Argentina - The Road to Tomorrow – Part 2
I will continue with the last 10 measures needed to lift Argentina to the highest levels of development.
11. De-centralize Buenos Aires - As mentioned in an earlier chapter, 30% of the population live in the “Greater Buenos Aires” area, accountable for 50% of GDP. The original plan of de-centralization never took place. By developing regional industries, millions of jobs would be created attracting the population outside the main district. Consider that Argentina in the 8th country in the world in extension, and has only 43 million inhabitants, which is not so much considering it’s size. The main efforts should be done in the North West and North East regions, which historically have been the least developed, but migration should be encouraged from Buenos Aires to the inner cities. This has always been hard to do, I understand for cultural reasons. Mainly Italian and Spanish background, Argentinians don’t like the family to “split”, and would prefer that they all live in the same region.
12. Discuss the immigration issue - Whereas Argentina has historically been an immigration based country, the immigration issue has never been discussed profoundly since the Peron Administration. Directed migration was set in place in that period, when as I mentioned former Nazis from Italy and Germany were allowed into the country, but not Japanese since it was considered that they would be more difficult to integrate. In the 1970s, the 3rd wave of migration constituted people from neighboring countries with indigenous backgrounds, mainly from Peru, Bolivia and Paraguay. A big issue was that these people were illegal immigrants, which made it an additional challenge. Now, since this migration is from neighboring countries it cannot be stopped, but it needs to be integrated as productive work force. Today, most of them live in slum areas. They are Argentina’s poor people. I will discuss how to solve this next chapter. Migration from all over the world though is not a good idea. If the country grows and influx of immigrants enter, the situation will always be the same. Every country needs engineers and entrepreneurs, but workers there is plenty of in the South American region.
13. Flatten the structure government structure - A vertical government structure has it so that many levels of approval mean inefficiencies and bureaucracy. By implementing the latest software accounting technology and digitalizing, all the middle levels can be eliminated. Long tedious paperwork and processes should be replaced by digital formats. This is very easy to do actually. It could be with direct pubic software companies, or by financing or fomenting software development customized for government needs. These softwares could be then exported to countries in the region.
14. Improve international relationships - One of the mistakes from the last government has been to “isolate” itself in the matter of international relationships. Alliances with Venezuela and Iran have been seen as “fishy” by the international community. The relationship with the US was always bad. But in the last four years, bad relationships with Brazil were also common place due to commercial issues. President Macri does right in aligning with the US, but as it always happens, apparently you have to choose in life. Argentina must improve it’s relationship with US and Brasil, but also keep momentum in it’s relationship with Russia and China. The alignment must be with the BRICS plus the US plus the UK. Europe can wait in queue though, there is nothing interesting happening there these days.
15. Unlock the Vulture Funds issue - After mankind’s largest sovereign debt default, the country was locked out of international capital markets. Consider that Argentina is really what is called a “frontier market”. It is very far away from “the world”, and nobody cares about it. Joining it’s stock market with other regional stock markets, like Chile, Peru or Colombia, would also be a good idea. Negotiations with the Vulture Funds are well advanced, and a solution will surely be reached soon. The return to international capital markets will mean lower interest rates. Today, 5 million people do not have access to housing since the financial system is destroyed and the interest rate is amongst the highest in the world. Bank financing for private companies is also hard to get, and occurs only through government plans and private venture capitalists.
16. Join OECD members - Now Argentina is, in my opinion, a developed country. But if you are not in the OECD, chances are the world will not see you as developed. Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries.[47] Joining this list of Nations will help put the country in the map, and make it easier to build trust to attract investments.
17. More efforts for GAFI and money laundering - The Financial Action Task Force (on Money Laundering) (FATF), also known as (GAFI), is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001 the purpose expanded to act on terrorism financing. It monitors countries' progress in implementing the FATF Recommendations by ‘peer reviews’ (‘mutual evaluations’) of member countries. Even if Argentina has said to be doing efforts towards this direction, Argentina is today number 107 out of 167 in the Corruption Perception Index.[48] Consider that while high levels of corruption persist in Brasil, efforts have been made in the right direct. Chile and Uruguay though present similar corruption levels to the US and could be a role model to imitate.
18. Solve the Malvinas/Falklands issue - This can be one of the most crucial challenges. The story of the Falklands/Malvinas is not really as it is told. Upon the country’s independence, the islands came to form part of the Argentinian territory. These were taken by occupation by the British Empire in 1833. In the 1970s, diplomatic conversations where held between Argentina and the UK. The idea was that Argentina was going to pay a sort of “leasing” to get the islands back. But then came the dreaded dictatorship. In order to regain declining popularity amongst the population, the dictatorial government tried to get the islands back by force, in what was known as the Falklands/Malvinas War. The Argentinian government did not expect the British to defend the islands, and miscalculated. But Margarethe Thatcher, known as the Iron Lady, was in office in that period. The War was really an occupation attempt and lasted only for 1 ½ months. Only close to 1000 soldiers died. And it wasn’t against the UK, but against NATO. Being a NATO member, the UK received support from the US, Italy and NATO members. Even Chile (at that point under the dictatorship of Pinochet), neighboring country, supported the UK. Tensions between Argentina and Chile persist to this day due to this and other incidents in the 1980s. - Today, double the oil reserves lay across the Malvinas/Falklands region on the Argentinian continental platform. Argentina does not have any offshore competence, so it would be beneficial to have a partner like the UK to develop the reservoir. The profit could of course be split. However, it is clear that the UK should de-militarize the region. It counts as “British Maritime Oversees Territory” and is one of the 16 colonies that are still existing worldwide. The UK claims that the citizens there have the right to selfdetermination, but of the only 3000 inhabitants, half are actually British troops. Self-determination can only be applicable if the inhabitants can sustain themselves without external intervention (like in the region of Crimea, Ukraine). This is not the case. It is not just a colony, but a military base controlled by NATO. The goal is not really the Falklands/Malvinas, but the Antartic region. In the future, the fight will be for the water.
19. Introduce reforms to the educational system - The educational system from bottom to tops must be renovated like in any country. Programming must be introduced as subject from 1st grade school, as well as robotics. English is already mandatory, but Portuguese could be introduced as well in order to achieve better regional integration with Brasil (where many people in the business world have introduced Spanish). The world of tomorrow will be very different than that of today. The changes will be fast and exponential. The countries that understand this, and adjust appropriately, will rise to top positions in relatively short periods of time.
20. Embrace the Knowledge Based Economy - I will go deeper onto the meaning of Knowledge Based Economy in the NeXT chapter. For now, I will stress that Argentina has a fantastic public university system that produces thousands of great professionals every year. This is a huge advantage. Scientists however, have never been well paid and do not have a high status in society. Also, there has never been established a strong link between university and the private sector. Universities can afford to think long term, experimenting and developing technologies that the private sector can then put into practical use. There must be more investment, and more connection from these two very different worlds. A battery of 20 measures seems like a lot. However, the goal is for the country not just to join the list of developed, or to be formally recognized as developed, but to climb to the top 10 of the list. Consider the following comparison between Argentina and Australia.[49] Whereas the difference in GDP x capita was not so high until the 1960s, they soared after the 1970s. A big difference between Argentina and Australia though is the region. Whereas Australia is an island, Argentina is continental and thus receives influxes of immigrants from nearby countries, rapidly increasing the population (and lowering GDP x capita). I will discuss how to actually take benefit from that in the next chapter. For now, we conclude that if the right measures are taken Argentina could triple it’s GDP x capita in 10 years. It is a long term plan that requires consensus from all political parties and sectors of society. Today, that remains the biggest challenge.
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