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Argentina: a strategic destination for
productive investment
Undersecretariat for Investment Development and Trade Promotion
Ministry of Foreign Affairs and Worship
2013
Why invest in Argentina?
Why invest in Argentina?
1. Sustainable economic growth
2. Attractive business profitability
3. Strength to face the global crisis
4. Strategic location
5. Openness to the world
6. Diversified economy
7. Abundant and diverse natural resources
8. Skilled and highly creative workforce
9. High levels of scientific, technological and productive
innovation
10. Modern infrastructure and high-quality connectivity
1
Sustainable economic growth
A dynamic economic model based on social inclusion
.
 One of the fastest-growing countries worldwide: leader in
Latin America for the past decade.
Argentina boasts the highest
economic growth in the region
 Sustainable macroeconomy: sustained external surplus,
accumulated international reserves, substantial reduction in
public debt and fiscal solvency.
 Dynamic domestic market: private consumption has grown
at an average rate of 7% per year in real terms since 2003.
8%
7%
6%
5%
4%
3%
2%
1%
0%
7.2%
3.8% 4.1%
1.3%1.3%
Source: Ministry of Foreign Affairs and
Worship (MREC) based on IMF
G7
 Record-high exports close to US$ 100 billion for goods
and services in 2011 (US$ 96 billion in 2012).
Average growth rate of GDP
(2003-2012)
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 Record investment rate for the last 30 years in 2011
(22.8% in 2012).
1
Sustainable economic growth
A dynamic economic model based on social inclusion
Five
million
new
jobs
created; a
decrease
Argentina ranks as a very high
human development country
(UNDP)
in
unemployment levels from 21.5% in 2002 to 7.2% in 2013.
Economic policies prioritize socioeconomic integration
and social inclusion as primary goals.
Improved income distribution: the Gini ratio reduced
from 0.53 in 2003 to 0.42 in 2012.
GDP per capita (PPP)
In thousands of current international US$ (2012)
18.4
18.1
15.9
Inclusion of the most vulnerable age groups into social
15.3
13.6
security coverage; substantial reduction in poverty and
11.9
indigence levels.
10.8 10.7
10.1
6.1
Ranked as a Very High Human Development country in
5.1
Source: MREC based on IMF
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the United Nations 2012 Human Development Index.
2
Attractive business profitability
Productive investment delivering high returns
Argentina offers high profitability for
FDI
 High profitability in
productive sectors.
a
wide
range
of
 New record-high profits from Foreign Direct
Investment (FDI) as a percentage of assets,
with the annual average exceeding 9% in the
last four years.
 Profits over sales above 13% for the 500 nonfinancial private companies in 2006-2011.
 More than 2,000 multinational companies
operating in diverse sectors share a long-term
vision and renewed investment commitments.
FDI profits (as a percentage of assets)
12%
9.7%
10%
8%
10.8%
8.7%
6%
4%
2%
1.3%
0%
1993-2000
2002-2003
2004-2007
Source: MREC based on Argentina’s National Institute
of Statistics and Censuses (INDEC)
2008-2012
2
Attractive business profitability
Productive investment delivering high returns
Profitability as a percentage of assets
(2010)
10%
8%
Aut
om
otiv
e
Win
e
11%
Plas
tics
d
11%
Foo
12%
iles
13%
Tex
t
14%
ery
17%
Ma
chin
17%
Adv
erti
sing
18%
rvic
es
Hou
se h
old
app
lia..
.
Che
m ic
al in
d us
try
Me
dica
l ins
trum
e nt
s
18%
IT s
e
nes
19%
Me
dici
rag
es
22%
Bev
e
25%
20%
15%
10%
5%
0%
Source: MREC based on Argentina’s Federal Administration of Public Revenues (AFIP)
Argentina offers
profitable
opportunities in
a wide range of
sectors
3
Strength to face the global crisis
Effective public policies aimed at fostering demand
.
 An inclusion-based model for growth, in which the
strong and dynamic domestic market is one of the
key pillars.
 Proven ability to sustain the economic growth
cycle from the on-start of the global crisis,
exceeding the average of emerging countries.
 Low level of public debt and high level of
international reserves, increasing capacity to
implement counter-cyclical public policies.
Argentina registers sustained growth in
the face of the global crisis
Annual average variation of GDP
(2008-2012)
5.6%
5.5%
3.3%
 Job protection and social inclusion policies drive
domestic demand and production.
 Investment promotion initiatives such as credits
facilities for the productive sector and a
construction plan to build 400,000 homes.
1.8%
0.5%
0.0%
Emerging Argentina
Latin
economies
America
Source: MREC based on IMF
World
Developed European
economies Union
3
Strength to face the global crisis
Effective public policies aimed at fostering demand
Public debt as a % of GDP and variation in percentage points
(2007-2012)
+41%
Argentina is pursuing
its debt reduction goal
despite the global
crisis
+28%
-20%
+4%
European Union
United States
2007 (pre-crisis scenario)
Source: MREC based on IMF
Latin America
Argentina
2012 (current scenario)
4
Strategic location
Strong ties with Latin America
Argentina is part of a dynamic
region strengthening its ties
Intra-MERCOSUR exports and MERCOSUR exports to the
world - 2002=100 index - In millions of US$ - Annual average
growth rate 2002-2012
600
+18.6%
Intra MERCOSUR
500
Extra MERCOSUR
400
+13.6%
300
 Located in a region endowed with
resources to meet current and future local
and global demands.
 Strategic player within the main food
exporting region in the world.
 Share of world resources: 27% of potable
water; 12% of arable lands; 21% of native
forests; and
sufficient
hydrocarbon
resources to satisfy demand for more than
100 years.
 A motor for Latin America’s increased
integration in terms of economy, politics,
society and culture.
200
 High economic growth, an expanding
domestic market and a dynamic middleclass.
100
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: MREC based on the Center for International Economy (CEI),
INDEC and IMF
4
Strategic location
Strong ties with Latin America
 Full MERCOSUR member, together with Brazil,
Paraguay, Uruguay and Venezuela:
 Preferential access (0% tariff) to a regional
market of 279 million inhabitants and aggregate
GDP of US$ 3.6 trillion.
 Great
industrial
opportunities
to
specialization.
complementarity
and
deepen
productive
 Member of UNASUR (Union of South American
Nations); ALADI (Latin American Integration
Association); and ECLAC (Commission for Latin
America and the Caribbean).
Member countries
Associated countries
Associated countries
(under ratification process)
 Regional leader in the defense of the democratic
institutions in Latin America
 Open and welcoming immigration policies in place
with other countries in the region .
5
Openness to the world
Global economic integration
 G-20 Member .
 Active presence in several international organizations, including the
World Trade Organization, G77+China, United Nations, UNCTAD,
ECLAC and FAO, among others.
 Global economic insertion and expanding South-South cooperation
ties.
 Strengthening of the bilateral relations with the BRICS as well as
other developing countries.
 Highly dynamic exports, with values tripling over the past eight
years.
 Diversified export basket with shipments to more than 150
destinations.
 Trade growth with the rest of the world (2003-2012) of 14.6% per
year.
 One of the countries with the least restrictive FDI legislation in the
world: 11th worldwide, 2nd in G-20 and 2nd in Latin America
(OECD).
 Open multicultural society without ethnic or religious conflicts.
Argentina expands its exports in all
economic sectors
Exports by major items
In millions of US$ (2002-2012)
30,000
25,000
20,000
15,000
10,000
5,000
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Primary products
Agricultural manufactures
Industrial manufactures
Fuels and energy
Source: MREC based on CEI
6
Diversified economy
Investment opportunities in every productive sector of the economy
 Diversified productive matrix with investment opportunities in
every sector.
 Great technological development in the agrifood value chain,
including innovation in seeding, direct sowing, precision agriculture,
agricultural machinery production, silo bag storage and vaccine
development for animal health, among others.
 Leading country in the international food market, with exports
exceeding US$ 25 billion (2012).
 One of the world’s main exporters of oils, cereals, meat, fruit,
honey and wine.
 High sanitation and environmental standards that meet the most
demanding requirements from global food and beverage
consumers.
 Industrial structure with a strong tradition in countless diverse
productive sectors: agroindustry, textiles, footwear and handbags,
chemicals and pharmaceuticals, capital goods, durable consumer
goods, automotive and auto parts.
6
Diversified economy
Investment opportunities in every productive sector of the economy
 Dynamic growth of industrial exports (13%
per year in 2003-2012), gaining share in total
external sales.
 Accelerated development of renewable
energies, biotechnology, software, creative
industries and other frontier sectors.
 Main tourism destination in South America,
with almost six million tourists per year in
2011.
 Highest proportion of FDI projects with high
technological intensity in South America
(ECLAC).
 Increase in the productive capacity of
domestic and foreign companies, with 97% of
FDI flows being directed to new projects and
expansion (compared to 43% in the 1990s).
Argentina has a diversified
economic structure
Gross added value per sector
Average growth rate per year (2003- 2012)
6.9%
GDP (all sectors)
10.9%
Transport, storage & communications
9.4%
Construction
8.8%
Wholesale and retail trade and repairs
6.6%
Manufacturing industries
6.4%
Other service sectors(*)
6.1%
Hotels and restaurants
4.7%
Electricity, gas and water
4.2%
Real estate, business and renting
Agriculture, livestock, hunting, forestry, fishing, and
mining and quarrying
Source: MREC based on INDEC
1.0%
*Including: Financial
intermediation; Public
Administration and Defense;
Teaching, health and social
work; Other community. Social,
personal and domestic
services.
Abundant and diverse natural resources
Rich resources available for sustainable development
 Second largest country in Latin America; 8th in the
world: 3.8 million km2.
 Highest agricultural productivity levels in the world.
 Vast extension of fertile land for agriculture: 9th
largest extension of agricultural area in the world
with 147 million hectares of arable lands (FAO).
 Ample forest resources: more than 33 million
hectares of native forests and 1.2 million hectares of
planted forests (FAO).
 4,500 km of mountain ranges with mining resources:
gold, copper, lithium, carbon, lead, zinc, tin, silver
and potassium.
 4,700 km coast along the Atlantic Ocean with rich
fisheries.
7
7
Abundant and diverse natural resources
Rich resources available for sustainable development
Exports – Main products (2010)
 Vast oil and gas resources with exploration and exploitation
opportunities.
 Ranked 2nd and 4th worldwide in shale gas and shale oil
reserves.
Position
Product
 High development potential for hydraulic energy, which
accounts for more than one third of the country’s total
electricity output.
1st
Concentrated lemon juice, peanut
oil, soybean oil, soybean cakes,
horse meat, yerba mate, soy
2nd
Corn, honey, sunflower oil,
prepared peanuts, shelled
peanuts, peanut cakes, sorghum,
safflower oil.
 Promising developments in renewable energy (wind, biofuel,
solar, geothermal, biomass).
3rd
Grape juice, cotton oil, non-pitted
olives, birdseed, dried plums,
whole powdered milk, wheat
meal, soy.
Source: MREC based on FAO
Skilled and highly creative workforce
Argentine talent
 Workforce internationally renowned for its skill set,
creativity and versatility.
 More than 99,000 graduates from higher education
programs and almost 11,000 postgraduate students from
115 universities across the country enter the labor
market each year.
 Economically active population (EAP) with the highest
education level in Latin America.
 Latin American country with the highest number of
Nobel Prizes awarded in science (three prizes).
 Highest level of public investment in education in
the region (equal to 6% of GDP).
 The most dynamic work productivity in the region
in recent years (ECLAC).
8
8
Skilled and highly creative workforce
Argentine talent
Argentina bets on
education
Public spending on education to GDP - in %
(2011)
8%
6.0%
6%
5.6%
5.3%
4.5%
4.2%
4.1%
Colombia
Chile
Paraguay
4%
EAP’s average number of years of education
in urban areas (2011)
2%
0%
Argentina
Brazil
Mexico
Latin
America
and the
Caribbean
9.1
Braz i
l
bia
9.7
Colom
10.2
Me xi
co
10.3
U rug
ua y
10.4
Bol iv
ia
uay
10.5
Parag
or
10.5
Ec uad
10.9
Pe ru
11.6
Chile
11.9
Argen
t ina
14
12
10
8
6
4
2
0
4.8%
Argentina’s workers have the
highest education level in the
region
Source: MREC based on ECLAC
High level of scientific, technological and productive innovation
Toward greater competitiveness and higher added value
 Development of knowledge and technological skills
at the service of productive activity.
 Creation of the Ministry of Science, Technology and
Productive Innovation in 2007 .
 Scientific and Technological Pole (opened in 2011)
recognized for its contribution to scientific
development, production and dissemination of
knowledge.
 Fifty five per cent increase in the number of R&D
professionals over the period 2003-2011.
 Highest ratio of researchers to the economically
active population (EAP) and ranked 3rd in terms of
the number of R&D technicians, measured as total
number per million inhabitants in Latin America
(World Bank).
9
High level of scientific, technological and productive innovation
Toward greater competitiveness and higher added value
 About 500 researchers and 1,000 research fellows
join the National Technical and Scientific Research
Council (CONICET) each year.
 Largest number of nuclear plants in Latin America:
Atucha I, El Embalse and Atucha II.
 Development of aerospace projects led by INVAP,
a public company of world renown for satellite
development and other space projects.
 One of a few countries in the world with
multispecies cloning capacities.
Argentina invests in R&D
Investment in science, technology and R&D activities
2003-2010 (% of GDP)
0.8
0.7
0.7
0.6
0.62
0.5
0.4
0.46
0.41
0.3
2003
2004
2005
2006
Inversión
actividades
Investment
in Sc &CyT
Tech
2007
2008
2009
2010
Inversión
en I+D in R&D
Investment
Source: MREC based on the Ministry of Science, Technology and Productive Innovation
9
Modern infrastructure and high-quality connectivity
A strong network in expansion
 Public investment at a historic high (going from 0.7% of
total public spending in 2002 to 3.5% in 2011).
 Well-developed transport and infrastructure system:
more than 39,322 kilometers of national roads and
195,837 kilometers of provincial roads; one of the longest
rail road networks in the world (36,000 kilometers); 43
ports and 54 airports.
 High rates of internet penetration into companies and
homes.
 2nd country in Latin America with the highest number of
mobile lines per 100 inhabitants (World Bank, 2011).
10
Modern infrastructure and high-quality connectivity
10
A strong network in expansion
Investment rates at constant prices
Linked series: total, public and private investment (% of GDP)
Public investment
30%
Private investment
Total
24.5%
25%
21.6% 23.1% 22.8%
20.6%
21.1%
20%
Argentina increases
its productive capacity
15%
10%
5%
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0%
Source: MREC based on the Ministry of Economy (MECON)
Thank you!