About Argentina

1. Argentina ' A diverse and progressive country

Argentina, officially the Argentine Republic is the second largest country in South America and the eighth largest country in the world by land area with a population of 33 Million. 85% of them have a European descent, primarily Spanish or Italian. Indians, mestizos (people of mixed Indian and Spanish ancestry) and blacks together make up the remaining 15% in the ethnic composition. Argentina is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires.

Argentina's continental area is between the Andes mountain range in the west and the Atlantic Ocean in the east. It borders Paraguay and Bolivia to the north, Brazil and Uruguay to the northeast, and Chile to the west and south. Argentine claims over Antarctica, overlapping claims made by Chile and the United Kingdom, are suspended by the Antarctic Treaty of 1961. Argentina also claims the Falkland Islands, South Georgia and the South Sandwich Islands, which are administered by the United Kingdom as British Overseas Territories.

Argentina is a founding member of both the United Nations and the Union of South American Nations. Argentina is one of the G-20 major economies.

The Republic of Argentina is a democracy for now, but has had a long history of military power.

Spanish is the official language, although many people speak English, Italian, or other languages. Argentine Spanish is heavily influenced by Italian and is unlike Spanish spoken anywhere in Latin America. Church and state are officially separate, but about 90 percent of the population considers itself Roman Catholic. Jews and Protestants account for 2 percent each.

Argentina is a country of wide-open pampas and ancient forests, in addition to very sophisticated cities, such as its capital, Buenos Aires.

Few Latin American nations have pursued economic reforms as sweeping as those carried through by Argentina in the past ten years. As its Convertibility Plan tamed hyperinflation the country launched a massive modernization program in the private and public sectors alike. Among the program's fruits were a more open economy, State reform with a heavy privatization component, higher business productivity, a more diverse export base, a bolstered financial sector, and rapidly developed ties with the other MERCOSUR members as tariffs were lowered across the board and trade barriers were removed. As the economy prospered, capital inflows swelled.

However, the performance of some economic and social variables over this same interval was more lackluster: as the country modernized its production apparatus the unemployment rate rose sharply, hitting 17.5% in 1995; the income distribution and poverty rates worsened; the public accounts were frequently in the red: when the budget did balance in any given year it was thanks to privatization receipts; and the economy was left more exposed to external shocks.

After four years (1991-1994) of robust economic growth Argentina was shaken by two external shocks, one in 1995 and another in 1998, each of them triggering a recession. The country bounced back quickly from the 1995 events but had big difficulties to recover fully from the 1998 episode. Also Argentina's share in Latin America's FDI flow declined in the later half of the 1990s.

2004 was a watershed year regarding policy changes in the Latin American nations. The policy changes primarily revolved round the participation of private investment in an'economy's'natural resource sector. This sector normally attracts huge inflows from foreign business firms.'

The massive upsurge in commodity prices led some Latin American governments to go in for a modification of their prevalent'tax'regimes. Some concerned legislations were also changed. The idea behind these government regulations was to secure the lion's share of the rent accruing from the natural resources sector for the state.'

These kinds of developments were observed in countries like Argentina, Venezuela, Chile and Peru. These policy measures discouraged FDI inflow to some extent. So the governments of the concerned countries made some other policy changes with an eye to attract'foreign'investments. They formulated newly devised investment promotion regimes in countries like Argentina and Brazil targeted at attracting investments for industrial activities.'Galloping inflation in 2007 threatened to derail Argentina's road to economic recovery. Rising prices lead to apprehensions of a decline in net'profit'on goods for export. FDI s for Argentina were already on the decline from 2006.' Average yearly rate of growth of FDI in Argentina was 11.2% in first quarter of the year 2006. It was lower than the comparable 26% growth it recorded in the time period from 2002 to 2006. From January 2007 to March 2007, it declined by 56.1% and stood at 624 million dollars. This contraction was due to the effect of a 374 million'dollars'worth of negative reinvested earnings. The country is currently facing an international scenario marked by an onslaught of negative shocks, which imply a drastic shift away from the favourable international conditions Argentina met in recent periods. However, the Argentine economy is entering the current global financial turmoil from a position of less relative vulnerability, compared with prior periods of international volatility, counting with a more solid fiscal and external position; less public debt; a more flexible framework of monetary and exchange policies; a substantial stock of international reserves; and a strengthened productive network. These factors make for a more robust country in the face of external upset. Less vulnerability, however, does not necessarily imply that Argentina can isolate itself from international turmoil. Different mechanisms through which international crisis is transmitted create'smaller or greater'risk and uncertainty in the domestic economy. Apart from a general decline in world trade, which would have an impact on Argentine exports, another contraction could come from the strong reduction in credit worldwide, resulting in scarce and more costly funding for both governments and businesses. Greater difficulties to access voluntary credit markets could deepen the impact of the international crisis on investment performance in the country's private sector.

For Argentina to achieve what can be posited as its people's paramount objective' high, sustainable economic growth rates'it will have to rise to a series of challenges that fall into four main areas: (1) building a more competitive productive system; (2) fostering social progress by reducing unemployment, combating poverty, and enhancing distributional equity; (3) reform of the State, and

(4) consolidating regional integration. The government is bringing a set of macroeconomic and sectoral policies to bear as it pursues all four objectives simultaneously.

B. The government's agenda

1.5 The aim of the policies currently in place is to deepen ongoing reforms to achieve economic growth with social equity and solidify the public finances. They address such areas as social security reform, negotiation of a new federal tax revenuesharing arrangement, health insurance reform, rules and standards to protect consumers, and putting the new telecommunications and ports regulatory frameworks into practice. A keynote of the government's strategy is a commitment to erase the fiscal deficit at all levels of government in the medium term, steadily lowering the ratio of public debt to GDP. The government is endeavoring to shore up investors' confidence in Argentina through an IMF-coordinated international financial support package.

C. The Bank's strategy objectives

1.6 The Bank's strategy for the coming years will address the challenges outlined above, in line with the government's program and the Bank's Eighth Replenishment mandates and those ensuing from the Forty-first Annual Meeting of its Board of Governors. The objectives of the strategy are to continue to support:

(i) sustainable growth of the production sectors and productivity increases by funding activities to help maintain an enabling environment for investment and competitiveness and build capacity in the government to promote productive and infrastructure projects; (ii) poverty reduction and raising of living standards , by supporting projects that will create jobs and provide broader access, better coverage, and higher quality of basic education, health, sanitation, and environmental services; (iii) reform of the State and balanced fiscal accounts to entrench gains achieved thus far, further decentralize government operations and make the workings of government more transparent, and strengthen institutions; and (iv) furtherance of the regional integration process.

1.7 With the above strategy goals in mind the Bank has devised a lending program, worked out in discussions with the country authorities, whereby it will support investments and reforms in the social sectors, infrastructure development, regional development, and other areas to help revitalize the economy and create jobs . This Bank-supported program is compatible with the offerings of other multilateral agencies as part of the financial support package for Argentina and the arrangement with the IMF approved recently by that organization's Board.

1.8 Along with loans, the proposed 2001-2003 operations program contains various other actions and facilities'technical cooperation, MIF and IIC funding'with private sector and civil society involvement. The aim is to achieve lasting improvements and yield the strongest possible impact in the sectors concerned.

D. Strategy priorities for 2001-2003

1. Activities to raise productivity and enhance competitiveness through financial and technical assistance to small and medium-sized enterprises (SMEs) and the agriculture, agroindustrial, and financial sectors; public- and private-sector infrastructure finance; regulatory framework improvements; capital market development, including the pension fund and insurance industries; and new technology development and dissemination programs.

2. Initiatives to reduce poverty and raise living standards , including targeting and strengthening of social programs; equity-enhancing activities and those that involve and strengthen communities; employment and labor-intensive programs; more flexible labor conditions; a new management model for the health sector, and reforms in the education, housing, sanitation, and environmental sectors.

3. Actions to help consolidate reform of the State and fiscal balance at the national, provincial, and municipal levels, including reforms to rebuild an enabling environment for investment, strengthen public-expenditure management capacity, transparency, and efficiency, and make tax collection more efficient.

4. Actions to advance regional integration, such as macroeconomic coordination, dispute settlement mechanisms, infrastructure investment planning, regulatory framework harmonization, etc.

2.1. History

A wave of foreign investment and immigration from Europe after 1870 led to the development of modern agriculture, to a near-reinvention of Argentine society and the economy and the strengthening of a cohesive state.

Argentina increased in prosperity and prominence between 1880 and 1929, while emerging as one of the 10 richest countries in the world, benefiting from an agricultural export-led economy. Driven by immigration and decreasing mortality, the Argentine population grew fivefold and the economy by 15-fold. The country was neutral during World War I and most of World War II, becoming an important source of foodstuffs for the Allied Nations.

In 1946, General Juan Per'n was elected president, creating a political movement referred to as "Peronism. During Per'n's tenure, wages and working conditions improved appreciably, unionization was fostered, strategic industries and services were nationalized, and urban development was prioritized over the agrarian sector.

Formerly stable prices and exchange rates were disrupted, however: the peso lost about 70% of its value from early 1948 to early 1950, and inflation reached 50% in 1951.Foreign policy became more isolationist, straining U.S.-Argentine relations. Elections in 1958 brought Arturo Frondizi to office. Frondizi policies encouraged investment to make the country self-sufficient in energy and industry, helping reverse a chronic trade deficit for Argentina. Frondizi was forced to resign in 1962.

The following policies of dictator Jorge Videla and economist Jos' Alfredo Mart'nez de Hoz left a traumatic legacy.

Though repressive, this new regime continued to encourage domestic development and invested record amounts into public works. The economy grew strongly, and income poverty declined to 7% by 1975, still a record low. Partly because of their repressiveness, however, political violence began to escalate.

Taking office that year, Per'n died in July 1974, leaving his third wife Isabel, the Vice President, to succeed him in office. Mrs. Per'n had been chosen as a compromise among feuding Peronist factions who could agree on no other running mate; secretly, though, she was beholden to Per'n's most fascist advisers. The resulting conflict between left and right-wing extremists led to mayhem and financial chaos and, in March 1976, a coup d''tat removed her from office.

Leopoldo Galtieri's takeover of the Falkland Islands in 1982 cost Argentina lives and prestige

The self-styled National Reorganization Process intensified measures against armed groups on the far left such as People's Revolutionary Army and the Montoneros, which from 1970 had kidnapped and murdered people almost weekly.[22] Repression was quickly extended to the opposition in general, however, and during the "Dirty War" thousands of dissidents "disappeared". These abuses were aided and abetted by the CIA in Operation Condor, with many of the military leaders that took part in abuses trained in the U.S.-financed School of the Americas.[23]

This new dictatorship at first brought some stability and built numerous important public works; but their frequent wage freezes and deregulation of finance led to a sharp fall in living standards and record foreign debt.[16] Deindustrialization, the peso's collapse and crushing real interest rates, as well as unprecedented corruption, public revulsion in the face of alleged human rights abuses and, finally, the country's 1982 defeat by the British in the Falklands War discredited the military regime and led to free elections in 1983.

Ra'l Alfons'n (left) greets supporters with his trademark salute (1983)

Ra'l Alfons'n's government took steps to account for the "disappeared", established civilian control of the armed forces and consolidated democratic institutions. The members of the three military juntas were prosecuted and sentenced to life terms. The previous regime's foreign debt, however, left the Argentine economy saddled by the conditions imposed on it by both its private creditors and the IMF, and priority was given to servicing the foreign debt at the expense of public works and domestic credit. Alfons'n's failure to resolve worsening economic problems caused him to lose public confidence. Following a 1989 currency crisis that resulted in a sudden and ruinous 15-fold jump in prices, he left office five months early.[24]

Newly elected President Carlos Menem began pursuing privatizations and, after a second bout of hyperinflation in 1990, reached out to economist Domingo Cavallo, who imposed a peso-dollar fixed exchange rate in 1991 and adopted far-reaching market-based policies, dismantling protectionist barriers and business regulations, while accelerating privatizations. These reforms contributed to significant increases in investment and growth with stable prices through most of the 1990s; but the peso's fixed value could only be maintained by flooding the market with dollars, resulting in a renewed increase in the foreign debt. Towards 1998, moreover, a series of international financial crises and overvaluation of the pegged peso caused a gradual slide into economic crisis. The sense of stability and well being which had prevailed during the 1990s eroded quickly, and by the end of his term in 1999, these accumulating problems and reports of corruption had made Menem unpopular.[25]

N'stor Kirchner (second from right) hosts Ra'l Alfons'n (right), the Brazilian President Lula da Silva and former Brazilian President Jos' Sarney to commemorate 20 years of productive trade talks

President Fernando de la R'a inherited diminished competitiveness in exports, as well as chronic fiscal deficits. The governing coalition developed rifts, and his returning Cavallo to the Economy Ministry was interpreted as a crisis move by speculators. The decision backfired and Cavallo was eventually forced to take measures to halt a wave of capital flight and to stem the imminent debt crisis (culminating in the freezing of bank accounts). A climate of popular discontent ensued, and on 20 December 2001 Argentina dove into its worst institutional and economic crisis since the 1890 Barings financial debacle. There were violent street protests, which clashed with police and resulted in several fatalities. The increasingly chaotic climate, amid riots accompanied by cries that "they should all go", finally resulted in the resignation of President de la R'a.[26]

Cristina Fern'ndez de Kirchner, president since December 2007

Three presidents followed in quick succession over two weeks, culminating in the appointment of interim President Eduardo Duhalde by the Legislative Assembly on 2 January 2002. Argentina defaulted on its international debt, and the peso's 11 year-old tie to the U.S. dollar was rescinded, causing a major depreciation of the peso and a spike in inflation. Duhalde, a Peronist with a center-left economic position, had to cope with a financial and socio-economic crisis, with unemployment as high as 25% by late 2002 and the lowest real wages in sixty years. The crisis accentuated the people's mistrust in politicians and institutions. Following a year racked by protest, the economy began to stabilize by late 2002, and restrictions on bank withdrawals were lifted in December.[27]

Benefiting from a devalued exchange rate the government implemented new policies based on re-industrialization, import substitution and increased exports and began seeing consistent fiscal and trade surpluses. Governor N'stor Kirchner, a social democratic Peronist, was elected president in May 2003 and during Kirchner's presidency Argentina restructured its defaulted debt with a steep discount (about 66%) on most bonds, paid off debts with the International Monetary Fund, renegotiated contracts with utilities and nationalized some previously privatized enterprises. Kirchner and his economists, notably Roberto Lavagna, also pursued a vigorous incomes policy and public works investment.[28]

Argentina has since been enjoying economic growth, though with high inflation, which according to the Economist was 15% in June 2009.[29] N'stor Kirchner forfeited the 2007 campaign in favor of his wife Senator Cristina Fern'ndez de Kirchner. Winning by a landslide that October, she became the first woman elected President of Argentina and in a disputed result, Fabiana R'os, a center-left (ARI) candidate in Tierra del Fuego Province became the first woman in Argentine history to be elected governor.

President Cristina Kirchner, despite carrying large majorities in Congress, saw controversial plans for higher agricultural export taxes defeated by Vice President Julio Cobos' surprise tie-breaking vote against them on 16 July 2008, following massive agrarian protests and lockouts from March to July. The global financial crisis has since prompted Mrs. Kirchner to step up her husband's policy of state intervention in troubled sectors of the economy.[30] A halt in growth and political missteps helped lead Kirchnerism and its allies to lose their absolute majority in Congress, following the 2009 mid-term elections.

Economical Facts ' a solid basis for investments

Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector and a diversified industrial base. Historically, however, Argentina's economic performance has been very uneven, in which high economic growth alternated with severe recessions, particularly during the late twentieth century. Early in the twentieth century it was one of the richest countries in the world and the richest in the Southern hemisphere, though it is now an upper-middle income country. It is considered an emerging economy by the FTSE Global Equity Index, and is one of the G-20 major economies.

Geert Hofstede Analysis

Argentina

The Geert Hofstede analysis for Argentina is similar to its Latin American neighbours. Uncertainty avoidance ranks highest which indicates a high concern for rules, regulations, controls and issues with career security ' typically, a society that does not readily accept change and is risk adverse. Individualism ranks lowest which signifies a society of a more collectivist nature and strong relationships where everyone takes responsibility for fellow members of their group.

Argentina is similar to many of the Latin American countries in analysis of the Hofstede Dimensions.

The high Uncertainty Avoidance Index (UAI) ranking of 86 indicates the society's low level of tolerance for uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented. The ultimate goal of this population is to control everything in order to eliminate or avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does not readily accept change and is very risk adverse.

In many of the Latin American countries, including Argentina, the population is predominantly Catholic. The combination of Catholicism and the cultural dimensions shown in the Hofstede Graph above, reinforce a philosophy predicated in the belief that there is an absolute 'Truth'. As Geert Hofstede explains about peoples with a high Uncertainty Avoidance Index, their attitude is, 'There can only be one Truth and we have it.'

Based on our studies and data, the large majority of predominantly Catholic countries (those with Uncertainty Avoidance as their highest ranking Dimension) have a low tolerance for ambiguity. This creates a highly rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty within the population. Geert Hofstede Information

Appearance

Dress is very important for making a good impression in Argentina; your entire wardrobe will be scrutinized. Business dress is conservative: dark suits and ties for men; white blouses and dark suits or skirts for women. Indian clothing is for Indians -- don't adopt any native costumes!

Maintaining eye contact is very important

A pat on the shoulder is a sign of friendship

A sweeping gesture beginning under the chin and continuing up over the top of the head is used to mean "I don't know" or "I don't care"

With thumb and finger touching (as if holding a pinch of salt), one taps them with the index finger to indicate "hurry up" or "a lot"

Make sure to cover your mouth when yawning or coughing

Don't put your feet up on any furniture

Eating in the street or on public transportation is considered rude

Behavior

Prior appointments are necessary

Argentine executives may put in a very long day, often lasting until 10:00 p.m.. An 8:00 p.m. business meeting is not unusual

Business dinners are popular and are usually held in restaurants; business lunches are uncommon outside of Buenos Aires, since most people go home to eat lunch

Tender beef and red wine virtual national symbols. American beef and red wine compare poorly to theirs

Long meals and conversation is the norm. Crossing the knife and fork signal "I am finished". Never pour wine back-handed; it's considered impolite. When dining, keep your hands on the table, not in your lap

Gifts to be avoided include personal items such as ties and shirts, leather, and knives. High taxes on imported liquor make this a highly appreciated gift; the most popular are scotch and French champagne

If the visitor is entertained in the Argentine home, he/she should arrange to send flowers or candy to his hostess. Bird-of-paradise flowers are highly prized

A guest should always wait for the host to sit down before sitting, and to open the door for him before leaving

Communications

Handshaking common when meeting for the first time

Titles, especially among the elderly, are very important. Address a person directly by using his or her title only. A Ph.D or a physician is called Doctor. Teachers prefer the title Profesor, engineers go by Ingeniero, architects are Arquitecto, and lawyers are Abogado. Persons who do not have professional titles should be addressed as Mr., Mrs., or Miss, plus their surnames. In Spanish these are:

Mr. = Senor

Mrs. = Senora

Miss = Senorita

Most Hispanics have two surnames: one from their father, which is listed first, followed by one from their mother. Only the father's surname is used when addressing someone

Italian and German second and third languages

Good conversation topics: soccer, history, culture, home and children, opera

Bad conversation topics: the Peron years, religion, Falkland Islands conflict

Doing Business in Argentina

Argentines are tough negotiators. Concessions will not come quickly or easily. Good relationships with counterparts will shorten negotiations.

Contracts are lengthy and detailed. A contract is not final until all of its elements are signed. Any portion can be re-negotiated. Get everything in writing.

An Argentine contact is essential to wading through government bureaucracy.

Be punctual for business appointments, but prepare to wait thirty minutes for your counterpart, especially if you are meeting an important person.

The pace of business in Argentina is slower than in the United States. A meeting that is going well could last much longer than intended, even if it means postponing the next engagement.

Personal relationships are important and must be developed before business is done.

Argentines often need several meetings and extensive discussion to make deals.

Decisions are made at the top. Try to arrange meeting with high-level personnel.

Guests at a meeting are greeted and escorted to their chairs. The visiting senior executive is seated opposite the Argentine senior executive.

During business meetings, sustain a relaxed manner, maintain eye contact and restrict the use of gestures. Don't take a hard sell approach.

Be prepared for a certain amount of small talk before getting down to business.

Make appointments through a high-level person. Your Argentine contact can help with this.

Confirm meetings one week in advance.

Argentina'benefits from rich'natural resources, a highly literate population, an export-oriented'agricultural sector'and a diversifiedindustrial base. Historically, however,'Argentina's economic performance has been very uneven, in which high economic growth alternated with severe recessions, particularly during the late twentieth century. Early in the twentieth century it was one of the richest countries in the world and the richest in the'Southern hemisphere,[11]'though it is now an upper-middle income country. Argentina is considered an'emerging economy'by the'FTSE'Global Equity Index, and is one of the'G-20 major economies.

Natural resources

See also:'Agriculture in Argentina'and'Mining in Argentina

View of'pampas'soy fields. Though Argentina is now an industrial and service economy, agriculture still earns more than half the foreign exchange.

Argentina is one of the world's major agricultural producers, ranking third worldwide in production of honey, soybeans and sunflower seeds and is ranked as fifth in the production of maize and eleventh in wheat. In 2007,'agricultural'output accounted for 9.4% of'GDP'and nearly one third of all exports.'Soy'and its byproducts, mainly'animal feed'and'vegetable oils, are major exportcommodities'at 24% of the total.'Wheat,'maize,'sorghum'and other cereals totaled 8%.[6]Cattle-raising is also a major industry, though mostly for domestic consumption.'Beef,'leatherand'dairy'were 5% of total exports.[6]'Sheep-raising and'wool'are important in'Patagonia, though these activities have declined by half since 1990.[6]

Fruits'and'vegetables'made up 4% of exports:'apples'and'pears'in the'R'o Negro'valley;'orangesand other'citrus'in the'northwest'and'Mesopotamia;'grapes'and'strawberries'in'Cuyo'and'berriesin the far south.'Cotton'and'tobacco'are major crops in the'Gran Chaco,'sugarcane'and'chile peppers'in the northwest and'olives'and'garlic'in Cuyo.'Yerba Mate'(Misiones),'tomatoes'(Salta) and'peaches'(Mendoza) are grown for domestic consumption. Argentina is the world's fifth-largest wine producer, and fine wine production has taken major leaps in quality. A growing export, total'viticulture'potential is far from having been met.'Mendoza'is the largest wine region, followed by'San Juan.[12]'A'strike'by'farmers, protesting an increase in'export'taxes'for their products, began 13 March 2008 and butchers and supermarkets were among the first affected by shortages.[13]'Following a series of failed negotiations and the 16 July defeat of the export tax-hike in the'Senate, the strikes and'lockouts'largely subsided.[14]

Argentine'fisheries'bring in about a million tons of catch annually[6]'and are centered around'Argentine hake'which makes up 50% of the catch,'pollack,'squid'and'centolla crab.'Forestry'has long history in every Argentine region, apart from the'pampas, accounting for almost 14 million m3'of'roundwood'harvests[15];'elm'for'cellulose,'pine'and'eucalyptus'for furniture as well as for'paper'products 1.5 million tons are all widely harvested. Fisheries and logging each account for 2% of exports.[6]

Petroleum fuels,'oil'and'natural gas'are 12% of Argentina's exports. The most important'oil fields'lie in'Patagonia'and'Cuyo. A network of'pipelines'send raw product to'Bahia Blanca, center of the petrochemical industry, and to the'La Plata-Rosario'industrial belt.

Mining'is a growing industry where the'northwest'and'San Juan Province'are the main regions of activity.'Coal'is mined in'Santa Cruz Province. Metals mined include'gold,'silver,'zinc,'magnesium,'sulfur,'tungsten,'uranium'and particularly'copper. These exports soared from US$ 200 million in 1996 to US$1.2 billion in 2004[16]'and to over US$ 2 billion in 2007.[6]

Industry

Tandanor'shipyard, Buenos Aires

Petrochemical complex in'Bah'a Blanca

Manufacturing'is the nation's largest single sector in the economy with 21.5% of the GDP in 2007 and is well-integrated into Argentine agriculture, accounting for nearly two-thirds of exports in all, with half the nation's industrial exports being agricultural in nature.[6]'Leading sectors by production value are:food processing,'chemicals'and'pharmaceuticals,'motor vehicles,'farming'equipment &'auto parts,iron,'steel'&'aluminum,'petroleum, as well as'industrial machinery'and'home appliances. These latter include over three million big ticket items, as well as an array of electronics, kitchen appliances and cellular phones, among others.[2][17]

Other manufactured goods include'textiles'&'leather,'plastics'&'tires, forestry products, publishing,cement, glass and'tobacco'products. Nearly half the nation's industries are in and around Buenos Aires, although'C'rdoba,'Rosario, and'Ushuaia'are also home to significant industrial centers.Construction'permits nationwide neared 19 million m' (200 million ft') in 2006 and the sector is 6% of GDP. Two-thirds of this total was residential construction.[6]

Argentina produces electricity in large part through well developed'natural gas'and'hydroelectricresources.'Nuclear energy'is also of high importance[18]'and the country is one of the largest producers and exporters, alongside Canada and Russia, of'Cobalt-60'which is a'radioactive'isotopewidely used in cancer therapy.

Service industries

The'service sector'is the biggest contributor to total GDP, accounting for 58%. Argentina enjoys a diversified service sector, which includes well-developed social, corporate, financial, insurance, real-estate, transport and communication services, as well as vigorous commercial and tourist trades.

The'telecommunications'sector has been growing at a fast pace, and the economy benefits from widespread access to'mobile telephony'(more than 75% of the population),[19]'the'Internet'(with more than 16 million people online),[20]'and'broadband'services. Regular'telephone'services (with 9.5 million lines)[21]'and'mail'services are robust.

Tourism'is increasingly important and provided 8% of economic output (over US$20 billion) in 2006.[22]'Argentines, who have long been active travelers within their own country,[23]'accounted for over 80% of this - though growing international tourism (4.2 million visited Argentina in 2006) contributed almost US$3.4 billion that year.[22]'Stagnant for over two decades, domestic travel has increased robustly in the last few years[24]'and visitors are flocking to a country seen as affordable, exceptionally diverse, and safe.[25]

Banking

Main article:'Banking in Argentina

National Bank of Agentina, the nation's largest.

Argentine banking, whose deposits exceeded US$65 billion in February 2009,[26]developed around public sector banks but is now dominated by the private sector, which makes up most of the 85 active institutions (4,000 branches) in the country and holds about 60% of deposits and loans. Locally and foreign-owned institutions split this percentage about evenly.[27]'The largest bank in Argentina by far, however, has long been the public'Banco de la Naci'n Argentina; not to be confused with theCentral Bank, this institution now accounts for about a fourth of the system's total deposits and a seventh of its loan portfolio.[28]

During the 1990s Argentina's financial system was consolidated and strengthened. Deposits grew from less than US$15 billion in 1991 to over US$80 billion in 2000, while outstanding credit (70% of it to the private sector) tripled to nearly US$100 billion.[29]

The banking system largely lent US dollars and took deposits in'Argentine pesos'and when the Peso lost most of its value in early 2002, many borrowers again found themselves hard-pressed to keep up; delinquencies tripled to about 37%.[29]'Over a fifth of deposits had been pulled out by December 2001, when'Economy Minister'Domingo Cavallo'imposed a near-freeze'on cash withdrawals. The lifting of restrictions a year later was bittersweet, being greeted calmly if with some umbrage at not having these funds freed at their full U.S. dollar value.[30]'Some fared worse; the owners of the now-defunct Velox Bank defrauded their clients of up to US$800 million.[31]

Credit in Argentina is still relatively tight. Lending to the private sector has been growing by 40% a year since 2004 and deliquencies are down to 2-3%; but, credit outstanding is still, in real terms, about a fifth less than in 2000 and as a percent of GDP (less than 20%), quite low by international standards. The'prime rate, which had hovered around 10% in the 1990s, hit 67% in 2002 and though it returned to normal levels quickly, rising inflation and, more recently, global instability have been affecting it again (the prime rate was 20% in August 2009).[26]

Partly a function of this and past instability, Argentine nationals also hold an estimated US$140 billion in overseas accounts and, as of 2009, this continues to grow (albeit slowly).[8]

Foreign trade

Main article:'Foreign trade of Argentina

Argentine exports are fairly well diversified; but, though agricultural raw materials were only 15% of the total in 2009, exports are (including processed goods) still 55% agricultural in origin. Soy products alone (soybeans,'vegetable oil, etc.) account for almost one fourth of the total. Argentina's leading export during much of the twentieth century,'cereals'(mostly'maize'andwheat) make up less than one tenth.

Argentine exports since 1991, in billions of US dollars.

Industrial manufactures today account for a third of Argentine'exports. The country exported over 322,000 motor vehicles in 2009 (mostly to Brazil)[32]'and, including auto parts, this is today the leading industrial export and about 10% of the grand total. Chemicals, steel, aluminum, machinery and plastics account for most of the remaining industrial exports.

A net energy importer until 1981, Argentina's fuel exports began increasing rapidly in the early 1990s and today account for about an eighth of the total. Refined fuels make up about half of this; crude petroleum and natural gas exports have been, together, hovering around US$3 billion in recent years.[7]

Argentine imports have historically been dominated by the need for industrial and technological supplies, machinery and parts; together, these amounted to US$29 billion in 2009 (three-fourths of the total). Consumer goods (including motor vehicles) make up most of the rest.[7]'Trade in services, historically in deficit for Argentina, is currently balanced at around US$12 billion each way.[8]

Investment

U.S.'direct investment'in Argentina is concentrated in telecommunications, petroleum and gas, electric energy, financial services, chemicals, food processing, and vehicle manufacturing. The stock of U.S. direct investment in Argentina approached $16 billion at the end of 1999, according to embassy estimates. Canadian, European, and Chilean firms'' other important sources of capital'' have also invested significant amounts. In all, foreign nationals hold around US$80 billion in'direct investment.[8]

The recycled docklands at'Puerto Madero'are among the developments attracting foreign as well as local investment.

Brazil has, since 2000, also became an important investor in Argentine assets and Spanish companies in particular have entered the Argentine market aggressively, with major investments in the petroleum and gas, telecommunications, banking, and retail sectors. Several bilateral agreements play an important role in promoting U.S. private investment. Argentina has an'Overseas Private Investment Corporation (OPIC)'agreement and an active program with the'U.S. Export-Import Bank. Under the 1994 U.S.-Argentina Bilateral Investment Treaty, U.S. investors enjoy national treatment in all sectors except shipbuilding, fishing, nuclear-power generation, and uranium production. The treaty allows for international arbitration of investment disputes. In October 2004, China announced it would invest US$20 billion in Argentina. An agreement provided for about Chinese investment in railway reconstruction (worth US$8 billion) and oil research (US$5 billion), though these investments failed to materialize.

Argentina attracted $3.4 billion in foreign direct investment (FDI) in 2006;[33]'as a percent of GDP, this FDI volume was below the Latin American average. Current Kirchner Administration policies and difficulty in enforcing contractual obligations had been blamed for this modest performance.[34]'A considerable improvement was recorded in 2007, however, when foreign nationals invested US$6.3 billion

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