Trade in Argentina

A recognised middle power according to the Global Security Institute, Argentina is Latin America’s third-largest economy as mentioned by BBC, with a “very high” rating on the Human Development Index, measured at .797 in 2011. Within Latin America, Argentina has the fifth highest nominal GDP per capita, measured at $10,639 by the IMF and the highest in purchasing power terms, measured at $17,376. Analysts from the Legatum Prosperity Index have argued that the country has a “foundation for future growth due to its market size, levels of foreign direct investment, and percentage of high-tech exports as share of total manufactured goods”, and it is classed by investors as an emerging economy.

Argentina has a market-oriented economy with abundant natural resources, a well-educated population, an export-oriented agricultural sector and a relatively diversified industrial base. The nation’s services sector accounts for around 59% of the economy and 72% of employment, manufacturing is 21% of GDP and 13% of employment, and agriculture is 9% of GDP, with 7% of employment; construction, mining, and public utilities divide the rest, as broken down by Argentina’s Economic Ministry. Agriculture, including processed goods, provided 54% of export earnings in 2010, however, while industrial manufactures accounted for 35% (energy staples and metal ores were most of the remainder), according to INDEC. The country has one of the largest economies in Latin America, with the IMF measuring it at $435.2 billion in nominal terms for 2011. Expansionary policies and commodity exports triggered a rebound in GDP from 2003 onwards. This trend has been largely maintained, creating millions of jobs and encouraging internal consumption. The socio-economic situation has been steadily improving and the economy grew around 9% annually for five consecutive years between 2003 and 2007, and 7% in 2008. The global recession of 2007–10 affected the economy in 2009, with growth slowing to 0.8%, as measured by the Argentine Economic Ministry. Argentina also had a phenomenol growth rate of 9.2% in 2010. Historically, however, Argentina’s economic performance has been very uneven, in which high economic growth alternated with severe recessions, particularly during the late twentieth century, and income maldistribution and poverty increased.

High inflation has been a weakness of the Argentine economy for decades, according to an article by the NY times. Officially hovering around 9% since 2006, inflation has been privately estimated at over 20%, according to Inflacion Verdadera, which is an Argentine website dedicated to providing transparent economic stats for the Argentine economy. The urban income poverty rate has dropped to 18% as of mid-2008, a third of the peak level observed in 2002, though still above the level prior to 1976, as mentioned in a report by the World Bank. Income distribution, having improved since 2002, is still considerably unequal, according to the IMF. Argentina ranks 105th out of 178 countries in the Transparency International’s Corruption Perceptions Index for 2010. Reported problems include both government and private-sector corruption, the latter of which include money laundering, trafficking in narcotics and contraband, and tax evasion, as mentioned in a report by the Heritage Foundation.

Overall, Argentina is a mixed bag for a country to do trade in. While it has consistently show tremendous potential for having a world-class economy, it has also run into problems of poor governance and terrible economic policies. It is considered an emerging market by the FTSE Global Equity Index, and is one of the G-20 major economies. While it has a lowly rank of 113th on the World Bank’s Ease of Doing Business Survey for 2012. The survey gave it a rank of 111 for Protecting Investors and 102 for Trading Across Borders. But the survey also gave it a relatively good rank of 45 for Enforcing Contracts. The Argentine market is relatively large with the Argentine Census measurin it at 40,117,096 fo 2011. So clearly there is a large potentially rich market for businesses, but Argentina has had a mixed economic record that may make businesses intent on trade, a little hesitant.

-Jay Zadey


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