As an outsider who does not speak or write Spanish the following is based upon antedotal and filtered conversations with the local people I have met in BsAs and my reading of modern Argentine economic history as well as the Economist.
Culturally the Argentine people do not believe in themselves. As soon as they get a nickle they send it to Spain, Germany or Italy or the USA (Miami) The Argentine people from what I have observed do not invest in themselves like we do in the USA. Consequently, their rational fear of the local banks and their government prevents the local economy from acquiring capital internally to support national growth unless the risk / reward (I. E. Interest) is extremely high and even then there is distrust in the local banks' or government promises to pay when due.
Without the support of the people in their own economy, growth and internal investment must be supported from abroad. When foreign capital is used, the cost of borrowing is even greater since the repayment generally goes back to the lending source off shore and does not remain inside Argentina which means more money must be borrowed from abroad with the attendant expense.
Until the Argentine people begin to believe in themselves their economy will always be unstable because it will be subject to the international forces and costs associated with external borrowing.
When the USA was growing, the British primarily funded the railroad expansion west and they kept reinvesting their profits in the USA because of our common legal systems. As Americans we have traditionally thought inward because we are all from somewhere else with less desirable or trustworthy institutions and it was better to invest in ourselves than repatriate our savings to where we came from initially. Thus, as we matured most of our funding for expansion came from our own people. (Forget today and our international borrowing. Moreover, generally, as a people we have not defaulted on our foreign debts. Until recently we have been net lenders and not borrowers. We had surplus capital.
This is my theory which is not predicated on any research but is merely an observation.
The attempt to prevent capital flight only hightens the internal insecurity with the Argentine people and thus fuels more attempts to evade the govenment's restrictions on the movement of money which thereby reduces the internal investment or savings. It is a never ending cycle of evasion and distrust in the local institutions.
During the last banking crisis in early 2000 the rich moved significant capital off shore before the meltdown which exacerbated the monetary crisis and that money has not been brought home.
I welcome a critque of this analysis because of its lack of empircal data and possibly faulty logic. A good topic for a roundtable discussion.
