About 1 month ago - Technology and Innovation

The atrocious charm of being Argentine

By Mágali Urquiza

The atrocious charm of being Argentine

"Argentinians are capable of the best and the worst. We can be both supportive and cruel, generous and selfish, creative and destructive. That is our greatness and our tragedy.”

Surrounded by both epic and sad tales, Argentina's history boasts a plot full of economic malpractice. Twin deficits at 17 points of GDP, currency controls, 15,000% annual inflation, debt with importers amounting to USD 30 billion, and the list goes on. While it is true that the decline in real wages, the rise in contained prices, and the drop in consumption have increased our risk of recession, it is also true that for the first time in its history, Argentina today finds itself before the historic possibility of leading the geopolitical map.

With two active wars, a 2% drop in global foreign trade over the past 3 years, and a projected 60% increase in food demand, it is very rare that we will find ourselves in this position both at a national and international level again. However, years of fiscal disaster, regulations, and state protectionism have left a damage in the collective unconscious that prevents us from realizing how competitive we really are in the world. Likewise, we have also forgotten that the role of the government is not to act as a messianic leader, protecting industries and controlling prices. On the contrary, the role of a government is to create the necessary conditions of freedom, spontaneity, and free coordination so market agents, both small and large, can interact and exchange goods and services freely.

Blinded by Protectionism

An eternal problem in Argentina has not been the lack of competitiveness nor the lack of qualified personnel, but inflation, price controls, and the distortion of relative prices. Inflation is solved by stopping emission, and in that regard, the macroeconomic program of Luis Caputo and Pablo Quirno focused on abruptly reducing inflation and saving three monetary bases in interests (40 Billion pesos) just by lowering rates.

Regarding regulations, historically Argentina has deployed a policy scheme that ensured the persistence of obsolete businesses for the average citizen just because they were extremely profitable for a marginal percentage of the population.

Dismantling these regulations and protections not only generates a strong resistance from those who benefited from these distortions, but it also forces the average citizen to face an almost forbidden truth: "For the price level to improve, we need to increase our competitiveness."

If there is one clear thing from President Javier Milei's administration, it is that provinces must resort to the strategic exploitation of their own resources to stay productive and, above all, be capable of sustaining their own public structure.

Under this federal approach, it is critical to understand that the real change does not lie merely in the approval of the Fundamental Law nor in the political consensus the President can achieve in the Senate. The real change lies in the population being aware that they are facing the opportunity to redefine their international insertion strategy but this time, with them inside.

Ignoring the historical opportunity in which the Argentine entrepreneur finds himself and the geopolitical conditions just because of the innocent belief that we strictly depend on a political figure or a more sophisticated corporate institution is not only false but is something we call in this article "The Price of Ignorance".

"We are at a crucial moment to start building an unprecedented bridge between Argentina and the United States, uniting the major private sector actors of both countries. This union becomes necessary both from a geopolitical, commercial, and social viewpoint. The United States, as a world leader, has the responsibility to channel investments, development, and technology towards countries like Argentina. These countries not only have the experience and deep knowledge of market dynamics, but they also share a sociocultural profile where values such as merit, determination, and the awareness that work and effort are the foundation of progress prevail."

"The Argentine biotech sector urgently needs to strengthen its ties with the United States. The potential of this sector is immense, but it requires a clear and strategic vision to reach its maximum potential. Collaboration with an experienced partner like the United States can be the definitive push for Argentine biotechnology to reach new horizons," said Mariano Meneo, co-founder and CFO of the consulting firm GB.

What the State Can Do vs What the Producer Can Do

When we talk about the functions of the State and creating the necessary conditions for free exchange, this inevitably implies a fiscal reform. For example, in the agricultural sector, the State's share in soybeans is 68.4%, corn 57.3%, wheat 83.9%, and sunflower 54.1%. Although production levels are higher post-drought, the drop in prices reduced the gross production value.

Returning to the concept of federalism, to overcome political and economic fragmentation at the national level, it is necessary for each province and each municipality to propose a new scheme of tax incentives to attract both local and foreign investments. These must at least match or exceed those proposed by the RIGI (Regime of Incentives for Large Investments).

This will not only increase the productive capacity of each of its resources but also encourage the construction of direct trade links with foreign countries without the intermediation of provinces like Buenos Aires. This is no small detail considering that all links to and from Argentina until now had to go through Buenos Aires.

To better explain this concept and not limit it to a single sector, it is necessary to refer to this graphic about the locations with the greatest attractiveness for the mining industry where it reflects a curious particularity: the list includes both countries and provinces.

Another example but in the agricultural sector, if we take a random crop like garlic, Argentina has stood out as one of the main suppliers of fresh garlic to the United States. In 2023 alone, Argentina ranked fourth on the list of garlic suppliers, after China, Spain, and Mexico, exporting 10% of the total value imported by the United States. At the provincial level, San Juan generated fresh garlic exports totaling USD 51.6 million in FOB. The result? It is the province with the lowest poverty rate in the Cuyo region.

In conclusion, on one hand, it is time for provincial governments to be aware of this new federal vision where internal migration will fundamentally emerge based on competitiveness and the efficient creation of a pro-market incentive system. From a national perspective, fiscal equilibrium is not up for discussion and to overcome it, they will have to generate competitive provinces not only within Argentina but with the world.

On the other hand, for many years we have suffered from the miseries of living in a country that knows no other reality than being immersed in economic turmoil. We have complained, we have cried, and we have watched enviously as other countries have managed to win that trophy we have worked so hard for. Today the reality is different.

Today reality proposes that we embrace our destiny in the way we have always dreamed: Strong, determined, and unbreakable. Unfolding our essence in each product before the world, showing that we are back but this time to stay.

But that final decision is neither in the hands of politicians, nor large groups or corporations.

That decision is ours and it is up to us to decide whether we hold on determinedly to that destiny of greatness to make it brilliant or whether we prefer to succumb to the easy path and fall into the eternal chapter of misery and nostalgia about what could have been but never was."

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magali urquiza

Mágali Urquiza

Mágali Urquiza studied Economics at the University of Buenos Aires. He worked as a biotechnology analyst for 11 years at RFT, Finguru. In addition, she was a consultant for the development of cell therapy in Chile and a Biotechnology fund advisor in Boston and Cambridge. Mágali also founded Leapcode Bio, a startup dedicated to data collection in neurological patients. Currently, he holds the post of Chief of the Biotech Unit at GB Consulting in Mendoza and, in his free moments, he contributes as a writer for Biospace, an American publisher who focuses on public companies in Bio.

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