Neoliberals have long argued that countries need to attract foreign investment as the main way of securing growth and development. To do so governments were to ‘liberalise’ their economies, meaning reducing regulation, allowing the free flow of capital in and out and privatizing state industries.
The recession affecting Europe and the US led to the use of very low interest rates to try to revive these economies. This resulted in much investment moving to ‘emerging economies’ such as Argentina, Brazil, Turkey, India, South Africa and Indonesia. But as the US economy has recovered, at least enough for the US Central Bank to reduce quantitative easing and increase interest rates, the ‘international investors’ have moved their money back into the US causing the value of currencies in those countries to fall significantly.
They are now faced with the dilemma of either large increases in interest rates reducing their growth or large devaluations of their currencies which increases import costs and causes inflation. In the case of Argentina this is made worse because the country had a positive balance of trade from the export of soya and other products. Soya production however, is controlled by a few capitalists, who will profit from a devaluation of the peso and so have stopped exporting.
Significantly Bolivia, Ecuador, Venezuela and other ALBA nations, which have not relied on foreign investment but used their own resources and control strategic industries, have retained economic stability. Sovereignty and self-reliance is, in the long term, the real answer to growth, development and equality.