Report to Marcelo Elizondo: Argentina and the decline of its export profile

From having reached 0.80% of world trade, today we have fallen to less than 0.30% and while we discuss the financing of the fiscal deficit in the world, exports of technology and services increase much more than those of physical goods. We analyzed with the economist Marcelo Elizondo the disadvantages that our country's export bias faces in order to diversify and grow.
Por Rodolfo Pollini
How do you see the country in terms of its export profile, its possibilities, stagnations and prospects?
More than how I see it, I refer to the data, which indicate that Argentina has a very weak export performance and has been losing relative participation in international trade. At the end of the 90s it accounted for more or less 0.4% of world trade. During the first decade of the new century it explained 0.32% or 0.33%, but in the second decade there was a greater drop and this year we are going to explain 0.28% of total world exports. But if we go back much further, we see that 50 years ago we were 0.80% of world trade. What happens is that the world evolves, there is more competitiveness, more technology and production and Argentina has more and more difficulty in participating, low investment, little participation in international value chains and difficulty in accompanying technological changes. Some years we are more satisfied, but we have a performance that is not good.
Do we ever feel more satisfied because we improve or because the international prices of what we sell rise?
Well, Argentina's export record, measured in dollars, occurred between 2010 and 2012, when we exported more than 80,000 million dollars of physical goods and about 13,000 or 14,000 million of services. Those were the years of highest international commodity prices. It's like you said, when prices help we improve and when they don't help we get worse. We are depending on exogenous factors and not on our competitiveness.
I think of Argentina losing possibilities to export but also of the real export capacity of companies. You once said that in 10 years we lost a third of the Argentine companies that exported.
That is a very significant point: the number of export companies we have. According to data from the Ministry of Production, there are between 6,500 and 7,000, when 15 years ago we had between 12,000 and 13,000. We have less and less, and of the few we have, very few export significantly. How many export more than 100 million dollars per year? 50 or 55. How many export more than 10 million? About 500. If you compare it with the rest of the region, it is tremendous. In Mexico there are 35,000 export companies; in Brazil 24,000 and in Chile and Peru, which have smaller economies than ours, there are 8,000. It is significant that we have few exporting companies and above all that we do not have SMEs that export. The few that export well are the big ones and that data reflects our weakness.
Would SMEs improve with help from the State to access markets or group by sectors to export better?
The first thing the State should do is stop causing inconveniences to the exporter. The State generates inflation, which is a problem because the exporter needs stability. It also puts many obstacles, withholdings, an exchange gap with an official exchange rate lower than the market and nationalizes foreign trade, so that you export, sign a contract in dollars, sell the product and when they pay you the dollars, the Central Bank keeps them and returns pesos to you at the official exchange rate. Before thinking about helping, the State must stop “unhelping.” Then, it should open markets and negotiate with other countries so that they charge lower entry tariffs on our products. To enter Mexico, Argentine wine pays a 14% tariff and Chilean wine does not pay, because Chile lowered the entry tariff into its country for Mexican products. Just as to protect our industry, Argentina does not want to give zero tariffs to products from other countries, the others do not give us access to their markets either.
How do exports of goods and services behave today, in Argentina and in the world, and what do we understand as exports of services?
In the world, exports of services are growing much more than those of physical goods. I would tell you that in the last 10 years they grew 60% more. What are service exports? On the one hand, professional services, companies that sell consulting, technical assistance or know-how. Then, there is the sale of technology. Today a lot of intellectual property, patents, royalties, copyrights are sold. Thirdly, assistance services for business development: logistics, transportation, financing. Additionally, there are services related to communications, such as software or content generation for the Internet. But in Argentina, exports of goods and services represent more or less the same.
How do you see international trade after the pandemic? Do you see countries being very protectionist to recover what they lost this year?
No, I don't see protectionism in terms of protecting local industry. Much less having lost (Donald) Trump the elections. The world's largest free trade agreement has just been signed in Asia and in recent months agreements have been signed between the European Union and Japan. What I do see is that countries are beginning to be more demanding in the conditions and quality standards to enter their markets, because consumers have become more demanding.
Are these quality demands today a major difficulty for the Mercosur-European Union agreement?
I would say yes. Note that the European Union is saying that, if the agreement is to be signed, Brazil has to stop burning the Amazon and adhere to the Paris Pact, which is contrary to climate change. Free trade is very good, but they ask for common rules and for us all to play the same game. Another European demand is that labor rights be respected when the harvest is harvested in Brazil or Paraguay. A set of quality requirements.
Elizondo: "The world is evolving, there is more competitiveness, more technology and production and Argentina has more and more difficulty in participating, low investment, little participation in international value chains and difficulty in accompanying technological changes."
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