Date of Award

Spring 5-18-2024

Degree Name

Bachelor of Arts (BA)

Advisor(s)

Jose Aleman, Ph.D.

Second Advisor

Caley Johnson, Ph.D.

Abstract

The history of currency reflects political histories, the shifting currents of the global market, and the enduring legacies of previous governments, offering a compelling narrative of a nation’s economic evolution deeply entwined with broader historical forces. Many contemporary nations are faced with the decision to replace their currencies with those of another country. In the face of economic and political instability, adopting another currency can influence the national wealth and its position in the global market. This thesis explores dollarization as an economic strategy, examining its viability and success, particularly in weak Latin American economies. The paper navigates Ecuador and Argentina, presenting them as compelling case studies. The imminent policy shift proposed by Argentina's President, Javier Milei, adds contemporary relevance to the exploration. The analysis scrutinizes the benefits and shortcomings of dollarization, drawing on Ecuador's experience and the current economic challenges faced by Argentina. This thesis argues that the ideal effects of a successful dollarization process should be lowered inflation, public support, increased business transactions, and decreased public debt. In the discussion and analysis section, Ecuador's success in achieving low inflation and public support is juxtaposed with potential drawbacks such as social discontent and adverse effects on local businesses. Argentina's economic challenges, including inflation, debt burdens, and a divided public opinion, contribute to the complexity of the potential adoption of dollarization. The analysis of advantages highlights immediate inflation control, enhanced public confidence, and increased foreign investment. However, potential disadvantages, such as long-term debt challenges and social unrest, present a nuanced perspective.

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