Argentina Essay -- essays research papers

I. INTRODUCTION Argentina lives in a democracy since 1986. Before this year lived it under a military regime. In the nineties under the presidency of Menem the country experienced a great increase in the liberalization of trade. Argentina has a free market economic system. Due to the recent privatization program, the State now has a very limited role in the economy. According to the Competitiveness Report of the World Economic Forum Argentina is classified as one of the most open, least protectionist countries in the world. Its currency is convertible to the US dollars and there is total freedom for moving capital internationally. Argentina has conducted one of the most intensive privatization programs in the world. The telephone company, airlines, most railroads, electric power production companies (including hydroelectric power plants), the Argentine oil company YPF (bought by the Spanish company Repsol) steel mills, ports, TV stations and most public services were transferred recently to the private sector. Consistent with Fundacion Invertir the combined value of privatized firms amounts more to more than US$ 30 billions. Many foreign firms have participated in this large-scale privatization program. Foreign investors do not need to seek any kind of prior approval and are free to repatriate full amount of their capital and earnings any time. Foreign and domestic companies are treated equally. Under the law, they have access to all economic sectors and are eligible for incentive program and state procurement. II. TRADE PATTERN It is hard to state the type of trade that exists between Argentina and Brazil in the automobile industry because both countries import and export cars of the same brand and very similar models. Volkswagen produces some of its model of cars in Argentina and some others model in Brazil. The reason for this is to achieve economies of scale; each country specializes in a certain model of car, by doing so they reduce the cost of each additional unit. Another reason for specialization of production in each country is that it might be cheaper to produce a certain model in either Argentina or Brazil. Several companies as Volkswagen have invested in production facilities in Mercosur. Additionally, joint ventures between local and foreign parts manufacturers have improved quality. A report on Argentina auto parts/services announced that loca... ...stment payments, and transfers. Argentina has generally maintained a deficit position in trade in services, and has historically paid out more investment income than it has received, keeping its finances on edge. Countries whose foreign direct investments keeps up with its domestic growth can afford such disparities. Nevertheless Argentina's deficit current account shows that the economy might be hurt even more by capital flight. Thus the development of exports, especially nontraditional ones, is taking on greater urgency. In recent years exports of manufactured products increased at respectable rates. "In 1995 industrial products grew 40 percent while primary products and manufactured agricultural products each grew 29 percent. In 1996, exports of industrial products decreased 0.6 percent, primary products grew 21 percent, and manufactured agricultural products 13 percent. In 1997, exports of industrial products grew 27 percent, and manufactured agricultural products 7 percent, however the primary products decreased 2.4 percent. Imports of capital goods and parts are a major component of total imports, which are being used to increase productivity." (Fundacion Invertir)