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1 -
Political Status
Argentina, which is a Latin American country,
is a federal state made up of 23 provinces and a
federal district. The capital is Buenos Aires. The
regime is that of a pluralistic democratic
republic.
The constitution dates from 1853 and was modified
in 1994.
The President of the Republic is elected by general
election for a four year term of office, which can
be renewed once.
The present President is Mr Fernando de la Rua,
since the 10th December 1999.
There are 257
members in the Chamber of Deputies, elected for a
four year period, half at a time every two
years.
There are 72 members in the Senate (3 per
province), who are elected for a 6 year term of
office by general election.
Historical outline
1816 : independence after a long struggle
1853 : after several conflicts with Brazil, Bolivia
and Uruguay, Argentina creates its own federal
Consititution
1943 : the outcome of the 1929 crisis was the
coming to power of military regimes which were both
conservative and corrupt. The last of these
presidents, Ramon Castillo, was deposed in 1943 by
a group of nationalist officers, amongst whom was
the future general Peron
1946 : Juan Domingo Peron came to power. He
developed and implemented a doctrine called
"justicialism", which was a mixture of nationalism
and social reform. His wife Eva Duarte, "Evita",
became the high priestess of this doctrine and was
adored by the people.
1955 : Peron was pushed out of power by other
military regimes. He took up exile in Spain, while
Argentina went through a series of crises.
1973 : In spite of being old and in bad health,
Peron was called back to power and re-lauched his
doctrine 1974 : death of Peron. His second wife
Maria Estela "Isabel" replaced him, but the army,
led by General Videla rapidly removed her from
office and took over the country with such ferocity
that they set the country against them
1982 : in a search for popular approval, General
Galtieri invaded the Malouine islands, a British
possession in the south Atlantic, also known as the
Falkland islands
1983 : this military failure brought about the fall
of the regime and the return to power of a civilian
president, Raul Alfonsin
1989 : the country is faced with both political
problems and serious economic problems. The
Peronist opposition won the elections with their
presidential candidate Carlos Menem, who was
re-elected in 1995. 1991 : the law is passed on the
parity of the peso and the dollar : 1 peso = 1
dollar
In the same year the free trade zone called
MERCOSUR was created between Argentina, Brazil,
Paraguay and Uruguay (*details at the end of the
chapter 'Economy' )
10th December 1999 : Fernando de la Rua (a radical)
is elected president and creates a coalition
government with the central-left wing.
Both the election campaign and the handing over of
power on 10th December 1999 took place in perfect
conditions of democratic good citizenship, proving
that democracy and political stability are now well
established in Argentina.
2 - Geographical situation
Argentina is the eighth biggest country in the
world with a total surface of 2,766,889 square
kilometers.
It is situated in the southern hemisphere near the
Tropic of Capricorn on the 50th parallel. The coast
line stretches over nearly 5000 kms along the
Atlantic Ocean. Argentina has 832 kms of borders
with Bolivia, 1224 kms with Brazil, 5,150 kms with
Chile, 1,880 kms with Paraguay and 579 kms with
Uruguay.
It is made up
of the regions of the Andes, the pre-Andine Sierras
and the Pampa, which is a flat stretch of land
covering a million square kilometers, starting 600
kms out of Buenos Aires.
The
Cordillera of the Andes rise up in the north
west.
The main towns are all in the north east.
The plains of the pampa are in the centre and the
east
And in the south there are the forests and the
glaciers of Patagonia and the Tierra del Fuego.
3 - Economy
Argentina is the richest country on the South
American continent, in 1999 the per capita income
was estimated at about 8000 dollars, which is by
far the highest in Latin America.
The economy works on a convertibility base with the
US dollar, in April 1991 the Minister of Finance Mr
Domingo Cavallo set up the system of parity, 1 peso
= 1 dollar.
Mercosur, which was created in 1991, is a free
trade zone between Argentina, Brazil, Uruguay and
Paraguay (*details at the end of the chapter
'Economy')
In 1995 a
restrictive policy was put into operation to allow
major reforms to be carried out : reduction of
taxes on exporting companies, the restructuration
of the banking system, the abolition of public
sector related organizations which regulate private
activity, factors disturbing external and internal
trade.
Following the
devaluation of the Brazilian currency in February
1999, Argentina, which is following a strict parity
with the dollar so as not to disrupt the
reorganization of its banking sector, suffered a
shock. It found itself closely bound, within a free
trade zone, to a partner who was taking advantage
of a competitive devaluation. The shock was violent
enough for the Argentinian authorities to discuss
the dollarization of Mercosur. In any case it
disturbed the export figures which had already gone
down following the drop in prices of raw
materials.
The country
remains interesting to investment capital, due to
the Asuncion Treaty, to exports within the Mercosur
countries and to the agreement signed between the
European Union and the Mercosur countries. The
legal framework for investing is very liberal.
Foreign investors can invest in any activity of an
economic nature, without previously getting
permission and within the same conditions as local
investors, except in the audio-visual sector. As a
result of privatizations which have taken place
over the last ten years, foreign groups now control
all the public services, 40% of industry and 90% of
the banks.
Argentina is
strongly backed up by the international financial
community. In mid-December 2000 the IMF proposed a
rescue plan for the Argentinian economy which will
involve over 40 billion dollars.
The external
debt ratio is extremely high : the external debt
represents 400% of the export revenues and its
service charges absorb two-thirds of them. Exports
represent less than 10% of the GDP.
The social
situation has got worse, household consumption has
gone down and unemployment has gone up. The
official unemployment rate is 15.4%, and on top of
that there is an under-employment which concerns
14.5% of the working population, which gives a
total of at least four million Argentinians with
employment problems. Labour charges are much higher
in Argentina than in neighbouring countries, the
gross average monthly salary is a little above 600
dollars, social charges are very high (the
employers contribution is 33%), they are the
highest in Latin America. Black market jobs have
increased, which deprive the workers of any health,
welfare or retirement benefits. The gap between
rich and poor gets bigger all the time. Over two
million Argentinians live with less than a dollar a
day.
The budgetary
deficit and unemployment are governmental
priorities, measures are in the pipeline to reduce
the deficit and the number of unemployed. De la
Rua's government has made an effort to improve the
fiscal balance as required by the IMF by hiking up
taxes. However, a report recently made by the
University of Columbia (USA), which studied all the
policies implemented to reduce the fiscal deficit
in Latin America, concludes that the countries
which have reduced their expenditures have had long
term positive results, whereas those who use the
policy of raising taxes have failed, for you have
to take into account the very strong resistance to
paying taxes that exists in South America. Tax
evasion is one of the favourite sports in Argentina
and can be estimated at 20 billion dollars a
year.
The market
value of agricultural and mining raw materials has
increased and this is a positive element.
Economic statistics
|
|
1997
|
1998
|
1999
|
2000
|
|
economic
growth (%)
|
8.1
|
3.9
|
-3.2
|
2.0
|
|
inflation
(%)
|
0.3
|
0.7
|
-1.6
|
0.0
|
|
public
balance/GDP (%)
|
-1.6
|
-1.4
|
-2.0
|
-1.6
|
|
rate
of unemployment (%)
|
13.7
|
12.4
|
15.4
|
nd
|
|
exports
(billions $)
|
26.4
|
26.4
|
23.8
|
26.3
|
|
importats
(billions $)
|
28.6
|
29.4
|
24.4
|
27.7
|
|
balance
of trade (billions $)
|
-2.1
|
-3.0
|
-0.6
|
-1.4
|
|
current
balance/GDP (%)
|
-12.0
|
-14.7
|
-13.1
|
-12.8
|
|
external
debt (billions $)
|
124.1
|
140.4
|
150.2
|
160.7
|
|
debt
charges/exports (%)
|
43.4
|
52.9
|
66.0
|
67.8
|
General information
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GNP
1999
|
278.88
billions $
|
|
GNP
per inhabitant
|
8,260
dollars
|
|
Purchasing
power parity (PPP)
|
9,140
dollars
|
|
GNP
growth 1990-1997
|
+4,2%
per capita per annum
|
|
Households
with PPP +$30000pa
|
2,150,000
= 22%
|
|
Households
with PPP +$15000pa
|
5,070,000
= 52%
|
|
Households
with PPP -$5000 pa
|
880,000
= 9%
|
|
Aid
1998
|
12.723
billion $
|
|
Foreign
investment 1999
|
23.152
billion $
|
|
Tourism
revenues 1998
|
5.363
billion $
|
Division of the GDP by sector of activity
:
agriculture :
5.7%
industry : 19.1%
mining : 9.6%
services : 65.6%
Argentina's
main export partners:
|
Brazil
|
23.2
%
|
|
USA
|
11.1
%
|
|
the
Netherlands
|
7.5
%
|
|
Chile
|
6.3
%
|
|
Italy
|
4.2
%
|
And its main import partners :
|
USA
|
19.4%
|
|
Latin
America
|
31.3%
|
|
of
which Brazil
|
22.6
%
|
|
Japan
|
4.6
%
|
|
European
Union
|
27.6%
|
Imports to Argentina are subjected to two
different regimes depending on where they come
from. Products from outside Mercosur are subjected
to an external rate which goes from 0% to 20%, the
most frequent tax being 14%. The Mercosur agreement
established the principle of free movement of goods
within the zone. However, the four countries have
maintained customs barriers on certain products
which will progressively disappear.
Cars and
spare parts are not subjected to the external
Mercosur importation rates. Customs duties are
fixed for each country. The trade of automobiles
and spare parts between Argentina and Brazil is
done in conformity with a bilateral agreement of
zero duties, subject to compensation.
Other
importations pay a tax of 0.5% + VAT on entry into
Argentina. There are special procedures concerning
the importation of pharmaceuticals or foodstuffs
which have to go via the appropriate
ministry.
Franco-Argentinian economic relations :
To encourage and help enterprises to set up several
measures have been taken by the Franco-Argentinian
Chamber of Commerce and Industry
(CCIFA).
The CCIFA
works with several other organizations eg the
Assembly of French Chambers of Commerce and
Industry, is a member of the Union of French
Chambers of Commerce and Industry overseas, and
constantly deals with other countries like those of
South America.
You can get
aid directly from this Chamber, its activities are
directed to and available to companies : trade
fairs, exhibitions, a rapid courrier service
between Argentina and the rest of the world, job
centre, French language courses, etc.
French
technology is more and more present in Argentina
(EDF, Télécom, Bouygues, Groupe
Accor, Peugeot, Renault, la Lyonnaise des
Eaux-Dumez in Aguas Argentinas etc.) Over 200
subsidiary companies are implanted as well as
several French sub-contractors.
The Mercosur
The Mercosur (the Southern Common Market), a
fundamental step in the economic integration of
Latin America, started with the Asuncion Treaty
which was signed on the 26th March 1991 by the
Presidents of the four founder-countries Argentina,
Brazil, Uruguay and Paraguay.
The basic texts of this 'common market' laid down
four main principles :
- the free circulation of goods, services and
elements of production between the member states
(interzone trade), basically via the abolition of
customs duties, non-fiscal restrictions and other
equivalent measures. - the establishment of a
common customs rate for countries outside Mercosur
(extrazone trade) with a communal trade policy
- the same macro-economic and sector related
policies between the member states
- an arrangement to harmonize the different
national legislations in order to consolidate the
process of integration.
The model that the agreement is based on is that of
the European Economic Community and the 1957 Treaty
of Rome, which appoints an autonomous organization,
doted with its own competence and a partial
surrender of sovereignty on behalf of the
Community.
(sources
MOCI, Le Monde, le nouvel Observateur)
4-Agriculture
Agriculture
(in millions of tons, head, m³ for timber)
|
Production
|
1996
|
1997
|
1998
|
1999
|
Rang
|
|
Millet
|
0.047
|
0.044
|
0.046
|
0.057
|
27
|
|
wood
|
11.428
|
11.428
|
11.428
|
-
|
-
|
|
wheat
|
15.914
|
15.000
|
11.500
|
14.200
|
12
|
|
sugar
cane
|
17.600
|
19.450
|
19.400
|
19.400
|
14
|
|
cotton
|
0.432
|
0.300
|
0.316
|
-
|
10
|
|
maize
|
10.518
|
15.536
|
19.360
|
13.183
|
6
|
|
oranges
|
0.504
|
0.919
|
0.984
|
0.780
|
15
|
|
barley
|
0.537
|
0.926
|
0.540
|
0.500
|
|
|
potatoes
|
2.275
|
3.080
|
3.412
|
3.450
|
14
|
|
rice
|
0.986
|
1.025
|
1.036
|
1.576
|
26
|
|
tea
|
0.047
|
0.054
|
0.057
|
0.049
|
13
|
|
wine
|
1.268
|
1.350
|
1.255
|
1.255
|
5
|
|
cattle
|
54.000
|
54.500
|
54.600
|
55.000
|
5
|
|
sheep
|
17.956
|
17.295
|
15.232
|
14.000
|
21
|
|
pigs
|
3.100
|
3.200
|
3.200
|
3.200
|
|
|
fishing
|
1.250
|
1.352
|
-
|
-
|
15
|
About 73% of the land is farmed.
The main crops are wheat, which cover 17% of the
farmed land and maize which covers 9%.
Argentina has
the fifth biggest vineyard in the world with
209,000 hectares. It is also the fifth biggest wine
producer in the world, producting 17 million
hectoliters of wine a year.
The growth of the agricultural production partly
compensated for the industrial recession in
1999.
Argentina is one of the top agricultural exporting
nations, it sells over 10 billion dollars worth of
agricultural production abroad every
year.
The foodstuff
industry is expanding rapidly in spite of the fact
that the equipment and the labour force are not
good enough. New technologies and a qualified
labour force are more and more in demand.
5 - Industry
The privatized electrical companies and the
petrol and gas companies are still planning to
build power stations, high tension lines and gas
pipe lines to transport the energy which is
plentiful in the Tierra del Fuego and Patagonia to
the high consumption areas in the north and the
west of the country.
Other sectors
which are developing are : environment, mining and
transport.
The
environment is an economic sector which should not
be overlooked, there are several problems, in
particular due to the considerable increase in the
population together with a large industrial
developement. To this can be added a lack of
investment in companies dealing with improving
sanitization, treating waste and refuse and
decisions which should be taken and are not. There
is an enormous amount which needs to be done in
Argentina to protect the environment. Drinking
water is insufficient and badly installed, hospital
refuse is not treated due to a lack of specialized
companies, and proper rubbish dumps are nearly
inexistent, it is necessary to find the means to
fight the industrial pollution.
Mining
(in millions
of tons, uranium, gold and silver in tons)
|
Production
|
1999
|
World
Rating
|
|
silver
|
36
(1998)
|
26
|
|
natural
gas
|
33.6
|
16
|
|
gold
|
11
|
23
|
|
petrol
|
42.8
|
21
|
|
uranium
|
35
(1998)
|
19
|
|
zinc
|
0.024
|
19
|
The
automobile sector was particularly disturbed by the
devaluation of the Brazilian real. A certain number
of foreign companies which had chosen Argentina as
a base within Mercosur, moved to Brazil, which
could offer much lower production costs. Big
companies like Fiat, Ford and General Motors
transferred a part or all of their production and
took with them some spare part manufacturers like
Goodyear tires. In the long term the automobile
sector is still one of the best growing. The
authorities have noticed the start of a reversal
tendency, Volkswagen announced in March 2000 that
they were going to open a new factory in
Argentina.
Another
growth sector is in the petrol and petro-chemical
industries. In 2000 the Spanish group Repsol
managed to take over the old national company YPF
and joined Shell and Exxon in the exploitation of
the country's petrol reserves.
The railway network has been totally
privatized.
Cycling has become a real economic resource for the
country. This passion which is enjoyed by a large
part of the country has encouraged the specialized
factories, Marilo SA and the Casa del Bicicletero
to turn out a massive production of bicycles and
accessories, nearly 50,000 models each.
Other companies, working under licence, are
installed in Argentina, eg Puma which produces its
own models or assembles bikes from parts imported
from Europe or Asia. China accounts for 30% of the
imports, other Asian exporters are Hong-Kong and
Taiwan, from Europe Italy and France export 6,000
models to Argentina and there are also other
suppliers from Chile, Brazil and the USA.
The best known brands are Olmo and Puma, Spalding,
Bianchi, Raleigh and Monark.
Other local companies make bikes for children :
Mastiff, Fiorenza, Cosmos, Hernan and Junior. The
production is distributed through specialized
outlets or via big stores like
Carrefour.
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