Interview: Argentina needs boost industrial productivity to compete globally, says expert

Argentina needs to improve the productivity of its manufacturing industry, as it did in the agro-industry, to become globally competitive, analyst Jorge Castro said.

To enter into the global market. the first step "is to deepen the specialization in agrifood," Castro, the director of the Buenos Aires-based Strategic Planning Institute, said in an interview with Xinhua.

As one of the world's three leading producers and exporters of agrifoods, "Argentina must deliberately emphasize its specialization as a leading agrifood producer" amid increasing demand the demand for these products, Castro said.

Next, said the analyst, the South American country must "attract large-scale investment from transnational companies and funnel it towards developing infrastructure, modernizing and boosting the productivity of the manufacturing industry, which in Argentina is extremely low."

The third step would be to better train the work force, "with large-scale investment in education."

Argentina is the world's third-largest exporter of soybeans, leading exporter of soybean meal and soybean oil, and second-largest exporter of biodiesel derived from soybean oil.

On Argentina's heavy reliance on agricultural exports, the Castro believed it should not be considered as a structural economic weakness.

"In the capitalist world of the 21st century, there are no competitive advantages that don't spring from comparative advantages, above all in the world of raw materials," he said.

"Argentina, in terms of comparative advantages, has the best conditions of the global system," he added.

Thanks to technological advances in its agrifood sector in the past two decades, Argentina "has succeeded in converting these unique comparative advantages into competitive advantages at a global level, comparable only to the United States' capacity to increase production," he said.

Argentina boasts one of the most fertile and extensive regions of flat grassland, known as the Humid Pampa, and to that, Argentina adds seaports less than 250 km away, noted Castro.

In addition to its natural and geographical wealth, said Castro, Argentina has fostered a technological revolution in the past 20 years, particularly to exploit genetically modified seeds, and has innovated a system to farm land without the need for plowing.

All of that has made Argentina a leading agricultural exporter.

And to replicate the success in its industrial sector, the challenge for Argentina, said Castro, is to increase its productivity and as a result its exports.

"In today's world, not everybody can export if they want to, only those who have a sufficiently high level of productivity to compete can export."

The question, he said, is "when and how will Argentina's manufacturing industry achieve the levels of productivity that agricultural production reached in the past 20 years."

Argentina's trade balance in industrial production showed a deficit of more than 32 billion U.S. dollars last year, meaning its "industrial production is largely oriented to the domestic market," Castro said.

"The reason it doesn't export is its extremely low level of productivity, with the exception of the automotive sector, which is totally transnational and directs more than 80 percent of its exports to a single market: Brazil," said Castro.

To spur its industrial sector, said Castro, Argentina needs to first substantially invest in the country's infrastructure, "especially in the country's economically and socially depressed zones, which are the north and northwest."

Secondly, it must keep in mind that "the investment priority is in improving Argentina's human capital, that is investing in education with a specific goal: to increase the qualification of the labor force."

Finally, said the analyst, the government must continue to increase investment in technological innovation, "with an emphasis ... on research in high technology for industrial production." Endi