ARGENTINA

A rgentina’s economic freedom score is 52.2, making its economy the

148th freest in the 2019 Index. Its overall score has decreased by 0.1
point, with plunging scores for fiscal health and government spending
outweighing improvements in monetary freedom and property rights.
Argentina is ranked 26th among 32 countries in the Americas region,
and its overall score remains below the regional and world averages.

Notwithstanding an ongoing crisis of confidence in the economy, Pres-

ident Mauricio Macri is sticking with his government’s politically risky
austerity plan of budget cuts and tax increases to close the fiscal gap.
These unpopular measures include the continued unwinding of costly
WORLD RANK: REGIONAL RANK: energy subsidies, which caused prices of regulated goods and services

148 26
to rise and spiked inflation. If Macri can succeed in restoring fiscal health,
he will be well positioned to improve government integrity and make
the many other institutional and structural reforms that are needed to
ECONOMIC FREEDOM STATUS: restore Argentina to its former levels of economic freedom.
MOSTLY UNFREE

ECONOMIC FREEDOM SCORE

52.2 ( DOWN 0.1 POINT )

0 50 60 70 80 100

REGIONAL AVERAGE
(AMERICAS REGION) 59.6 60.8 WORLD
AVERAGE

RELATIVE STRENGTHS: HISTORICAL INDEX SCORE CONCERNS:

Trade Freedom and Tax Burden CHANGE (SINCE 1995): Fiscal Health and
–15.8 Government Integrity

FREEDOM TREND QUICK FACTS

60

POPULATION: UNEMPLOYMENT:
52.3 52.2
50.4 44.1 million 8.5%
50
GDP (PPP): INFLATION (CPI):
44.1 43.8 $920.2 billion 25.7%
2.9% growth in 2017
FDI INFLOW:
40
5-year compound
$11.9 billion
annual growth 0.7%
$20,876 per capita PUBLIC DEBT:
52.6% of GDP
30

2015 2016 2017 2018 2019 2017 data unless otherwise noted. Data compiled as of September 2018

BACKGROUND: Argentina is South America’s second-largest country. Once one of the world’s wealthiest
nations, it has vast agricultural and mineral resources and a highly educated population, but it also has
a long history of political and economic instability. Argentina’s investment profile declined during the presi-
dencies of Cristina Fernández de Kirchner and her late husband Néstor. Their legacy of statist protection-
ism and other Peronist policies isolated the country and led to economic stagnation. Center-right President
Mauricio Macri began his four-year term in 2015 and has implemented a reformist agenda. Faced with an
opposition-controlled Congress, weaker commodity prices, and a downturn in foreign investment, Macri
was forced to seek a highly unpopular $50 billion IMF bailout in 2018.

84 2019 Index of Economic Freedom

 WORLD AVERAGE | ONE-YEAR SCORE CHANGE IN PARENTHESES

12 ECONOMIC FREEDOMS | ARGENTINA

RULE OF LAW GOVERNMENT SIZE
(+7.0) (No change) (+0.9) (+3.6) (–6.1) (–19.6)

100 100

80 80

70 70

60 60

50 50

47.8 44.5 33.5 69.3 49.5 33.0

0 0
Property Judicial Government Tax Government Fiscal
Rights Effectiveness Integrity Burden Spending Health

Secured interests in real property are recognized
and enforced. The government has taken signifi-
cant steps to improve the protection of intellectual
property rights, but deficiencies persist within the
patent and regulatory data protection regimes. Pres-
ident Macri has issued executive orders to improve
judicial transparency, but the opposition-controlled
Congress has blocked his comprehensive reforms to
strengthen bureaucracy and reduce corruption.
The top individual income tax rate is 35 percent,
and the top corporate tax rate is 30 percent. Other
taxes include value-added, wealth, and financial
transactions taxes. The overall tax burden equals
30.8 percent of total domestic income. Over the past
three years, government spending has amounted
to 41.0 percent of the country’s output (GDP), and
budget deficits have averaged 6.2 percent of GDP.
Public debt is equivalent to 52.6 percent of GDP.

REGULATORY EFFICIENCY OPEN MARKETS

(+0.2) (+3.6) (+8.9) (–0.3) (No change) (No change)

100 100

80 80

70 70

60 60

50 50

56.4 46.9 60.2 70.0 55.0 60.0

0 0
Business Labor Monetary Trade Investment Financial
Freedom Freedom Freedom Freedom Freedom Freedom

The Macri government has pursued a range of
measures to improve the efficiency of business reg-
ulation. The president vetoed a labor law that would
have kept firms from dismissing workers, arguing
that it would depress the employment outlook by
deterring investment. The government is removing
price controls on fuel, oil, and natural gas and plans
to cut energy and transportation subsidies in an
effort to lower the fiscal deficit.
The combined value of exports and imports is equal
to 25.0 percent of GDP. The average applied tariff
rate is 7.5 percent. As of June 30, 2018, according
to the WTO, Argentina had 126 nontariff measures
in force. Openness to foreign investment is below
average. The financial sector remains subject to gov-
ernment interference, but the presence of foreign
banks has increased, and their assets have risen to
approximately 30 percent of the total.

The Heritage Foundation | heritage.org/Index 85