\"The phone at the end of the World\" Planet Money, February 17, 2017 transcript
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Question
"The phone at the end of the World" Planet Money, February 17, 2017 transcript https://www.npr.org/templates/transcript/transcript.php?storyId=515850029Listen to the interview https://www.npr.org/sections/money/2017/02/17/515850029/episode-755-the-phone-at-the-end-of-the-world
Questions: 1. What was the goal of the trade policy implemented by Cristina Kirchner? Please explain the trade policy. 2. What were the consequences of this trade policy? (what was the impact on production and consumer surplus, and on national well-being?) What went wrong? Why?
Explanation / Answer
ans 1=
In Argentina the government is currently utilizing import substitution strategies to turn the South American country into one of the most protectionist economy in the world.
The import substitution strategy basically supports the replacement of imported items by wares produced locally, & so promotes the development of domestic industries & lessening the nation's import bill. President C. Kirchner promotes the strategies in order to create & protect local employment.
Disturbed by mounting imports that are affecting its trade surplus, the government has introduced a 1:1 strategy. This time, it is for the nation’s foreign trade, and not for foreign exchange. As per this regime, importers are free to bring products into Argentina, as long as they match their worth, (dollar for dollar), with exports
Ans 2= Currency controls & restrictions on trade, which C. Kirchner levied in 2011, are obstructing productivity; inflation level remains at about 25 per cent. The budgetary deficit is enlarging & foreign-exchange reserves are diminishing. Argentina can’t seek external financing till it ends its deadlock with creditors who declined a debt-restructuring strategy
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