Argentina

Initial situation: Argentina used to be used as an example of how a poor country could grow wealthy by embracing free market principles. Foreign companies were encouraged to invest, including, in privatised formerly state owned companies. The peso was fixed to the US dollar, so the government had to keep large reserves of US dollars. It also meant that the government needed foreign companies to invest in Argentina.

Government response to crisis As world recession increased, fewer foreign companies wanted to invest in Argentina. At the same time the dollar rose in value on world exchange markets, so this made it more expensive to buy goods made in Argentina - so people bought them elsewhere. Eventually the government decided to devalue the currency and broke the link with the dollar. At the same time, it started to limit the amount of money that people could take out of their bank accounts.

Impact upon the people Salaries and pensions haven't been paid to many people, and so instead of using money, people are turning to barter and exchange systems. There have been many public demonstrations of anger against the government's handling of the crisis. Many ministers have resigned, and since December 2000, there have been three different Presidents. This political instability adds to the difficulty of dealing with the country's problems

Country Facts Population 37 million Government: Republic Life Expectancy: 70 (men), 77 (women) Average annual income: US$7440 Exports: Food and live animals, mineral fuels, cereals, machinery.