Socialeconomy entails existing relationships between both social and economicbehaviors. Therefore, it tends to analyze ways in which social morals, ethicsand particular humanitarian philosophies influence consumer behaviors. In fact, it is crucial when it comes toexamining specific activities that have a relation with economics amongst onespecific business and thus exposing the information to the general communityabout volunteer sectors and also social enterprises (Schneider, Kallis & Martinez-Alier, 2010). Development of social economy results fromthe need of having new solutions that would effectively solve particular issuesin the city and also to ensure satisfaction of the requirements that have beenignored in one way or another by not only public sector but also private once.SocialEconomy and Human RelationshipsWiththe collapse of the economy of Argentina in 2001, the state finds itself in acondition where factories have been abandoned which in turn increased inunemployment individuals.
Whileconsidering years in the 1990s, Argentina outperformed most of the countries inLatin America regarding growth and economic development. However, with thepegging of its hard currency to US Dollar, high foreign debt and alsopro-cyclical fiscal policies, Argentina was left helpless regarding dealingwith some different economic shocks. It resulted in an outbreak of severecurrency, dept, sovereign and most commonly known banking crisis.
Eventually,there was a significant impact on both economic and also social impact. Withthe negativity of the commercial growth form 1998, the economy can be relatedto a contract of eleven percent by the year 2002. Decreases in the grossdomestic product rate will effectively result in a rise in the unemploymentrate. It would significantly contribute to an increase in the number ofindividuals living below the national poverty level, in this case, Argentina.
But when looking further, the collapse of the economy, in this case, did notonly results in an increase in unemployment individuals but also affected othergovernment-related activities and increase in riot cases. Generally speaking,there was a decline of twenty-eight percent in the economy of Argentina from1998-2002.TheInternational Monetary Fund (IMF) is responsible for the provision of financialsupport. But if in any case, a particular country fails to meet therequirements and conditions between them, the organization may be forced to cutoff any existing support. A similar situation happened to Argentina after itsfailure to meet their conditions that were to rescue the program from the year2001 on September.
The problem, in thiscase, is not only to the government but also to the societies. For the instanceof Argentina, there was an increase in social unrest due to the IMF cut off. Itmeant that Argentina had lost its last sources that they were able to accessfinancial help and for foreign capital. Like most social unrest, lives can belost, 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 thepresident and the mister of an economy after those events.FiscalMismanagementFiscalpolicies 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 regimethat is fixed, there is a need to follow a counter-cyclical fiscal policy. Butwhen considering Argentina, its monetary policy was Pro-cyclical during thattime.
By then persistent, De La Rua, aimed at tackling the resultant budgetdeficit that was of 2.5% of the total gross domestic product and also ensuresthat he fought against corruption that was enduring in the country. The aim ofreducing the deficit is mainly to restore confidence regarding governmentfinances, lower interest rate thus ensuring they significantly bring back theireconomic growth (Sandleris & Wright, 2014).But the effects of this president were however opposite as increase in theirimposed taxes results to reduced demand for a national need of the people thusencouraged corruption. With these issues, there was no reduction of the fiscaldeficit. In fact, in a case like this one, it would be difficult to implementany austerity measure on regional levels if the government is not able tocontrol expenditure related to the local governments. Lossof Economic CompetitivenessUsually,different states will depend on each other as trading partners.
Therefore, anyeconomic decline or improvement in the economy amongst one of the dependentpartnered will significantly affect the other states. In this regard, anoutbreak of currency crisis in Asia Brazil and also Russia increased byborrowing money costs for markets that were significantly emerging. Furthermore,a considerable change in Brazil had an enormous impact on the economy ofArgentina as Brazil was one of Argentina’s trading partners.AlthoughArgentina was able to maintain its peg significantly, it was also not able torespond the increasing issues regarding its economy. The reason, in this case,is that the country counts not be able to effectively apply either the exchangerate policy or the monetary policy in either way. In fact, at this time, the USDollar had appreciated to its highest level in fifteen years which led to thestraight-jacketing of the currency peg (Sandleris& Wright, 2014).
Other than that, lack of exchange rate supportmainly from nominal price and wage flexibility also contributed to reducingways in which Argentina could deal with currency overvaluation and alsodecrease regarding the credibility of regimes with rates that are fixed.Effectson the Banking SectorThebanking sector plays an essential role in the economy of any states. ForArgentina, the banking sector is ranked second. Contraction of the economywould significantly result in negative performances and outcomes of the band.And as the second-ranked in Argentina; this is a big problem (Schneider, Kallis & Martinez-Alier, 2010).
As a result, there was a rise in non-performing loans. It resulted in the vastsuffering of most banks in Argentina including their central bank. A surge innon-performing loans can be as a result of some factors. These factors include;• Bankruptcy about a vast number of banks’debtors• The conversion in relation the conversionof currencies and the rate of converting them • The USD 93bn default on 23rd December ofthe year 2001Bythe end of 2001, a massive number of individuals started to withdraw large sumsof dollars, particularly from their bank accounts.
They proffered turning thismoney from pesos into dollars and then sending them abroad. In this regard,these banks were forced to run law thus affecting the economy negatively. Thiscase forced the government to enact a particular measure known as the Corralitowhich allowed for only minor withdrawal of cash that was original $250 for aweek.
ConclusionGenerallyspeaking, the problem of the economic crisis in Argentina was as a result of anundesirable confluence of some economic events in the country. These factorsincluded a hard currency peg, fiscal policies that were not appropriate,currency overvaluation, rigidities regarding the economy, external shock andalso vast amounts of foreign currencies borrowed that were followed by negativeinfluence like a sudden stop in capital inflow. All these factors together witha number of a both social and political resulted in the crisis in Argentina tobe 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 profoundreform to be implemented. This documentary represents relationship andcontributing factors that can either contribute to the success or failure ofthe economy depending on how different aspects are conducted not only by thegovernment but also the society in general. In this regard, both the people and the government have a responsibilityof ensuring they maintain a positive economic development for their countrythrough considering particular aspects that will be of help and value to theeconomy. The economy means a lot to any nation.
Therefore, failure to maintainpositive growth about the economy will affect almost every part f citizens’ andpolitical relationship. There is a need to consider each aspect thatcontributes to the successful performance of economical-related activities inthe country.