STRUCTURE OF THE ARGENTINEAN ECONOMY

Argentina's Economy Structure


In 1996. 7.3 percent of Argentina'sGDP came from the agricultural sector, 35.5 percent from the industrialsector, and 57.2 percent from the services sector.

While the contributionof agriculture has remained relatively stable-it was 7.0 of GDP in 1980-industryhas faded from 37.8 percent of GDP as services, which accounted for 53.1percent of GDP in 1980, gained.

In 1995, according to ILO data, 11 percentof the workforce was employed in the agricultural sector, 24.4 percentin industry (mining, manufacturing, and construction), and the remainderin services.

AGRICULTURE

-Farming and Ranching 
  Argentina's wealth has traditionally come from ranching andgrain growing, and agricultural commodities continue to be a mainstay ofArgentine exports. A bright spot for the economy in 1996 was the agriculturalsector. 
  In the first part of this decade many agricultural producerssaw commodity prices fall while the cost of their inputs rose. they alsocontended with scarce credit and high export taxes. Of late this situationhas improved fairly dramatically. In August, 1997 Argentina also for thefirst time in 67 years exported a shipment of beef to the United States.(The country was declared free of foot and mouth disease in May.) The governmenthopes to export as much as one million tons of beef a year by the year 2000, and beef producers are looking at this as an important conduit tothe lucrative markets of Asia and Japan. 

-Fisheries and Forestry 
  Production by Argentine fisheries has continued to expand,rising by nearly 118 percent from 1990 to 1996 to 1.23 million tons. Productionof raw logs grew during the 1980s until 1992, declined in 1993 and 1994,and is now growing once again. Production of secondary products (paper,paper paste, lumber, laminates, boards, etc.), has remained stagnate duringthe 1990s. 

-Future Directions 
  Increased investment incentives have been offered tomodernize Argentina's fishing fleet and processing facilities, with a viewtoward increasing its exports. The Argentine government has targeted thedevelopment of new crops and non-traditional products, particularly processedgrain, grain sub products, prepared foods, fruit, and organically grownproducts.

INDUSTRY

The industrial sector includes manufacturing,mining , and construction. Overall, this sector employed approximately24.4 percent of the workforce in 1995. Development of this sector beganduring the World War I era, and has accelerated during the past 10 years.With Argentina's push during the 1990s to diversify its economy, growthhas surged. Industrial development is heavily concentrated in the provinceof Buenos Aires, as well as in centers in Santa Fé and Córdoba.Pockets of specialized industrial development have developed in other areasto take advantage of local natural and labour resources.  
  The prospect of being able to reach largermarkets on more favorable terms through the Mercado Común del Sur(Mercosur) is spurring interest in industrial investment and production. 

-Mining  
  This sector has shown limited growth formany years. However, in recent years, a major overhaul in the legal frameworkhas created incentives such that production grew 36 percent from 1990 to 1995. Foreign investment in this sector in recent years has grownrapidly: in 1991  only ten international firms were operational inArgentina; by 1996 the number had risen to 67 (with an additional 46 researchinginvestment opportunities). 
  To improve output value and increase thissector's export share, the government has removed controls on foreign investmentand has added favorable tax treatment as further incentive to attract newcapital. 

-Petroleum 
  Oil production grew from 28.1 millioncubic meters in 1990 to 45.5 million in 1996, and natural gas productionwent from 23 million cubic meters in 1990 to 34.6 in 1996. Through privatizationof this industry and deregulation of foreign investment, Argentina hopesto attract nearly US$ 12 billion in new investment to this sector between1994 and the year 2000. 

-Manufacturing  
  Faced with competition from imports, manysector-such as textiles, apparel, and footwear, nonmetallic mineral products,wood products, and miscellaneous manufactures-have been seriously affected.Other sectors-such as food and beverage, paper, chemical and petrochemicalproducts, and the automotive industry-have shown renewed strength. Increasesin investment by local and foreign firms are contributing to modernizationand improved efficiencies in these areas.  

-Construction 
   Construction accounted for a little more than 5.6 percentof GDP in 1996. 
   In the early 1990s pent-up housing demand, coupled withnewly available credit, led to a surge in building activity. By 1995 thenumber of building permits issued had risen by 59 percent, representinga cumulative addition of 59 million sq m (635 million sq ft) of space. Some 35 percent of this construction represented new single family housing,followed by retail space (15 percent), multifamily dwellings (14 percent),family housing with stores (12 percent) and industrial facilities (8 percent).In 1995 permits issued for extensions of existing structures added 3.7million sq m (41.4 million sq ft) of space, mostly for single family homes,and retail and industrial space. In 1998 constrution is one of the mostdynamic sectors of the economy. 

-Future Directions  
  Argentina's industrial policy now operates within the contextof an open economy. The country's participation in Mercosur is having amajor effect on market-based development as industry begins to grow tocomplement that in the economies of member countries. Industry is generallyexpected to expand its scope and increasingly to target foreign marketsto a much greater degree on a competitive basis. Between 1991 and 1995,exports of certain manufactured goods increased at very positive rates,especially chemicals, plastics and trasnportation equipment. 

SERVICES

Despite rapid growth in importance, the Argentine sevices sectorhas received relatively little attention. In 1996 thes sector's share ofGDP was 57 percent; throughout the 1990s the sector grew substantially(10.3 percent in 1991, 10.1 percent in 1992, 6.3 percent in 1993 and 9.4percnet in 1994). In 1995, the sevece sector shows a decease of 3.4 percent. In 1995, according to ILO data, it employed 8 million people, or 65 percentof the work force. The service sector includes utilities, transportationand communication, commerce (which includes reatil and wholesale trade,lodging, restaurants, and entertainment), financial services, and miscellaneoussevices (including professional, personal, and government ones). 

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