Social economy entails existing relationships between both social and economic behaviors. Therefore, it tends to analyze ways in which social morals, ethics and particular humanitarian philosophies influence consumer behaviors. In fact, it is crucial when it comes to examining specific activities that have a relation with economics amongst one specific business and thus exposing the information to the general community about volunteer sectors and also social enterprises (Schneider, Kallis & Martinez-Alier, 2010).
Development of social economy results from the need of having new solutions that would effectively solve particular issues in the city and also to ensure satisfaction of the requirements that have been ignored in one way or another by not only public sector but also private once. Social Economy and Human Relationships With the collapse of the economy of Argentina in 2001, the state finds itself in a condition where factories have been abandoned which in turn increased in unemployment individuals. While considering years in the 1990s, Argentina outperformed most of the countries in Latin America regarding growth and economic development. However, with the pegging of its hard currency to US Dollar, highforeign debt and also pro-cyclical fiscal policies, Argentina was left helpless regarding dealing with some different economic shocks.
It resulted in an outbreak of severe currency, dept, sovereign and most commonly known banking crisis. Eventually, there was a significant impact on both economic and also social impact. With the negativity of the commercial growth form 1998, the economy can be related to a contract of eleven percent by the year 2002. Decreases in the gross domestic product rate will effectively result in a rise in the unemployment rate.
It would significantly contribute to an increase in the number of individuals living below the national poverty level, in this case, Argentina. But when looking further, the collapse of the economy, in this case, did not only results in an increase in unemployment individuals but also affected other government-related activities and increase in riot cases. Generally speaking, there was a decline of twenty-eight percent in the economy of Argentina from 1998-2002. The International Monetary Fund (IMF) is responsible for the provision of financial support. But if in any case, a particular country fails to meet the requirements and conditions between them, the organization maybe forced to cut off any existing support.
A similar situation happened to Argentina after its failure to meet their conditions that were to rescue the program from the year 2001 on September. The problem, in this case, is not only to the government but also to the societies. For the instance of Argentina, there was an increase in social unrest due to the IMF cut off. It meant that Argentina had lost its last sources thatthey were able to access financial help and for foreign capital. Like most social unrest, lives can be lost, and injuries occur which is also another social-related problem. In fact, the problem was even more severe that it led to the resignation of the president and the mister of aneconomy after those events.
Fiscal Mismanagement Fiscal policies play an essential role in contributing to the economy of any country. By this, it means that for those countries that have an exchange rate regime that is fixed, there is a need to follow a counter-cyclical fiscal policy. But when considering Argentina, its monetary policy was Pro-cyclical during that time.
By then persistent, De La Rua, aimed at tackling the resultant budget deficit that was of 2.5% of the total gross domestic product and also ensures that he fought against corruption that was enduring in the country. The aim of reducing the deficit is mainly to restore confidence regarding government finances, lower interest rate thus ensuring they significantly bring back their economic growth (Sandleris & Wright, 2014). But the effects of this president were however opposite as increase in their imposed taxes results to reduced demand for a national need of the people thus encouraged corruption. With these issues, there was no reduction of the fiscal deficit. In fact, in a case like this one, it would be difficult to implement any austerity measure on regional levels if the government is not able to control expenditure related to the local governments.
Loss of EconomicCompetitiveness Usually, different states will depend on each other as trading partners. Therefore, any economic decline or improvement in the economy amongst one of the dependent partnered will significantly affect the other states. In this regard, an outbreak of currency crisis in Asia Brazil and also Russia increased by borrowing money costs for markets that were significantly emerging. Furthermore, a considerable change in Brazil had an enormous impact on the economy of Argentina as Brazil was one of Argentina’s trading partners. Although Argentina was able to maintain its peg significantly, it was also not able to respond the increasing issues regarding its economy. The reason,in this case, is that the country counts not be able to effectively apply either the exchange rate policy or the monetary policy in either way. Infact, at this time, the US Dollar had appreciated to its highest level in fifteen years which led to the straight-jacketing of the currency peg (Sandleris , 2014).
Other than that, lack of exchange rate support mainly from nominal price and wage flexibility also contributed to reducing ways in which Argentina could deal with currency overvaluation and also decrease regarding the credibility of regimes with rates that are fixed. Effects on the Banking Sector The banking sector plays an essential role in the economy of any states. For Argentina, the banking sector is ranked second. Contraction of the economy would significantly result in negative performances and outcomes of the band. And as the second-ranked in Argentina; this is a big problem (Schneider, Kallis -Alier, 2010). As a result, there was a rise in non-performing loans. It resulted in the vast suffering of most banks in Argentina including their central bank.
A surge in non-performing loanscan be as a result of some factors. These factors include; • Bankruptcy about a vast number of banks’ debtors • The conversion in relationthe conversion of currencies and the rate of converting them • The USD 93bn default on 23rd December of the year 2001 By the end of 2001, a massive number of individuals started to withdraw large sums of dollars, particularly from their bank accounts. They proffered turning this money from pesos into dollars and then sending them abroad. In this regard, these banks were forced to run law thus affecting the economy negatively. This case forced the government to enact a particular measure known as the Corralito which allowed for only minor withdrawal of cash that was original $250 for a week. Conclusion Generally speaking, the problem of the economic crisis in Argentina was as a result of an undesirable confluence of some economic events in the country.
These factors included a hard currency peg, fiscal policies that were not appropriate, currency overvaluation, rigidities regarding the economy, external shock and also vast amounts of foreign currencies borrowed that were followed by negative influence like a sudden stop in capital inflow. All these factors together with a number of a both social and political resulted in the crisis in Argentina to be one of the most severe disasters in the history of the world. Other than that, the economy of Argentina was able to recover which prevented any profound reform to be implemented. This documentary represents relationship and contributing factors that can either contribute to the success or failure of the economy depending on how different aspects are conducted not only by the government but also the society in general. In this regard, both the people and the government have a responsibility of ensuring they maintain a positive economic development for their country through considering particular aspects that will be of help and value to the economy. The economy means a lot to any nation.
Therefore, failure to maintain positive growth about the economy will affect almost every part f citizens’ and political relationship.