Country Feature: Investment Opportunities In Argentina
FOUR GLOBAL TRENDS ALIGN BLOBAL MARKET DEMAND WITH ARGENTINA’S ENDOWMENTS
In a rapidly evolving global economic scenario, Latin America is emerging as a regional force of dynamic economies with strong domestic markets. Among those economies, Argentina stands out.
Argentina’s macroeconomic predictability and sustained economic growth make the country a strategic investment destination. The country offers differential opportunities for productive investments geared towards meeting current and future domestic, regional and global market demand.
At a domestic level, Argentina has the potential to continue attracting more and better investments. The Argentine economy grew 7.1% per year over the period of 2003 to 2009 and 9.2% in 2010. According to IMF projections, GDP will grow 6% in 2011. Sound macroeconomic fundamentals – record-high accumulated international reserves, primary fiscal surplus, current account surplus, flexible and competitive exchange rate – a solvent financial system, and supportive public policies underpin new investment prospects for both domestic and foreign investors alike. In fact, investment has been a key driver for economic growth over the past few years. Gross fixed capital formation grew 22% in 2010, reaching record-high rates. Foreign direct investment (FDI) has grown since 2003, reaching an all-time high in 2008. After a brief slowdown resulting from the impact of the global economic crisis on investment worldwide, FDI flows to Argentina grew 58% in 2010.
At regional and global levels, the growing economic weight of emerging markets, in particular those constituting Argentina’s main export markets, is stimulating local production, in addition to helping anticipate a continuing trend of favourable terms of trade. Furthermore, as a member country of MERCOSUR (the common market including Argentina, Brazil, Paraguay and Uruguay), Argentina grants investors tariff-free access to a regional market of 250 million people.
Moreover, Argentina’s comparative and competitive advantages are well aligned with global structural trends, positioning the country as an attractive destination for investors across the globe. There are four global trends that illustrate the growing complementarities between Argentina’s capabilities and endowments and global market needs.
| 1. | RAPID ECONOMIC GROWTH IN DEVELOPING ECONOMIES IS DRIVING DEMAND FOR FOOD AROUND THE WORLD At the same time, the shift in consumption habits in developed economies is leading to an increased demand for highly differentiated gourmet and organic food products. Argentina is an agro-industrial powerhouse. It is one of the leading food producers and exporters with some of the highest crop yields in the world. Major biotechnology developments specifically targeting the domestic food industry have continued to bolster the sector’s prospects throughout the country. |
| 2. | GROWING DEMAND FOR CLEAN AND RENEWABLE ENERGIES Argentina is one of the world’s leading biofuels producers and the largest biodiesel exporter. The country’s broad range of high quality natural resources, expert human resources and well-established technological capabilities in the energy sector form a unique platform to support and foster future developments. Argentina offers high-potential business opportunities for the development of second generation biofuels such as algae and jatropha-based fuels (neither of which compete with food crops) and for further advancements in wind, solar power, and biomass energy projects. In fact, leading Argentine companies are already exporting wind power technology to countries around the globe. |
| 3. | GLOBAL VALUE CHAINS DOMINATING PRODUCTION To remain competitive and efficient, companies are expanding their network with multiple locations and suppliers around the world. Once predominantly the realm of the manufacturing sector, many service industries today, such as accounting, software and customer care, have moved towards an outsourcing model. Argentina is the fifth best location for outsourcing services, just below the US, India, the UK and China (Deloitte). The talent and quality of Argentina’s human resources is positioning the country as a preferred location for high value-added professional services in areas such as software, IT, design, architecture, culture and finance. The country’s human resources are also renowned for their creativity and have earned Argentina a place as the fourth largest exporter of original TV formats worldwide. Argentina is also considered one of the six best places in the world to look for and produce ideas (Gunn Report). Investors value the country’s convenient time zone and the population’s outstanding English- language skills. A modern system of telecommunications provides additional support to the services sector. Furthermore, Argentina can benefit from the global relocation of specific production segments. The country’s longstanding industrial tradition and diversified industrial structure give it an edge in high potential and value-added industrial production segments. From pharmaceuticals to metal works, automotives to nuclear reactors, the country offers investors a myriad of attractive business opportunities. Tourism offers cosmopolitan cities and eco-adventures, with around 4 million international tourists visiting Argentina every year. Buenos Aires city has taken 4th place in the ranking of the most visited cities in the world for the past three years. |
| 4. | CREATIVITIY AND DEVELOPMENT OF NEW TECHNOLOGIES Finally, while still an incipient phenomenon, the increasing role played by certain emerging economies in the creation and development of new technologies holds great promise for Argentina. Once again, the outstanding quality of local human resources, the vibrant network of internationally renowned scientific institutions and strong public sector support are three of Argentina’s many attributes that has firmly positioned the country as a regional R&D hub. The wide variety of awards granted to the local scientific community, including the highest number of Nobel prizes in sciences in Latin America, reflect the country’s exceptional capacity. |
Prosperar
Undersecretariat of Investment Development
Florida 375, 8º Floor, “B” Apart,
Buenos Aires, Argentina (C1005AAG).
Tel : (54 11) 4328.9510
Email : infosuinv@mrecic.gov.ar
Website : http://www.prosperar.gov.ar/en/
For further information in Malaysia, please contact:
Embassy of Argentine Republic in Malaysia
Mr. Luis Luna (Counsellor)
Suite 16-03, Menara Keck Seng,
203, Jalan Bukit Bintang, 55100 Kuala Lumpur.
Tel : 03- 2144 1451 / 61
Fax : 03- 2144 1428
Email : lul@mrecic.gov.ar