Argentina (officially known as the
Argentine Republic) is a country in South America. This Spanish-speaking nation
shares its border with Chile, Bolivia, Paraguay, Brazil and Uruguay. Argentina
is the eighth largest country in the world, and also the largest among Spanish
speaking nations. Argentine Pesos is the currency that the country uses as a
medium of exchange. Like the US dollar, Argentine pesos are also sub-divided
into 100 units. The hundredth part of an Argentine peso is called centavos.
According to the World Bank Argentina’s population was 40.76 million in the year 2011.[1] Argentina
is a federation of 23 provinces. Its capital Buenos
Aires is an autonomous city. The country operates with Federal Republican
government. Cristina Fernandez de Kirchner is the current president. Argentina has Civil Law legal system.
Constitution and civil law code are the two pillars of Argentina’s civil code.
Spanish legal tradition, Brazilian civil code, Napoleonic code and the Chilean
Civil Code have a great deal of influence over Argentina’s Legal system. [2]
Argentina’s economy is the Second largest economy in Latin
America.[3] The country has highly literate
population. Its agriculture sector is export oriented and the country has a
very diversified base in industrial sector. Argentina
According to UNDP, scores very high in human development index and people over
there live a high quality life.[4]
Argentina’s GNI was last reported to be $ 397,095,833,507 by World Bank in 2011. [5] Data
shows that Argentina has very consistent economy compared to its neighbors and
many countries around the world. Its GNI per capita PPI was 17250 in 2011. [6]
Argentina
is very rich in natural resources. Its geography and the climatic condition are
perfect for agriculture, forestry, fishery and mining. According to World Bank
51.3 % of Argentina’s total land is suitable for farming. Mountains in
Argentina have rich deposits of copper, tin lead, gold, uranium, zinc, silver
etc. Argentina is adding a good figure in its GDP by mining these resources and
exporting to the world. Argentina has successfully developed its labor force
and other infrastructures like transportation and communication, which in
return has helped the country to harness its natural resources and uplift its
economy. Table below shows the different sectors of Argentina’s economy and the
percentage of their contribution to nation’s economy.
Sources
|
Percentage
|
Agriculture, forestry, and
fishing
|
9.7%
|
Mining
|
3.1%
|
Manufacturing
|
18.9%
|
Construction
|
5.3%
|
Commerce and
Tourism
|
13.8%
|
Transport
Communication and Utilities
|
8.2%
|
Finance Real
Estate and Business Services
|
14.3%
|
Government
|
6.5%
|
Education,
Health Care and Others
|
20.2%
|
Argentina’s
industrial sector is the biggest contributor to its GDP. This sector includes
manufacturing and construction. Agriculture, which is the fourth largest
contributor, is well integrated with Argentine manufacturing sector. More then half of country’s industrial export
is agriculture related. Argentina’s major exports are vegetable oil, bio fuels, cereals, feed,
etc. Argentina actively
participates in foreign trade. Argentina exports goods and services mainly to
South America, Europe, Asia and North America. Brazil,
Chile, the US, Spain, China. As reported by National Institute of Statistics
and Census of Argentina the total amount of export summed up to be $ 5,993 millions
during 2012.
Export
partner
|
Amount (in
millions)
|
Brazil
|
3.1%
|
European
Union
|
18.9%
|
China
|
5.3%
|
Chile
|
13.8%
|
USA
|
8.2%
|
Argentina
mainly imports machineries, Industrial
supplies, equipment, automobiles, chemicals, metal, plastics, refined fuel,
lubricants etc. Brazil, European Union, China, United States and Mexico are its
major exporters. According to National
Institute of Statistics and Census of Argentina the amount of import during
2012 was $ 5,464 million. [7]
Argentina
joined WTO in 1995; the year it was established. It is also one of the founding
members of the United Nations in 1945. Argentina is a member of Bank
for International Settlements (BIS), an international organization of 60 member
countries aiming to “to promote cooperation among central banks in international financial
settlements.” Argentina is also associated with Financial Action Task Force (FATF), and organization with 36 member
countries, which was established to “to develop and promote policies to
combat money laundering and terrorist financing.” Other important organizations
with which Argentina is associated with an aim to foster trade and investments are
G-15, G-20 Inter-American Development
Bank (IADB), etc. [8]
The agricultural industry in Argentina is export driven,
Argentina suffers from inefficiencies of tools and machinery in the
agricultural sector, Argentina has the second largest economy of any South
American country, and it is growing.
The US business should increase their
investment in companies that produce agricultural machineries and parts in
Argentina. One of the main reasons to invest in such companies is because the
country has exported oriented agriculture sector. Argentina’s agriculture is
huge; it’s a world’s major producer of soybean, sunflowers, wheat, corn, Rice,
potato, sugar cane etc. As stated earlier agriculture accounts about 13 percentage
of Argentina’s GDP. Demand for Argentine soya bean has risen 250% over the past
decade, and corn exports have increased by over 80%. [9] The biggest Argentine farmer’s
association “ The Rural Society” estimates 37% growth in value of grains and
other oilseeds. [10] There is a growing demand of food
because of the growing population. The emerging countries like china and
African countries where population growth has outpaced food production are
demanding more food.
Insufficiency
of agriculture tools and machineries is thwarting Argentine agriculture sector
from reaching its full potential. Argentina imports 50 and 25 percentage of its
agriculture machineries from Brazil and the United States respectively. There
is shortage of machinery and agricultural tool manufactures inside the country.
[11] The
existing manufactures (approx. 160) that produce variety of machineries do not
have capacity to produce enough to full fill the market demand. These companies
do not have high level of expertise and have to relay heavily on imported key
parts and mechanisms. The other small local manufactures produces less
sophisticated tools like sprayers, seeders and harvesters. But these
manufactures are very small relative to the market size; they are family owned
business and are concentrated in small geographic area.
Argentina
has the second largest economy in South America. In past decade Argentina
exhibited strong economic growth; the country doubled its gross domestic
product. The average real growth was 7.2%. Unemployment fell from 20 percent
(2002) to 8 percent. The level of poverty fell by half in last decade. [12] Due to the boom in prices of
commodities, Argentina benefitted largely from its agriculture sector. The
other reasons behind Argentina’s steady growth are the governments smart
economic measures. The country keeps the value of currency low, which makes
exports cheaper and imports expensive. Argentina welcomes foreign direct
investments; the country enjoys a good relationship with foreign countries in
terms of trade and investments. Investing constantly for the advancement of
health and education is one of Argentine tradition. World Bank report shows
that 6 percent of GDP is currently invested in education and culture and 9.5
percent in health. Argentina’s industrial sector, in recent years has
experienced significant growth; automobile, textile and power companies are in
raise. Export of wine increased by 323% in between 2003 and 2010 and now
Argentina is the fifth largest wine producer in the world. [13]
The
U.S has always been the one of the largest investor in Argentina’s economy.
More then 500 U.S based companies in Argentina are currently employing over
155,000 people. [14] These
existing companies have built a good reputation; 14 out of 50 of these U.S
based companies are listed in “best places to work”. [15] Besides
this, According to one of the largest Argentine newspaper “El Clarin,” many U.S
companies are also in the list of most respected companies in Argentina. The
reputation earned by the U.S based companies has paved a great path for
Americans to initiate additional investment activities in Argentina.
The
government of Argentina instigated a “non automatic import license system” in
2010. It was implemented so the country can have balanced trade by matching
imports and exports. This license discourages Argentinians to import foreign
products and encourages them to consume domestic products. Besides consuming
products from inside the country, Argentinians consume a large percentage of
products imported from Brazil. Argentina and Brazil are both the member
MERCOSUR custom union. This union allows Brazilian Imports to enter Argentine
market free of duty. Brazil and Argentina, the two economic giants who share a
border have very close trade tides. Due to this reason it is very hard for a
third country to enter their market. In order to benefit form Argentina’s
mounting economy, the United States should make direct investment in Argentine
companies. The local manufactures, lack of abundance capital and expertise are
bound to limit their market in certain geographic areas. Investing in these
companies will surge their production and expand their domestic market, and
most importantly increases their strength to combat brazilin imports which is
threatening their existence.
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