During the second half of the last decade, the three countries of the Southern Cone of Latin America—Argentina, Chile, and Uruguay—were subject to radical economic reforms that completely changed the structure upon which economic development took place in the past. While the new policies were in effect, their implementation was closely scrutinized by observers holding very different ideological convictions. As the region plunged into economic turmoil, the same policies became the subject of heated debate and have been analyzed and interpreted in many different ways.

This article assesses the 1976-1981 price stabilization and restructuring program and its impact on major macro- and microeconomic variables in Argentina. More specifically, it concentrates on examining the attempt simultaneously to control inflation and to redirect the economy towards a more marketoriented structure with a rapidly changing combination of domestic and external economic measures. After discussing the objectives and implementation of the program, the development of major macroeconomic variables between 1976 and 1981 is briefly examined. Since several of the macrovariables give conflicting evidence, a more detailed analysis of the program's impact on agriculture and industry was undertaken, which stresses the need to differentiate among the various actors within the major subsectors of the economy.

After a period of economic stagnation that lasted from the late 1950s to the mid-1970s, Uruguayan economic growth took off. Between 1974 and 1981 real GDP growth averaged 3.8% per annum (p.a.) versus .7% p. a. between 1956 and 1974. Yet, in 1974 Uruguayan prospects appeared rather dismal—inflation was high and accelerating, the fiscal deficit amounted to 4.5% of GDP, international reserves were largely exhausted, the debt service ratio exceeded 40%, the terms of trade were falling as a result of the oil price rise, and the EEC had just cut off imports of Uruguayan beef. How Uruguay achieved a dramatic turnaround in the face of these poor initial conditions is an interesting case study in the role of stabilization cum liberalization programs.

Since the mid-1970s, the Southern Cone countries of Latin America have experienced profound political, institutional, and economic reforms. Their immediate causes can be found in the evolution of their relatively recent (prereform) political situation, which saw marked polarization of different groups and political forces, social unrest, and a general feeling of dissatisfaction with the countries’ economic performance.

These events were followed by the installation of military regimes, with the new characteristic of trying to go far beyond the traditional attempt of introducing social (and particularly, labor) discipline and put the “house in order.”