The challenges of leaving protectionism behind: the political economy of trade policy in Argentina

Abstract

In 2015, the government of Argentina experienced a significant shift in its programmatic orientation from an administration characterized as left-of-center and interventionist to one considered right-of-center and market friendly.1 The contrasts between the Frente para la Victoria (2003–2015) and Cambiemos (2015–2019) administrations were particularly visible regarding trade policy preferences. The administration of Mauricio Marci of Cambiemos took power with an ambitious trade liberalization agenda.2 The objective of this chapter is to understand the political economy factors that explain the scope and pace of import liberalization in Argentina between 2015 and 2018. This period offers an interesting case to examine the political and institutional challenges faced by a liberal administration trying to reverse many years of protectionist policies. The chapter aims to address, in particular, the following research questions: What political economy factors determined the government’s trade policy strategy? What were the trade liberalization tactics adopted by the government? This includes the analysis of specific trade policy tools and complementary policies to alleviate resistance from the affected groups. What mechanisms did import-competing firms put in place to confront trade-opening initiatives?