The competitiveness of Argentina: From sheltered markets to global rivalry

Since the early 1990s a comprehensive economic reform program has been introduced in Argentina. My research assesses the progress of Argentine industry in responding to the challenge of competitiveness. The approach is microeconomic.;I first examine Argentina's import and export industries and their evolution over time. My thesis confirms that Argentine industries are still heavily dependent on natural resources for their international success. Argentina's competitive export industries are concentrated in the early production phases and clustering manifestations are scarce. Secondly, I evaluate the status of various microeconomic determinants of competitiveness and identify specific bottlenecks. To achieve these goals, I developed a survey and conducted 33 personal interviews with firms in 22 different industries. They account for close to 20 percent of total country exports.;Survey responses indicate that domestic rivalry did not lead Argentine firms to upgrade, captive markets meant domestic producers felt little pressure to meet domestic demand's needs, and related and supporting industries were usually not internationally competitive. Successful firms were those which were able to substitute for the deficiencies in the local environment, as in the case of those companies which systematically tried to satisfy the needs of more sophisticated foreign buyers through exports.;My survey suggests that a deficient infrastructure and shallow capital markets are the two critical weaknesses of the Argentine microeconomic structure.;Based on case studies, I find that firm-specific forces are dominant factors in the success of individual companies. This reflects the nation's early stage in economic development. I find that successful firms have a very defined set of assumptions or an organizational culture which gives form to the whole organization. Culture's observable manifestations are family control, the professional background of the owners and their international exposure.;I show that although all companies have responded to the new challenge in one way or another, some are further advanced in the process than others. Almost all firms have reduced their costs. Some organizations have sought to identify their competitive advantage. Finally, a limited group of companies has began to invest to strengthen their competitive position. Policy implications for both firms and government are discussed.