Argentina is one of the world’s more regulated countries (although less so now than it was a few years ago), and has been for generations. Over those generations, Argentina had one of the world’s slowest economic growth rates, often experiencing recessions. Recently, Argentina has deregulated a fair amount, and seen some economic growth as a result. But Argentina remains a relatively complicated and burdensome place to do business, which reduces its rate of economic growth. Argentina’s president, who strongly supports deregulation, was previously not able to get the country’s congress to approve deregulation in some areas, because his party controlled only a minority of seats in Congress.
But now, Argentina’s government is taking bigger steps to deregulate, reports The Doomslayer:
- Argentina’s Senate has approved a major labor reform bill that loosens rules around hiring and firing and curbs union power. The bill still has to pass through the lower house, but the Senate—where President Milei’s party, La Libertad Avanza, holds a smaller share of seats—was the larger hurdle. As policy analyst Marcos Falcone recently discussed on our podcast, labor reform is a crucial step toward fixing the Argentine economy:
Argentina also has a very high degree of informality in its labor market because it’s very expensive to hire employees legally, and it can be even more expensive to let them go because of litigation. Businesses, particularly small and medium enterprises, are constantly trying to avoid litigation because they know, due to the way that the judicial system is set up, if they face a lawsuit by a former employee, they’re going to lose. This needs to stop, and the Milei administration knows this and is going to push for labor reform.
Three years ago, Argentina was in a recession, and experiencing hyperinflation. But in 2023, it elected Javier Milei as its president. Milei got rid of lots of government red tape and fired many bureaucrats. Due to Milei’s policies, Argentina’s inflation rate fell from 25% per month to less than 3% per month. Now, Argentina’s economy is growing again, and poverty is falling, even as Argentina slashes tariffs, eliminates trade barriers, and balances its budget, which used to have a large budget deficit. As The Doomslayer explained last year:
Javier Milei’s Argentina is rapidly becoming the exemplar of prudent economic policy in the Americas. According to Argentina’s national statistics agency, the poverty rate in the second half of 2024 was 38.1 percent—a 3.6 percentage point drop from when Milei took office in December 2023. Monthly inflation is now hovering between 2 and 3 percent, down from 25 percent in late 2023.
It’s worth noting that part of Milei’s strategy involves unilateral trade liberalization. Since taking office, he loosened import limits, slashed tariffs, and scrapped customs regulations, giving Argentinian consumers access to a bounty of cheap foreign goods and forcing domestic producers to become more competitive.
Argentine exports have risen substantially.
Before President Milei was elected in 2023, Argentina experienced decades of decline. Argentina had once been one of the richest nations on earth, richer than Canada, Australia, and all but a handful of countries. But by the time Milei was elected, Argentina had fallen behind around 70 countries, including countries that were once much poorer than it, such as Turkey, South Korea, and Panama. Arbitrary regulations and red tape did much to cause its economic decline.
But after being elected, Milei repealed many of his country’s regulations. Argentina has one of the biggest red-tape burdens on earth, although Brazil has a more complicated tax code, and France has a higher tax burden. At the time Milei was elected, Argentina ranked 23rd worst out of 165 countries in terms of its regulatory burden, imposing more red tape than many European countries with much better health, safety, and labor conditions.
In December 2023, Milei issued a decree that repealed or reformed 300 laws to begin reversing “decades of failure, impoverishment, decadence, and anomie.” Milei had his work cut out for him — Argentina ranked very low in economic freedom — 158th out of 165 countries ranked, in one study, and 144th in another. Now, Argentina ranks about 124th, a substantial improvement, although still below average.
When Milei took office, Argentina had almost the highest inflation rate in the world. It still has a relatively high inflation rate, but today, its inflation rate is much lower than in some other countries, like Venezuela, Sudan, South Sudan, and Zimbabwe.
