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Almost ten years ago, while a student at the Judge Business School, I visited Argentina as part of the program. It was a fascinating experience where we studied economics in a country that had seen both prosperity and decline.

During one lecture, an intriguing contrast in the economic world was highlighted. While the U.S. and the Soviet Union were dominant powers, Japan and Argentina stood out as two striking anomalies.

Japan, despite its lack of resources and frequent natural disasters, was booming. Many believed it was on track to overtake the U.S. as the world’s leading economy.

Argentina, on the other hand, had everything—vast wealth, fertile land, and a highly educated workforce. It should have thrived. Yet, instead of rising, it declined.

How a Country With Everything Fell Behind

This paradox is well documented in financial history. Niall Ferguson, in The Ascent of Money, provides a stark account of Argentina’s decline:

“Once, Argentina was a byword for prosperity.” In 1913, Argentina was among the ten richest countries in the world, growing faster than the U.S. and Germany between 1870 and 1913. Many saw it as the U.K.—or even the U.S.—of the Southern Hemisphere.

Yet, Argentina failed to fulfill that promise. By the late 20th century, its per capita GDP had fallen from 72% of the U.S. level in 1913 to just 34% in 1998—overtaken by Japan, South Korea, and even Chile.

What Went Wrong?

Argentina’s decline had many complex causes, but one pattern stands out: economic populism, especially through tariffs and protectionist policies.

Tariffs were supposed to protect domestic industries but instead made Argentina less competitive. Industries that should have grown strong under pressure remained inefficient. Trade barriers turned into stagnation.

Meanwhile, Japan took a different path. Instead of shielding its industries indefinitely, it embraced global markets, invested in technology, and carefully navigated industrial policy. Its rise was fueled not by protectionism but by competition, efficiency, and relentless innovation.

Echoes of Argentina Today?

As I reflect on that lecture and the lessons of history, I cannot help but notice echoes in recent economic policies elsewhere.

Tariffs may seem like a quick fix—a way to shield industries from foreign competition and “bring back” economic strength. But if history teaches us anything, it is that protectionism without a long-term strategy leads to decline, not growth.

Argentina’s experience is a cautionary tale—even the most resource-rich economy can falter if it prioritizes short-term political wins over long-term competitiveness.

Knowing history does not prevent mistakes. It only tells us what may—or will—happen next.