Argentina - Economy and business in Argentina

Argentina offers a solid basis of resources luring investment; different profiles of qualified human resources having an attractive blend of skills and abilities; internationally recognized talents developing their work in Argentina and abroad; renowned universities and high-capacity research centers which provide the excellent offer of natural and industrial resources with knowledge and value, at competitive costs on a developing and expanding infrastructure.

Given this stability context, the agricultural sector as well as the different productive areas, along with the development of new technologies applied to manufacturing and the growth of international trade (boosted by the Argentine peso’s high competitiveness) have made this country an ideal place for investments.  

Natural Resources

Therefore, the agriculture and livestock sector has become one of the cornerstones of economic activity. Argentina is the eight country in the world classified under geographical extension and one of the main places possessing the highest quantity of farmable land, in addition to other natural resources such as oil and mining. Moreover, Argentina is suitable for fishing owing to its many rivers and 4000-kilometer Atlantic shoreline.  

Seeking competitive and comparative advantage, Argentine producers have applied technology to their agricultural activities in order to optimize the results of their work. Thanks to farming technology, the production frontier has grown 10 millions of hectares in the last 60 years. Thus, the country has become one of the main exporters of soy, wheat, corn and fruit such as apples, pears or lemons, among others. 

Last year, Argentina exported over 15 million tons of animal and vegetable products to the European Union (EU).  These exports’ main destinations were: Spain, The Netherlands, Italy, Germany and France. Among Asian countries, China is a preferred destination for Argentine domestic agricultural products.    

Besides these objective facts accounting for the economic positioning in relation to its natural resources, Argentina is ready to export its rural management. That is why many foreign investors are interested in finding Argentine producers in order to expand their scope in the region. Not only does it come down to natural resources but also to experience and technical and organizational know-how, giving rise to this advantage in the world.   

Today, Argentina’s agribusiness constitutes a major industry in the country. The wine sector also belongs to this industry. At present, Argentina is positioned among the first wine producers worldwide. This industry’s significant development has succeeded in conquering demanding consumer markets, as well as a growing number of visitors wishing to combine leisure and wine-tasting in the wineries located along Mendoza’s Wine Roads. This sector, characterized by its ever- growing competition, is seeking to penetrate markets in developed northern-hemisphere countries such as: the UK, Ireland, Germany, Belgium, The Netherlands, Luxemburg, Scandinavia, the USA and the Japan.      
 

Imports Replacement

In the last five years, industrial activity has grown steadily, favored by the strength of the internal and external demand and its higher competitive capacity. Today, the expansion of the productive offer allows catering to a growing external demand without overlooking the dynamic local consumption. The increase in investments and a dynamic labor hiring activity have promoted industrial productivity, taking it up to a historic record.   

Under this process, Argentina started to move favorably towards imports replacement, based on the internationally competitive peso model, a policy boosting several industrial sectors in the country.  Having this high competitive economic plan, both domestically and internationally, Argentina became strong again in the automotive, construction, siderurgic and metalmechanic sectors. Small wonder that nuclear energy has also gained momentum, given that state-owned and private companies are manufacturing nuclear reactors for scientific research. (see productive innovation).  

Besides their growth, these sectors’ competitiveness is strong enough so as to get inserted abroad.  The fundamentals of industrial growth comprise the steady competitive exchange rate as the bedrock of the current accumulation model with an industrialist profile and also a diversified accumulation matrix.    

Last year, the automotive industry launched 80 units, between new models and existing versions. This year, a hundred launches are estimated for domestic consumption and exports, in addition to a more profound development in auto-parts local manufacturing.   

Following the automotive industry is the industrial manufacturing of different sectors: chemicals and plastic materials, farming machinery, electric materials and common metals, paper, rubber, leather, footwear and construction materials.

Another strong sector in Argentina is the textile industry; some distinctive features of this industry are: high creative ability for design development; innovating ability for market development; a place of prestige in Latin-America as a fashion and design reference country. Brazil, the USA and Chile are the main exports destinations for this economic sector.

Creativity and imagination are not free from being in the country’s mosaic of industries.  Argentine creative professionals seem to have found a place of privilege in this sense, and have been great exporters of television contents for over a decade. Local shows are wanted by networks worldwide: Israel, Spain, France, Chile, the USA, Brazil, Russia, Panama, Colombia, India and Portugal, to mention a few. A strong presence of local cinema is also taking place around the world.   

Thanks to services, other non-traditional industries started to be strongly capitalized by Argentina, especially everything related to technologies and communications (IT&Cs). Software companies, outsourcing services and contact centers constitute an axis of the current economic policy.  

Industry as Service

As a result of a more and more constant global trend, Argentine executives are aiming at positioning the country among the worlds most powerful service exporters. Five significant facts take place for this to happen: the consolidation of an integrated world market of services –global sourcing-; a time zone similar to those of main clients, meaning developed countries; the country’s talented human resources; a cultural relation with the West; and the high competitiveness of the exchange rate.  

Service exports, except transportation and tourism, represented an income of almost 2,600 million of dollars in the first 3 quarters of 2007. Software, information services, outsourcing and call centers are now employing over 100,000 people. Engineers, architects, accountants and physicians, with the use of technical support, are part of this growing industry,   

Productive Innovation

In Argentina there are opportunities in IT&C’s, biotechnology, agribusiness, offshore services, among others. This is because there is a relevant innovation core encouraged since the Science, Technology and Productive Innovation Ministry, with Lino Barañao at the helm, was set up.   

Being promoted by the Ministry, technology-based start-ups allow  better resource allocation, focusing on the professionals involved, where knowledge is the key to economic growth.  The biofuels stand as a representative case of productive innovation. There are already eight plants specialized in this type of fuel manufacturing.

The Bio-Diesel is the renewable fuel with the biggest development potential, giving agriculture and the oil industry another marketing and production diversification possibility.  The BioEthanol can replace gas as it is already the case in Brazil with cane alcohol or in the USA with corn alcohol.  It is also important to highlight that the country is a world power in the design and manufacturing of science-applied satellites and nuclear reactors for medical purposes.