What is Economic Shock Therapy?
It’s a rapid, radical reform process in an economy, usually shifting from state-controlled to market-based systems.
Why is it used?
Employed in economies needing urgent, significant reforms, often transitioning from socialist to capitalist frameworks.
Key Features:
Sudden price liberalization, large-scale privatization, and strict fiscal measures are typical aspects.
Does it always succeed?
Success varies; some nations quickly benefit, while others suffer short-term difficulties and social upheaval.
Risks Involved:
The risks are heightened unemployment, inflation, and potential social unrest.
Argentina’s Recent Implementation:
Under President Javier Milei, Argentina is employing shock therapy, marked by drastic austerity measures, peso devaluation, subsidy cuts, and reduced government spending, demonstrating a bold approach in a traditionally non-austerity political landscape.
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