Argentina is focusing on the knowledge-based economy to reel in foreign investors. Alex Irwin-Hunt reports.

Argentina has extended a 2004 software industry promotion law to the whole knowledge-based economy as a tactic to attract investment in tech.

The sectors promoted by this law which will come into force on 1 January 2020, are those that combine “the intensive use of technology and human capital”, says Juan Pablo Tripodi, executive president of Argentina’s Investment and Trade Promotion Agency. They include software, biotech, professional services, nanotechnology, aerospace, and Industry 4.0 activities.

Argentina hopes to build on the previous success of the software sector, which since the enactment of the software law in 2004 has seen employment and exports rise by 50% and 35%, respectively, according to ministry of production and labour figures.  

Fintech is one sector to enjoy recent success in Argentina, and the country boasted 116 operational fintech start-ups in 2018, according to a report from the Inter-American Development Bank. This number grew by 61% from 2017 and represents a 10% share of the total number of fintech startups across Latin America, as Argentina ranked fourth behind Brazil, Mexico and Colombia.

“There are a lot of fintech companies, [which are] producing not only for Argentina, but for the rest of the world. The challenge there is that we need companies to sell finished products more than the development of the product for any other firm,” Mr Tripodi told the LatAm Edge Awards in London on June 13, 2019.

Overall, Argentina has seen a mixed bag of greenfield investment activity since a record high of 150 greenfield projects and $11.9bn of capital investment in 2011, at the height of the previous commodity boom, according to greenfield investment monitor fDi Markets.

The number of greenfield projects fell each subsequent year until 2015 as the commodity cycle reversed and former president Cristina Fernández de Kirchner turned to increasingly protectionist policies. Her successor, Mauricio Macri, managed to mend fences with the international business community in the first year of his presidency in 2016, when greenfield FDI projects rebounded to 105. However, Mr Macri has since struggled to deliver on his promises of economic recovery, which has affected foreign investors, whose activity halved in 2017 with 58 announced projects before rebounding again in 2018 to 103 announced projects.

Capital city Buenos Aires has garnered almost a third of all greenfield projects since fDi Markets records began in 2003. The new knowledge economy law hopes to promote knowledge-based sector investment to the capital and emerging tech centres like Tandil, Mendoza and Córdoba.

The knowledge law is part of a wider drive to open up the Argentinian economy through trade and investment following years of isolation relative to its South American counterparts.

“Since the start of Mr Macri’s administration, one of the main goals has been to get in contact and become connected to the world,” said Mr Tripodi. “We are really confident that we can continue in the second term of Mr Macri with this policy. Even though the situation is not the best and there are a lot of people complaining, I think that the probability or possibilities of Mr Macri winning the election have been increasing in the past three or four weeks.”

This article is sourced from fDi Magazine
fDi Magazine

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