Global Perspectives
National Economic Profiles from IIC Partners
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Argentina
The Belise Group
BUENOS AIRES — Democratic, socially tolerant and economically progressive, Argentina is a country focused on building a stable future.
The Argentine Republic is located in the southern half of South America, occupying a continental surface area of 2,971,810 square kilometers (excluding Antarctic claims). Because of its north-to-south length (3,800 kilometers), Argentina is subject to a variety of climates: tropical in the north, temperate in the center, and cold in the Patagonian region. This range of climates, topography and long Atlantic coast, give Argentina a highly diversified economic potential.
Out of a Spanish colonial past — following on the May Revolution in 1810, and the declaration of independence in 1816 — the country is now approaching its bicentennial anniversary.
Historically, Argentina has been famously open to immigration. For this reason, and because of the huge growth in the first years of the 20th Century, Argentina attracted a great number of immigrants seeking new horizons in the New World. Even though this immigration mostly comprised Spanish and Italian inhabitants, it also included a wide variety of other nationalities and religions.
“Argentia has a history of peace, sheltered by a tolderant and accepting culture. It does not, and has never had, ethnic problems,” says Ezequiel Conesa, a partner of Belise Group and a member of IIC Partners, Executive Search Worldwide.
The government is a presidential republican democracy, with 23 provinces and the Autonomous City of Buenos Aires, home to the executive, legislative and judicial branches of government.
“During the middle half of the 20th century (1930 – 1983), the country went through a long period of institutional instability, in which democratic and military governments followed one another. Since then, and for a quarter of a century,” Conesa says, “democracy has consolidated its position in society, and today all institutions work cohesively, with few signs of the former instability.”
There are now 40 million people, with 18 million concentrated in the city and province of Buenos Aires.
Throughout its history, and particularly during the 20th Century, Argentina has benefited from high levels of educational attainment. Despite social and political turmoil that undermined Argentina’s competitive position in the middle years of the 20th Century, technical and professional training standards have remained high due to the strength of public and private universities. And these institutions have bolstered the standing of Buenos Aires as a cultural center in South America.
Conesa says the recent history and economy of Argentina have been shaped by two economic crises— hyperinflation in 1989 and severe devaluation in 2001.
To combat the ’89 inflation crisis, the government of the day enacted the convertibility law, he says, fixing exchange rates between the peso and the US dollar at one-to-one and enforcing a period of economic stability. Many state-owned companies were privatized, financial and commercial sectors were revived and many expatriat professionals returned to Argentina to participate in the recovery. At the same time, many students took advantage of currency stability to attend graduate schools in the United States and Europe. Internally, educational institutions focused on matching market trends by turning out graduates in administration, economics and finance, but de-emphasizing industy and engineering.
“Pegging the peso’s value provided immediate relief from inflation and reduced unemployment rates,” Conesa says. “But this freezing of exchange rates eventually led to a foreign debt crisis, a 200 per cent increase in the value of the dollar against the peso and the fall of the government.” Unemployment rose sharply, to reach nearly 20 per cent, and many young Argentines left the country in search of opportunity, often facilitated by the dual citizenship of parents who had previously immigrated to Argentina.
After a difficult transition period, a new government established an austerity program in 2003 that featured a lower value for the peso, support for domestic products over foreign imports, a freeze on utility tariffs and tight budgeting to produce a fiscal surplus. The result has been an economic recovery that has seen annual growth rates surpass eight per cent in 2003 through 2006, and unemployment reduced to seven per cent by 2007.
The effect on the labour market has been to reverse the previous outflow of young professionals, once again attracting expatriats back to Argentina. Despite the influx, industry is facing a looming shortage of qualified technical professionals. Companies find themselves in a competition for talent and the result has been rising salary levels.
Conesa says Argentines can now expect the economy to be more stable comapared to the rapid growth of the past four years. Nevetheless, due to high inflation, Argentina may loose some of the advantage it had because of the exchange rate.
“We still expect a strong demand for labour and professional talent, with a gradual increase in the availability of employees as universities turn out more graduates in the most needed disciplines and more people are attracted to Argentina. But we may start to see senior executives looking for opportunities in other countries, because in terms of US dollars, salaries in Argentina are not so tempting,” he says.
“Given these economic factors, the country is currently in a solid position, with an annual GDP of $240 billion and accumulated hard currency reserves above $43 billion at the Central Bank,” Conesa says. “This implies that the country’s economic vulnerability has diminished significantly.
“If these trends go on, and if the government speeds up the country’s integration into the global economy, we’re optimistic about the future from the economic and social point of view, and for the development of our profession and our business,” he says.
Ezequiel Conesa is a partner with the Belise Group of Buenos Aires and a member of IIC Partners, Executive Search Worldwide.
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