services were suspended and/or
readapted, affecting at least, in the medium term,
the living arrangements of contemporary societies.
Although it is premature to evaluate the effects of
this pandemic in the long term, we could observe
that some countries are returning to everyday life,
trying to recover (even with protocols) economic
activity and social development.
By December 2020, Argentina’s economic activity
index (a monthly proxy of GDP) stood at 2.9% below
pre-crisis levels, and activities representing 70% of
the index had already reached pre-pandemic output.
GDP fell 9.9% in 2020. Economic activity has
recovered faster than expected, with an increase of
10.3% of GDP in 2021. The fiscal deficit was reduced
compared to 2020, mainly because of the reduction
in spending related to COVID-19 and extraordinary
revenues, such as those from the tax on large
fortunes, as well as higher collections from the rights
of exports, in a context of rising international
commodity prices. After the transfer of private debt
in 2020, an agreement was reached with the
International Monetary Fund in early 2022 for a new
Extended Fund Facility (EFF). With a duration of 30
months and a four-and-a-half-year grace period, this
program will allow the country to postpone its
maturities with the agency and strengthen its
reserves in the short term. [KIND OF USED]
ARGENTINA’S ALLIES AND TRADE PARTNERS:
Argentina’s top trading partners are the United
States, Brazil, and China. The United States is also
Argentina’s largest foreign investor, with more
than three hundred U.S. companies operating
there. In addition, Argentina is a member of several
regional trade groups, including the Southern
Common Market and the Latin American
Integration Association, and it is currently a
prospective member for the Organization for
Economic Cooperation and Development, a bloc of
the world’s most advanced economies.
Argentina was one of the ten wealthiest countries
per capita in the early twentieth century. However,
economists say that its overreliance on commodity
exports and unsustainable government spending
fueled frequent boom-bust cycles, resulting in
political instability and economic decline in the
decades that followed.
Argentina is a regional power in Latin America due
to the size of its economy; it is a leading trade
partner to neighboring Brazil, Chile, and Paraguay.
It is part of several long-standing regional
partnerships, including the Community of Latin
American and Caribbean States; the Organization
of Ibero-American States for Education, Science
and Culture; and the Mercosur trade bloc.
The election of Fernandez in 2019 heightened
regional tensions. In January 2020, he denounced
the recognition of Juan Guaido as Venezuela’s
interim president; several neighboring states,
including Brazil and Colombia, support Guaido’s
claim to the presidency over that of Maduro.
Fernandez later oversaw Argentina’s
withdrawal from the U.S.-supported Lima Group, a
group of twelve Latin American countries created
to restore democracy in Venezuela, the following
March. At the same time, relations with Brazil,
Chile, and Uruguay have been strained by disputes
over China’s growing role in Latin America, the
future of Mercosur, and maritime boundaries.
Argentina belongs to the Group of Fifteen (G15), a
forum for developing countries, and the Group of
Twenty (G20), which comprises twenty of the
world’s largest economies. It is also a founding
member of the United Nations, the Organization of
American States, and the World Trade
Organization. It also maintains robust relations
with major world powers, including the United
States, China, and the EU.
China and Argentina have become close trading
partners in the past two decades, and in February
2022, Argentina officially signed on to China’s Belt
and Road Initiative. In recent years, Chinese
investment in Argentina has been concentrated in
the telecommunications, agriculture, and
infrastructure sectors, and has included financing
for a nuclear power plant and a space station.
Between 2005 and 2019, Chinese investment in
Argentina totaled $30.6 billion, or nearly 40
percent of all Chinese investment in South
America. Both Chinese President Xi Jinping and
Fernandez have expressed a desire to deepen the
comprehensive China-Argentina strategic
partnership.
The Argentine-China Joint Hydropower Project will build
two dams on the Santa Cruz River in
southern Argentina: Condor Cliff and La Barrancosa.
The China Gezhouba Group Corporation (CGGC) will be
responsible for the project, which is expected to provide
5,000 direct and 15,000 indirect jobs in the country. It will
generate 4,950 MWh of electricity, reducing the
dependence on fossil fuels.
Argentina will also build a Hualong One nuclear plant that
is expected to commence construction in 2022 and be fully
operational by 2028 at a cost of US$8 billion, of which 85%
financing is provided by Chinese banks. The nuclear deal
agreement with Argentina is one of China's first successful
bids in exporting its domestic Nuclear power technology
abroad.
Argentina remains a major non–North Atlantic
Treaty Organization (NATO) ally of the United
States, but experts say that bilateral relations
seesaw depending on both countries’ political
leadership.
Cut off trade supply from USA, Brazil and China can
cause severe lack of resource problems in Argentina
and affects the overall economy of the country.
RESO ->
The Global Goals can only be met if we all work
together. International investments and support
are needed to ensure innovative technological
development, fair trade and market access,
especially for developing countries. To build a
better world, we need to be supportive,
empathetic, inventive, passionate, and above
all, cooperative.
Developed countries who have much to offer,
should assist developing countries in attaining
long-term debt sustainability through
coordinated policies aimed at fostering debt
financing, debt relief and debt restructuring, as
appropriate, and address the external debt of
highly indebted poor countries to reduce debt
distress.