Departure of foreign companies could prove to be a benefit for Argentina’s economy

Aug 5, 2020 | 2 comments

By Cristian Schulthess

Regarding the recent post, In face of unprofitability and the coronavirus, international companies flee Argentina

The article is a bit of a mixed bag of nuts. Foreign companies were buying up Argentine industries. Their leaving reduces foreign investments but allows local Argentines to fill in the gap. These are Argentines that actually wish to advance the technology in their own country (rather than the foreign ones that simply make use of cheaper costs without the technology transfer).

Making money is one thing, technology transfer is another. They usually go hand in hand, but foreign companies are generally focused on only one and not the other. Similar issues occur in Mexico and several other places, where companies leave the U.S. and establish production in Mexico and elsewhere. The technology development is in the U.S., production is abroad. Eventually, labor forces in the USA want production to return to the U.S. Same with European companies.

Chile-based Latam airlines recently announced it is leaving the Argentia market.

In the end, there is no easy fix. All countries (like people, perhaps) need money to make money. But progress requires a system where knowledge and technology also advance in the country. The article is not addressing this issue well. The “complications” of doing business in Argentina and elsewhere is a nice way of saying, “nay, we do not wish to transfer knowledge and technology, nor give you any financial help to achieve that. In fact, we will leave, try to bankrupt you and perhaps will return when a new government takes over and is more in line with our goals.” The biggest problems in this are the Chinese (such as what they seek to do in Peru, Ecuador and elsewhere in the Americas).

Beware of mass media control by countries (U.S. included) that portray a government that is trying to do the right thing for its people as “failed” governments. Another big example of mass media propaganda: consider recent efforts in Bolivia.

An example of rules that hurt Argentina is the one that allows all purchases of goods inside Argentina to be foreign based, rather than obligating a small percentage (say 10 to 20%) to be of internal origin (assuming quality is sufficient, of course). Open trade agreements generally want all goods purchased within a country to be in fair competition with foreign based goods (this includes goods made inside the country but owned by foreign nationals, which eventually export most of their financial gains). But “fair” does not include anything that could allow the country to develop its own technology and competitive production. Trade agreements generally seek to maintain the status quo, which is currently very slanted in favor of the “have’s” and not the “have-nots.”

Argentina is rich in academic intellectuals capable of many new discoveries, but it is not on a level playing field with other countries and their trade agreements and regulations. Look also at the World Bank rules and manipulations of agreements to their loans to African countries, for more examples. Curiously, they insist on “fair” competition, but the money loan is pennies compared to the amount of dollars lost due to these “fair” rules agreements.
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Cristian Schulthess is an associate professor of plant science at the University of Connecticut. His research focuses on the mobility and fate of nutrients and contaminants in soil environments.

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