Closed or open economy?

BUENOS AIRES HERALD - 09.06.2003 - WORD & TRADE

As editorial pages are being filled with quotes from President Nestor Kirchner’s inaugural speech in which he announced a policy of “national capitalism” and indirectly derided the US-backed open market reforms of the 1990s, the number of organizations devoted to the economic integration of Argentina into the world community is currently on the rise.

While the rejection of neo-liberal policies and the condemnation of the Washington Consensus is greatly in vogue these days, a movement has emerged to ensure the survival of the basic principles of free trade and economic integration. Leaders within this movement have grounded themselves in a realistic assessment of the current economic crisis, admitting to the errors of a one-size-fits-all menu of reforms pushed throughout Latin America over the past decade, but nevertheless committed to the fundamental tenets of export-led growth and the importance of regional and international assimilation.

This movement established its roots well before the emergence of the economic crisis that has sent the nation reeling. Until recently however, formally articulated models of integration have been housed mainly in academic institutions, creating a disconnect between a wealth of information and policy-makers. Over the past two years, non-governmental organizations (NGOs) and foundations have begun to direct their attention to the process of integration in an attempt to bridge the gap between researchers and decision-makers.

PENT, the Fundacion para la Integracion de la Argentina en el Mundo, is one of the newcomers to the field. As an example of the more moderate approach heralded by this nascent movement, the organization is taking a two-pronged approach to the process of integration. Rather than focusing solely on creating economic and political ties to the international community, PENT—derived from the Latin word for bridge—is simultaneously working toward the strengthening of domestic institutions, a tactic that falls directly in-line with President Kirchner’s recent nationalistic declarations.

Founded in July of 2002, the organization has grown to a staff of ten and holds monthly seminars and workshops on issues varying from crime and violence in Buenos Aires to moving toward a common currency through MERCOSUR.
The executive director of PENT, Jose Ghio, explained that the impetus for this approach was “the idea that the strength and longevity of bridges connecting a country to the outside world is dependent on the quality of its domestic institutions.” PENT has assessed Argentina as “a country currently characterized by fragmentation at every level,” and therefore places equal importance on integrating the nation into the global community and integrating the country internally.

Ghio openly recognizes the pitfalls of the neo-liberal reform model adopted by Latin America over the years, again stressing the consequences of a weak state in the failure of these policies. “The menu of reforms in Latin America was basically the same for all the countries of the region,” he explains, “but in some cases this menu had to be enacted with extremely low institutional capabilities, as was the situation in Argentina.”

A long-time leader in the world of economic integration in Latin America, the Institute for the Integration of Latin America and the Caribbean (INTAL) has worked with the government of Argentina for over 30 years to help the country adapt to the globalization of economies in the region. According to Juan Taccone, the director of INTAL, the past two years have seen an increase in the number of formal institutions working on the integration of Argentina. Although the process is in its early stages, Taccone believes the number of organizations devoted to this cause will continue to grow and that the discussions surrounding the issue are in the process of moving out of the marginalized trenches of the academic world.

When asked if concerned about the new government’s potential move toward a more closed nation, he replied that although the future is an unknown, he is not overly worried. Echoing this sentiment, PENT’s executive director commented that he doesn’t believe “a closed model of development is in the minds of anyone at this point.”
PENT and INTAL, together with a number of other organizations working to close the gap between the research and policy-making worlds in this field face the challenge of turning a substantial amount of inputs into tangible results. Argentina lacks the transparent and institutionalized lobbying process found in other countries, rendering this goal particularly difficult.

In order to tackle the obstacle, PENT plans to target specific individuals, NGOs, and foundations in the policy world that are beleived to wield influence on the decision-making process. The kinks of this strategy have however not been fully worked out.

“Our goal is to develop a think tank that is action-oriented,” says PENT’s executive director Ghio. “We aim to translate academic diagnoses and investigations currently underway into a concrete format and language of outputs, which can be incorporated into the public debate and the policy-making process.” Although the organization is aware of the pitfalls of traditional academic think tanks, its language has not yet changed to reflect this realization.

Ghio is optimistic, but is also well aware of the difficulties in creating and maintaining channels of communication between policy-makers and the intellectual community, and admits to the fact that there has been little success in previous attempts at bringing the two groups together.

While it is clear that leaders of the integration movement do not see a closed model of growth as a reality for Argentina in the years to come, it is yet to be seen if the nation’s new government shares this point of view. Many in the field of integration policy read President Kirchner’s inauguration speech as an overshooting mechanism to rally a country that has seen few results from neo-liberal economic reforms behind him. With a visit from US Secretary of State Colin Powell to discuss the Free Trade Association of the Americas in the works, perhaps the new president’s true colors on Argentina’s role in the international community will come to light.

Por Carol Abousleiman
Director Ejecutivo, Fundación PENT