1 FROM NEOLIBERALISM TO NEO-DEVELOPMENTALISM? THE POLITICAL ECONOMY OF POST-CRISIS ARGENTINA, 2002-2007 A Dissertation Submitted for the Degree of Doctor of Philosophy University of Sheffield Hilal Gezmis Department of Politics Faculty of Social Sciences March 2015 2 Contents ABSTRACT ..................................................................................................................................... 4 ACKNOWLEDGEMENTS .................................................................................................................. 5 Abbreviations ................................................................................................................................ 6 List of Tables ................................................................................................................................. 9 CHAPTER 1. INTRODUCTION ......................................................................................................... 11 1.1. Problematizing the Approaches to the New Left ........................................................................ 12 1.2. Towards a “New” Approach to Neo-developmentalism ............................................................. 16 1.3. Argument and Contributions of the thesis ................................................................................. 19 1.3.1. Financial Regulation............................................................................................................. 23 1.3.2. Trade Policy ........................................................................................................................ 24 1.3.3. Investment Policy ................................................................................................................ 24 1.3.4. Labour Policy ...................................................................................................................... 25 1.4. Research Methods ...................................................................................................................... 26 1.4.1. Case Study Selection ........................................................................................................... 26 1.4.2. Limitations and Difficulties .................................................................................................. 29 1.5. An Outline of the Thesis: ............................................................................................................ 29 CHAPTER 2. CONCEPTUAL FRAMEWORK: TOWARDS A “NEW” APPROACH TO NEO-DEVELOPMENTALISM .................................................................................................................................................. 33 2.1 From Developmentalism to Neoliberalism in Latin America ....................................................... 34 2.2. Approaches to the New Left ....................................................................................................... 43 2.3. Compatibility of Neoliberalism and Developmentalism ............................................................. 64 2.4. Conclusion .................................................................................................................................. 69 CHAPTER 3. A BACKGROUND TO THE ARGENTINE POLITICAL ECONOMY: FROM ISI TO THE FINANCIAL CRISIS OF 2001-2002 ................................................................................................................... 70 3.1. Beginnings of ISI: The First Phase of ISI under Peronism (1946-1955) ....................................... 70 3.2. Argentina`s Neoliberal Transformation ...................................................................................... 77 3.3. Lessons from the Financial Crisis of 2001/2002 ......................................................................... 85 3.4. Conclusion .................................................................................................................................. 88 CHAPTER 4. FINANCIAL POLICY RESPONSES BETWEEN 2002 AND 2007 ............................................. 90 4.1. Convertibility Plan and Financial Deregulation in Argentina (1989-2001) .................................. 91 4.2. Post-crisis Financial Regulation Policies (2002-2007) ................................................................. 98 4.2.1. Foreign Exchange Intervention .......................................................................................... 100 4.2.2. Acting as a Lender of Last Resort ....................................................................................... 104 4.2.3. Debt Management ............................................................................................................ 107 4.2.4. Constraints of Financial Policy ........................................................................................... 109 3 4.3. Conclusion ................................................................................................................................ 114 CHAPTER 5. TRADE POLICY RESPONSES BETWEEN 2002 AND 2007 ................................................. 116 5.1. Trade Policy and Neoliberal Transformation in Argentina (1989-2001) ................................... 116 5.2. Trade Policy Responses (2002-2007) ........................................................................................ 127 5.2.1. Trade Barriers .................................................................................................................... 128 5.2.2. Argentina-MERCOSUR Trade Relations ............................................................................. 140 5.2.3. Multilateral and Preferential Negotiations ........................................................................ 148 5.2.4. Argentina-China Trade Relations: ...................................................................................... 151 5.3. Conclusion ................................................................................................................................ 153 CHAPTER 6. INVESTMENT POLICY RESPONSES BETWEEN 2002 AND 2007 ....................................... 156 6.1. Investment Policy and Neoliberalism in Argentina (1989-2001) .............................................. 156 6. 2. Investment Policy Responses (2002-2007) .............................................................................. 162 6.2.1. Regulation in Strategic Industries ...................................................................................... 163 6.2.2. Industrial Incentives and Capital controls .......................................................................... 169 6.3. Conclusion ................................................................................................................................ 175 CHAPTER 7. LABOUR POLICY RESPONSES BETWEEN 2002 AND 2007 .............................................. 177 7.1. Neoliberalism and Labour policy in Argentina (1989-2001) ..................................................... 177 7.2. Labour Policy Responses (2002-2007) ................................................................................. 183 7.2. 1. Employment Creation ....................................................................................................... 184 7.2.3. Re-regulation of Labour Markets ....................................................................................... 190 7.2.4. Constraints of Labour Policies ........................................................................................... 194 7.3. Conclusion ................................................................................................................................ 202 CHAPTER 8. CONCLUSION .......................................................................................................... 204 8.1. Problematizing the approaches to the New Left: Towards a “New” approach to Neo- developmentalism ........................................................................................................................... 205 8.2. Understanding the Financial Crisis of 2001-2002 ..................................................................... 211 8.3. From Neoliberalism to Neo-developmentalism in Argentina (2002-2007) .............................. 214 8.4. Moving the Debate Forward .................................................................................................... 224 8.5. Conclusions............................................................................................................................... 225 BIBLIOGRAPHY .......................................................................................................................... 227 Newspaper clippings ....................................................................................................................... 256 Websites .......................................................................................................................................... 264 Appendix List of Interviewees ..................................................................................................... 266 4 ABSTRACT In this thesis, I explore the policy responses to the financial crisis of 2001/2002 in Argentina and its implications for the Argentine political economy between 2002 and 2007. Precisely, I examine the extent and nature of the shift from neoliberalism to neo- developmentalism in Argentina between 2002 and 2007. Scholars who observed the rise of the New Left governments in Latin America argued