By David Schepp BBC News Online's North America business reporter

Speculation is swirling around crisis-ridden Argentina as to how the economic plague afflicting Latin America's second largest economy might affect other countries.

Several foreign nations, including Spain and the US, have substantial investments in Argentina and could lose heavily if the South American nation defaults.

In terms of foreign countries, Spain would be proportionately the biggest loser

Lacey Gallagher, analyst, Credit Suisse First Boston

"Spain definitely has big investments, at least within the banking sector," Lacey Gallagher, director of Latin America research for Credit Suisse First Boston, told BBC News Online.

Also at risk are Spanish firms, such as Telefonica and Santander Central Hispano - both of which have invested $65bn in Latin America.

Probable default

Shares of both firms may tumble on fears that Argentina's debt default and devaluation may cut earnings.

"In terms of foreign countries," Ms Gallagher told BBC News Online, "Spain would be proportionately the biggest loser."

President de la Rua is busy putting together debt restructuring

A default by Argentina on its $132bn (�90.7bn) debt, which many analysts view as all but a done deal, has some concerned the ripples could be as far reaching as the 1997 Asian Crisis.

A spokesman for the World Bank cautioned, however, that the current environment is a very different one from that four years ago.

"The extent to which Argentina is integrated in the world economy is much, much less than was the case for the Asian countries," says Ian Goldin, World Bank senior policy advisor.

"So there's not going to be major trade effects," he said.

Little ripples

Given the closed nature of the Argentinean economy, a possible default on its debt and the ensuing economic turmoil most probably will affect the domestic economy more than any other.

Stanley Fischer: "The likelihood of crises... is less likely for emerging countries."

How painful and how much pain endured by the domestic economy depends on how credible a recovery plan the government puts forth.

Domestic and world markets have been unmoved by recent reform measures implemented by Argentina's government, led by President Fernando de la Rua, viewing them as too little and too late.

Market expectations

Analysts for the most part agree that Argentina's woes would have far fewer implications for countries and markets around the world than previous economic crises across the world.

"The market is prepared for it, unlike the crises that unfolded in Russia in 1998 and in Southeast Asia in 1997," said CSFB's Lacey Gallagher.

Financial and capital markets might be affected, she told BBC News Online.

But because the market has already priced in a default, if there is an immediate impact, it would be manageable.

"The market is much less leveraged than it was in 1997," Ms Gallagher said, adding the scale of Argentina's problems was much smaller.

"It's just one country without extensive trade links unlike in Asia [where countries] are linked to each other and the rest of the world."

Source of woes

The sources of Argentina's current economic woes are many.

Analysts point mainly, however, to unbridled spending in the 1990s, which led to a fiscal imbalance.

Another factor is the fixed-exchange rate, which puts the peso on par with the US dollar and has led to the overvaluation of the Argentine currency.

In the wake of previous economic turmoil, developing countries around the world have moved to flexible exchange rates has made the world safer from crises of the sort currently afflicting Argentina and which could affect other emerging-economy countries, a former International Monetary Fund (IMF) official said on Tuesday.

Speaking before students at London School of Economics, former IMF deputy managing director Stanley Fischer said: "Because so many countries have moved to flexible exchange rates, I believe the likelihood of crises... is less likely for emerging countries."