Argentina Compared to Brazil

There was a prediction from Peter Zeihan that Japan, Argentina and Turkey would emerge as regionally dominant powers. Japan would dominate Asia, Argentina would dominate South America and Turkey would dominate the area of Europe and the Middle East near it. I will first look at Argentina versus Brazil and Argentina by itself. I will follow up with articles looking at Japan and Asia and Turkey and its region.

2014 Peter Zeihan Provided More Details of His Fall of Brazil and Rise of Argentina

His point is that he loves Argentina’s geography and if Argentina just stopped having bad political leaders then everything would be great. He dislikes Brazil’s lack of rail system. Brazil has too many steep mountains. If the World does not have cheap capital and China’s demand goes away then Brazil has problems.

I am dubious of predictions that Argentina could start doing better and that they will start breaking from their many decades-long pattern of one economic crisis after another. This is not impossible but it is unlikely.

But I have a major problem with the World goes almost Mad Max and Argentina transforms from a country constantly tripping over itself and emerges as regional superman that has more power than an economy that is currently over 3 times bigger.

This prediction was predicated on a Zeihan prediction that the US would withdraw as the global cop and the collapse of world trade and world order. The World would return to the WW2 and earlier period of relatively frequent wars.

Argentina now and Forecast

Trading Economics has a look at Argentina’s economy now. Argentina has 45% inflation and just below 10% unemployment. Argentina’s economy is suffering because Brazil had a recession from 2015-2016 where Brazil had negative 3.5% GDP each year.

Argentina will continue to struggle with lackluster growth for the next few years, as it begins to digest the challenges behind the implementation of President Macri’s economic reforms and the woes coming from its key trading partner Brazil. Structural improvements should materialize in the long run as reforms mature. In the meantime, private consumption should benefit from slowing inflation (albeit still above the administration’s 12-17 percent target for 2017) and credit expansion.

Argentina has an economic history with a lot of crisis. I do not get how Zeihan can predict that Argentina stops shooting itself in its own economic foot.

Here is a link to a comparison Argentina and Brazil’s economy. Argentina’s economy is about 3 to 3.5 times smaller than Brazil. Argentina has 32% of its people living below the poverty line to 4% in Brazil.

Argentina workforce is 18 million while Brazil has 111 million. Argentina is 6 times smaller in terms of workforce.

Zeihan predicted that Brazil would tank because of lack of world trade.

Brazil’s top trading partners in 2017 were. Brazil shipped US$217.7 billion worth of goods around the globe in 2017, down by -10% since 2010 but up by 17.5% from 2016 to 2017.

China: US$47.5 billion (21.8% of total Brazilian exports)
United States: $27 billion (12.4%)
Argentina: $17.6 billion (8.1%)
Netherlands: $9.3 billion (4.2%)
Japan: $5.3 billion (2.4%)
Chile: $5 billion (2.3%)
Germany: $4.9 billion (2.3%)
India: $4.7 billion (2.1%)
Mexico: $4.5 billion (2.1%)
Spain: $3.8 billion (1.8%)
Italy: $3.6 billion (1.6%)
Belgium: $3.2 billion (1.5%)
South Korea: $3.1 billion (1.4%)
United Kingdom: $2.8 billion (1.3%)
Russia: $2.7 billion (1.3%)

So If Argentina is doing great in the Zeihan scenario, why would they not be importing more from Brazil?
Also, if Brazil is doing terrible, say worse than the 2015-2016 recession then how would Argentina be going great? Brazil went to -3.5% GDP and Argentina went to -4% GDP.

So Zeihan is implying that with US out as global cop that somehow things would get so bad that China and Brazil and other bi-lateral relationships would not be able to figure out a way to maintain their own trade shipments? China could not get Brazilian oil? I don’t see it.

Zeihan says the USA continues to do great. Even if the US was not the global cop, the US would still protect its own trade. US Trade with Brazil is detailed at US Trade Numbers.

The top five U.S. exports to Brazil by value through September were the categories of Civilian aircraft, parts; Gasoline, other fuels; Coal, briquettes; Petroleum gases, other gaseous hydrocarbons; and Computer chips, respectively. They accounted for 37.97 percent of total exports to Brazil.

The value of the top five categories of U.S. imports from Brazil –– Oil; Value added to a returned import; Returned exports, with change; Aircraft, Spacecraft, Satellites; and Semifinished products of Iron, nonalloy steel –– accounted for 35.11 percent of all inbound shipments.

19 thoughts on “Argentina Compared to Brazil”

  1. the 4% for Brazil shows "below the extreme poverty line" which is rather like comparing slightly bad oranges with completely rotten apples.

  2. If Argentina had been taken over by the British in the early 1800s the way it almost happened during the British invasions of the Rio de la Plata, then surely Argentina would be much more powerful – economically, politically, and otherwise – than it is now in real life. It would surely have far better governance as is characteristic of countries descended from temperate-zone British colonies (with India, many parts of Africa, etc. being totally different stories). In fact, it most probably would be in a G8 along with the real-life G7 countries. Until the 1980s-1990s, it would have been more powerful than Brazil, but since then, Argentina and Brazil would be neck and neck for being the most powerful country in South America. Sort of like Japan vs. China for East Asia.

    (Bear in mind that that other Argentina isn’t wracked by instability, inflation, etc. since the mid-20th century or so the way it has been in real life. Bear in mind, also, that that Argentina a. would have been taken over by the British and then would be in the Commonwealth along the lines of Canada, Australia, New Zealand, South Africa, etc., b. would be bilingual in English and Spanish much like Canada in English and French or white South Africa in English and Afrikaans, and c. would include Uruguay as a province and the Falklands in an undisputed way as either a province or territory.)

  3. That only 4% of Brazils population is below the poverty line versus Argentinas 32% is utterly nonsense. The fact that you use “data” like this greatly harms the validity of your analysis. Just for reference, your source (Indexmundi) states that Swedens percentage is 15% (!)

  4. No, Chile has decent bases (ironically left over from the worst dictatorship that sprung up in South America), but they don’t have sociopolitical oomph to make it as a regional power. Their best bet is to become something like the Netherlands or Canada of Latin America: a rich country where people are comfortable and which does not concern itself with playing these games of influence.

    Not, of course, that this isn’t a better aspiration than regional power status. Being a regional leader is generally more of a headache than anything else (ask Germany)…

  5. I assume davidwsyuen was talking about Isla Grande de Terra del Fuego that is currently half occupied by Chile.

    That at least would be a feasible target for the current Argentina military.

  6. He’s also vocally anti-China (his largest trading partner). He’s going to oversee a collapse and will end up in jail himself. Chile will emerge as pragmatic leaders in hemisphere and will align more closely with China (covertly).

  7. Take back? The Falklands never was their’s bloke! All Her Majesty would have to do to get it back is let her subs sink all traffic and mine the Argies ports. They would be begging to give them back wrapped in a bow in six months.

  8. Zeihan’s predictions are completely bonkers and only demonstrate a complete lack of understanding about both Argentina and Brazil.

    First, the similarities between the two countries: both have a history of government interventionism in the economy, rampant corruption, and reliance on strongman political figures. Both also rely heavily on exporting commodities; this means that whatever global conditions that could make Brazil tank would also hit Argentina heavily. I don’t see how a global geopolitical shift could help one and hinder the other.

    But Brazil has some advantages over Argentina: is more advanced in the fight against corruption, has a much larger internal market (meaning is is comparatively less dependent on foreign trade than Argentina to survive), a more mature financial sector, and a better (albeit also shaky) track record with investors and external creditors. It is also generally more connected to current technological developments and trends than Argentina.

    Militarily both countries are fairly weak, so nothing to discuss here.

    Sincerely, I think Zeihan has no idea what he is talking about and is just throwing random, bad science fiction in the air to see if it picks some attention….

  9. Yea, but you see what I’m saying though? Germany went from down on their luck to blitzkreiging within a very short time period. A lot of nation states have in the past.
    As to the cause of Argentina’s economic woes- rampant corruption is something that is amendable. As are many things.

  10. some one said that china may take back taiwan island at 2020. Argentina dont cry and pay attention to learn how to take back your big island at the time.

  11. Unlikely, if anything because of Brazil’s sheer size and population. Yes I don’t see a relation of “dominance” here in South America, rather of peaceful coexistence and cooperation.

  12. Somebody openly extolling state-sponsored murder and torture ( including the torture of his predecessor in the presidency, Dilma Rousseff ), isn’t a ‘ social conservative ‘, he’s just an a hole.

  13. “Brazil has a far better chance, but they need to get rid of socialism to have a chance. Currently, they are allowing environmental locusts to rape the Amazon – as opposed to sustainable development…. And like most other socialist nations – they are wasting billions on useless social programs that do not lift people up.”

    I think you missed the meme saying Brazil elected as president an economic and social conservative, Jair Bolsonaro, this past October.

  14. It is plausible that Japan might take up a premier role in Asia, but that will be predicated on their building up their military might. Until then, it will be America backing them.

    Argentina doesn’t stand a snowballs chance in hell of assuming the mantle of dominance in the southern hemisphere. My family does business there and conditions are horrible.

    Brazil has a far better chance, but they need to get rid of socialism to have a chance. Currently, they are allowing environmental locusts to rape the Amazon – as opposed to sustainable development…. And like most other socialist nations – they are wasting billions on useless social programs that do not lift people up.

    Chile has a far better chance than either China or Brazil. They’ve adopted Health Savings Accounts and their economy is robust. The nation is relatively stable, a healthy middle class, and tourism is thriving.

  15. Even Friedman mentioned that at the turn of the 1900s Argentina was considered ripe to become one of the great powers…

  16. Same could have been said about early 1930’s Germany.
    Economic collapse. A gigantic debt. Severe curtailment of military capabilities.

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