Argentina, adaptability
The Convertibility Plan, and its collapse
Argentina ended hyperinflation by fixing the peso to the dollar by law in April 1991, taking annual inflation from 4,923 percent in 1989 to 3.9 percent in 1994, and the regime held until it collapsed in the 2001-2002 crisis.
3.9 % per year, consumer price inflation under convertibility, 1994. 4,923.3 % per year, consumer price inflation at the hyperinflationary peak, 1989. Secretaria de Programacion Economica and BCRA, republished by Reed College Department of Economics, retrieved 2026-08-27.
The move, and what it needed
Congress fixed the exchange rate one-to-one to the dollar by statute and barred the central bank from printing unbacked pesos, which converted a monetary promise nobody believed into a law that was costly to break.
Preconditions
- Dollar reserves large enough to back the monetary base
- A legislature willing to bind itself and its successors
- Prices and contracts already partly dollarised, so the anchor was credible on day one
Where it travelled: Currency boards were copied widely in the 1990s, from Estonia to Bulgaria, and they worked as stabilisers. Argentina is the case every copy now studies for the exit problem: the law had no honest way out.
Limits: The IMF and World Bank series for Argentina do not reach these years, so the numbers come from a teaching case that republishes the official table, and the 1989 figure is a December-to-December change where other publications give 3,079 percent as the annual average. Ending inflation is what the indicator asks for, but the fixed parity that delivered the stabilisation also removed the tools that could have absorbed the shocks of 1999-2001, so the case evidences a response that consumed its own durability. The collapse later cost Argentina its statistical credibility too, which is why the official series is hard to cite today.
This record describes what Argentina delivered. It is linked to Institutional responsiveness because no comparable dataset measures that capability. It does not affect the score or confidence.
The same gap elsewhere
5 deliveries linked to Institutional responsiveness in other countries.
Plano Real, the 1994 currency stabilisation
Brazil ended four decades of high inflation with a staged currency reform, taking annual consumer price inflation from 2,075.9 percent in 1994 to 3.2 percent in 1998.
Proalcool, the fuel substitution after the oil shock
Brazil answered the 1973 oil shock by mandating ethanol blending and building a national fuel alcohol industry, taking production from 580 thousand cubic metres in 1975 to 38,199 in 2025, and from 2003 flex-fuel engines moved the choice to the driver.
Kurzarbeit in the 2008-2009 crisis
Germany answered the 2008-2009 collapse in manufacturing orders by paying firms to cut hours instead of jobs, and short-time work covered 1.44 million workers at the May 2009 peak, about 5 percent of insured employment, while unemployment barely rose.
The 2001 stabilisation, and its unwinding
Turkey answered its 2001 banking collapse with central bank independence, bank restructuring and fiscal rule, taking inflation from 54.4 percent in 2001 to 8.6 percent in 2004, and after 2018 the same framework was overridden until inflation reached 72.3 percent in 2022.
Telebras, the telecom system that was dismantled
Created in 1972, Telebras coordinated Brazil's state telecom system until its 1998 privatisation, when 54 concessionaires were split out and the state moved from operating the network to regulating and universalising service.