Argentina’s national statistics bureau (INDEC) is expected to publish revised data next month that corrects the alleged “book cooking” and data falsification that occurred under former President Cristina Fernández de Kirchner. How bad is it?
The verdict is ugly. The former administration caught significant flack for lying about inflation, but a project from Harvard University and the University of Buenos Aires show that that was just the tip of the iceberg. In addition to inflation, former Cristina’s administration hugely overstated gross domestic product (GDP) and vastly understated poverty.
This is a big deal because GDP is used to determine economic well-being by measuring how big a country’s economy is and how fast it is growing.
The aptly named Arklems + Land project uses the internationally recognized KLEMS Framework to calculate GDP based on capital, labor, energy, material and service Inputs. In an interview with the Financial Times, Arklems director Ariel Coremberg blatantly stated that “since 2007, official economics statistics in Argentina, particularly on consumer inflation and GDP, have been subject to political manipulation.”
What Does “Political Manipulation” Add Up To?
Since 2007, both Argentina’s GDP and poverty data show evidence of heinous and intentionally misleading miscalculation.
Under Cristina, INDEC reported that the economy grew by 99.1 percent between 2002 and 2012. In 2013, the government boasted 8.3 percent annual growth. To put that whopper into context, China only grew by 7.5 percent the same year. In reality, Argentina only grew about 71.1 percent over the same period.
The numbers get more personal when you break this down into GDP per capita, or divide the total economy by the population.
In 2014, the World Bank reported Argentina’s GDP per capita as US $12,510 using INDEC data. Arklems + Land calculate the GDP per capita the same year as only US $7,399. This is a difference of over 40 percent and drops Argentines below the global average of US $10,739 per head and from the 56th richest in the world all the way to 78th. This places Argentina below China, Mexico, Brazil and Suriname just to name a few.
When it comes to insulting ones intelligence though, the discrepancies regarding poverty levels really take the cake.
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The numbers line up through 2006, with poverty falling from 50.9 percent to 29.2 percent. But in 2013, INDEC reported a poverty rate of 4.7 percent. To put that into context, that would mean Argentina had the same percentage of the population living in poverty as countries like Sweden and Norway. While we all appreciated the hilarious memes that were born from such a ridiculous lie, a government should be ashamed of pretending and officially reporting that poverty has been effectively eliminated.
Reality Is Not Political
It is critical to clarify that this is not just some ideologically motivated, mathematically ridiculous attack on Cristina à la the misery index. This is a study carried out by the public University of Buenos Aires and Harvard University.
Moreover, acknowledging this correction and determining the reality of Argentina’s economic situation in its entirety is a prerequisite to advancing. In order to solve problems, it is essential to first identify them and then to understand them. The tidy rows of economic data to describe countries and the well-being of their inhabitants appear as if by magic by the World Bank, but the reality is far from that.
For young economists keen on changing the world, the unreliability of data from countries seeking economic growth and reduced poverty is one of those disappointing rude awakenings. Before ideology can even enter the room, many times a country’s “data” comes from some “economy” ministry run by the nephew of some president-for-life-cum-warlord-cum-dictator who prefers to spend his time and country’s resources on Caribbean yacht vacays. That’s a bit of dramatic hyperbole, but you get the point — the rigor and care that go into assembling developing country datasets pale in comparison to the expertise and precision invested in their analysis.
The movement to correct faulty data from the past and create a reliable INDEC is laudable and necessary. Even more important is rebuilding the institution by using reliable and non-politicized methodology in a transparent way. INDEC should serve as a tool for Argentina, regardless whether the reigns are being tugged right or left.