Don’t Cry for Argentina…Tango and Trade are Their Trump Cards

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When most people think of Argentina, they probably think of the tango, wine, soccer fanatics or maybe the emotional play, Evita. What many may not know is that despite many setbacks and hardships, this country of proud and hardworking people has continued time and again to rise and become one of the leading exporters of products ranging from soybeans to software.

Until the arrival of the Europeans in the 16th century, Argentina was a sparsely populated country and most people lived either in small, walled towns that made pottery, grew potatoes and squash and used metal for their work, or belonged to hunter-gatherer communities. Despite the Spanish and British fighting for land and the breakup of the United Provinces into what is now Bolivia, Argentina and Uruguay, Argentina has continued to grow and develop its’ resources. The first railroad was introduced in the country in 1857 and by 1912 there were over 20,000 miles of railroad throughout Argentina, making it easier to export goods to other countries. Due to exports of wool, meat and grain, by 1900 Argentina was the richest country in Latin America and the seventh richest country in the world. At the same time, the population was booming due to a new wave of immigrants from Italy and Spain. Then Argentina, like the rest of the world, was deeply affected by the Great Depression and subsequently ruled by ineffective leaders and dictators throughout much of the next century causing Argentina to become largely indebted. After a severe recession in 2001-2002, the economy began to grow rapidly for several years. This growth occurred in part by making the peso equal to the US dollar, privatizing numerous state-run companies and using part of those proceeds to pay off debts.

Despite the challenges Argentina has faced, it remains one of the top exporters of agricultural goods in the world due to its’ great number of natural resources including soybeans, maize, meat and wheat. In December 2015, Mauricio Macri, a pro-business, pro-trade leader was elected President. Since his election, Macri has been working tirelessly to do a complete 180 from previous President Cristina Fernandez de Kirchner’s policies and revive Argentina’s struggling economy. As part of his reform, Macri has sought to open Argentina to more foreign trade. Macri’s hard work seems to be paying off. In 2016, Argentina shopped US$57.7 billion worth of goods around the world. 29.6% of Argentine exports by value are sent to Latin America (excluding Mexico) and the Caribbean countries and 11.1% are sent to North American nations. Top imports from Argentina include soybeans, wine, cereal, oil seed, meat and chemical goods. In 2017, inflation is coming down sharply, the economy is coming out of the recession and a trade dispute with the U.S. has been resolved. On August 13, former President Kirchner lost the primary vote for a seat in Argentina’s senate, which gave many investors cause to celebrate. The peso rallied 3.2% the following day, showing the biggest gain Argentina has experienced in the past year.

While Argentina celebrates Kirchner losing the vote, they also warn the U.S. to use Kirchner and her protectionist trade policies as a cautionary tale for the U.S. if Trump places tariffs on imports. So why should the U.S. trade with Argentina? Under Macri’s leadership new trade possibilities are available. During former President Obama’s trip to Argentina, the two leaders discussed new opportunities to work together including the possibility of increasing bilateral trade to benefit both economies.  Many hope the current administration will continue to advance these negotiations. As of July 2017, 45.7% of U.S. imports come from Asian countries but what if we could begin to import more from nearshore countries? Argentina has an abundance of goods to offer, their time zone is only one hour ahead of the east coast of the U.S., Spanish is the second most common language in the world, and their customs and culture are much more similar to the U.S. making Argentina a great candidate for trade.

Further, according to Nearshore Americas, Macri is trying to bolster outsourcing efforts in Argentina by creating 80,000 technology jobs over the next few years, with a goal of hitting 200,000 by 2024 as it implements initiatives to train coders, programmers and quantitative analysts. However Argentina is not an inexpensive place to outsource as the cost of delivery for CRM services is high. That being said, the Argentinian workforce is highly educated and should not be underestimated, especially when combined with competitive and consistently “lower-loaded” (to include bonuses, vacation, etc.) wages

With so much change and promise, it behooves us to keep an eye on Argentina. This is a country worth watching. 

Brittany Miller, Marketing Analyst, SIG

Brittany Miller is the Marketing Analyst for SIG and the LatAm Alliance, with an emphasis in building online communities and supporting education in the U.S. and Mexico, where she currently resides. Brittany has taught middle and high school biology, chemistry and health sciences. As a type 1 diabetic, she has always been interested in science, cause and effect and the intersection of medical science and technology. She translates that passion into blogging about millennial issues, human health issues and the disruptive technologies that affect both. Brittany has a bachelor’s degree from Santa Clara University in California.