Argentina is losing despite having everything the world needs

In an activity that creates more wealth, more development and more employment, but the country does not have exclusivity, these investments seek more stable areas.

October 4, 202200:05

It’s good news. And it’s bad. right, Argentina has everything the world needs, from lithium to soy and food, through oil and gas. The bad news is that he’s always had it, but his potential is locked away.: compared to the countries of the region, in the sectors that became heroes in the middle of the pandemic, post-pandemic and war in Ukraine, Argentina loses despite everything. Where there is opportunity, failure is born.

This is not an inevitable fate in Latin America. For example, Brazil, now polarized between Lula and Bolsonaro, presents itself politically as a party, but there are differences that persist. Some things are working, for example, the development of its oil sector and the positive stimulus from the development policy of the agriculture and food sector.

Today, Brazil is the largest exporter of oil in all of Latin America. And Argentina was years ago, but is now a net importer of energy. In food, the panorama seems to be more favorable: Argentina is a net exporter. But this fact is immediately overshadowed: their problem is productivity. Brazil was a net importer of food until it implemented a state agro-industrial policy. It started with Lula’s first presidency and has been maintained until the current Bolsonaro. Soybean production in Brazil increased by 90% in 10 years. In Argentina, during that decade, growth was zero.

More than Argentina’s strength, Argentina is pure potential that eludes its realization. Impotence Argentina: having everything, facing nothing. Several questions arise: First, are leaders the problem? which one

We know: the inefficiency of energy resource management is related to the subsidy policy defined by the Kirchner national government and its impact on energy investments. But the issue is also about the responsibility of provincial governments. and to federalism, which has increased the scope of its power as a result of the constitutional reform that faced democracy in 1994, but is endemically ineffective in converting power and political capital into wealth, development and equality. In this constitution, the exploitation of natural resources in general, including energy and mining, falls under the jurisdiction of the provinces. Argentina was young at that time. The failure of the provinces could not be foreseen.

The challenges overlap: Bad national policy decisions have added to the incentive for governors to sign operating agreements with short election periods on the horizon.. It is about the reproduction of power without regard to the welfare of the provinces or the general public. These policies have consolidated poverty, which INDEC has shown to be around 40% or more in mining provinces.

However, during the trip of the governors of the great mining north to the United States last week, they represented the Scandinavian governors of the poorer provinces. “Surprise”. “Awesome”. “Very awesome.” These are the comments of Argentine businessmen, men and women from the markets and academics who make up the Argentine “Red Circle” after hearing presentations by the governors in Washington and New York. Speeches of rational statesmen, but inept provincial governors.

The moderator of a panel featuring governors held last Friday at the US Capitol in Manhattan pointed to the contradiction. Director of S&P Global Ratings, Lisa Schinnertook the words of the governor of Santiago del Estero, Gerardo Zamorawho has been ruling the province since 2005, alternating power with his wife, Claudia Ledes did it.

“We see great potential in Argentina, in its natural wealth and human capital, and in this difficult global moment, as the governor pointed out, there are many opportunities in terms of food, energy and technology. But when we look at the performance of the Argentine economy over the decades, there are weaknesses,” Schinner countered. His diagnosis highlighted Argentina’s problems: Lack of stability, GDP that grew less than 2% for decades and GDP per capita less than 1% per year, inflation averaging 30% for decades.. And this sparked a debate: why should we have hope now, if it was not possible before, even with IDB financing ten years ago?

The question is central. Why was it not possible to have the resources and finance before?. Why is it possible to succeed now? Zamora spoke the language of unreality. “If you don’t know anything about Argentina and the power of the provinces, Zamora could convince everyone,” summed up the Manhattan-based Argentinian entrepreneur.

The structure of federalism becomes a matter of strategic concern in two ways among experts who study this sector. Due to the risk of continuing to miss out on opportunities, ie the currencies of the energy and mining sectors. and because of the provinces’ low capacity and little incentive to enter into investment agreements that simultaneously address environmental sustainability.

Unnecessary visit

A second question arises from this visit about everything and nothing in Argentina. What’s the point of a trip that doesn’t generate credibility among potential investors? During business visits to the US, such a deployment of the governors was unnecessary: ​​investments will be made the same in the energy and mining sectors, which make decisions based on the high rate of return in sectors that are only in Argentina and a few countries. For example, lithium. The trip is exclusively political, and he is looking for a photo in the US to establish causality: these visits as the key to investment arrivals. The work of the sector and the roughness of Schinner’s analysis showed that the photo is not enough. There is mistrust. In other activities that create more wealth, more development and more employment, but Argentina does not have exclusivity, these investments are looking for more stable areas.. Nor would they reach the rhetorical falsehood of the governors.

Exploitation of lithium. oil and gas. All the resources that Argentina has, but the policy under-implements and under-utilizes them, and when it does use them, it does not lead to provincial economic development. Public employment still dominates the picture. The effect is negative: it takes more resources to build energy.

A third question that arises from this visit is the contrast between words and deeds. The double discourse of the governors who strengthened the debt of democracy raises the question: that they do not know the rational logic of the market, wealth and development and the virtuous circle of justice. What then is the incentive to pursue the opposite policy? Does it take too long and people don’t take the time? Does this rationality conflict with the creation of political foundations? Do they not have the necessary bureaucratic capacity?

The contradiction between discourse and reality is also a historical problem of Kirchnerism. In 2006, the energy trade balance showed a surplus of 6.1 billion dollars. Almost 10 years later, in 2015, the picture was different: a deficit of $4.6 billion. The Kirchnerist conceptual matrix anchored by an import substitution hose did the opposite: it condemned Argentina to energy dependence..

Maximo Kirchner It also shows the pendulum swing of the Kirchnerist worldview. It becomes rational when the crisis comesFor example, inflation and exchange rates go through and allow, for example, soybeans to dollar. But he is still resisting because of impatience with results and electoral risk. “The grain producers have brought us to our knees and we have to give them another dollar to pay,” he said. A few days earlier, his mother, Christina Kirchner, tweeted again against the food sector when she accused them of excessive profits and speculative price increases. The sector that Lula and Bolsonaro protect.

The problem is capital: in every indicator that is important to analyze the progress of society and economy towards growth, development and equality, Argentina loses in everything. Poverty, poverty gap, average wage in dollars, GDP growth, private job creation, export balance of key sectors, productivity and educational attainment.

The decades-long endemic educational crisis, which has stagnated at very low levels for all students, even for high socio-economic levels, also calls for questioning how federalism is structured. The Governors’ League, which is now gaining strength again on everyone’s domestic front. and manages to condition not only his provinces, but also society in general.