Even as most of Latin America’s larger economies appear to be headed for tremendous sustained growth, the situation for Argentina appears riskier, largely because of economic policies that are not attracting new significant investments.
Yet the business arena also spotlights many dynamic companies in one of the wealthiest and most sophisticated countries in Latin America. With the second-highest income per capita in the region after Chile and the fastest growth of any Latin American economy between 2002 and 2012, Argentina has plenty of advantages.
Although Oxford Economics expects that interventionist policies will continue to crimp economic growth in Argentina for some time, the country seems likely to continue to profit from its neighbors’ successes.
Since Argentina and Brazil are both members of the Mercosur common market, many entrepreneurial Argentine companies are profiting both directly and indirectly from that proximity.
At the moment, however, strict capital controls put in place by the Argentine Government in 2012 limit the degree to which Argentine companies can build on that advantage. They can expand trade abroad but have limited flexibility to invest in foreign operations.
Domestically, too, the difficulties of planning in an inflationary environment and general anxiety about Argentina’s economic future have created uncertainty. However, we also believe that this obstacle will spur some Argentine companies toward more creative and less capital-intensive cross-border strategies.
This report focuses on the challenges Argentine companies face in realizing their cross-border business goals.