Up until WWI, Argentina was one of the greatest trading giants in the world. Its exportation of beef and grain around the globe put them on the map as one of the top 10 most prosperous countries worldwide. As the years went on, a number of internal and external factors affected the prosperous nation. Two world wars, the great depression, political instability, high levels of national debt, protectionist policies and double-digit inflation can be attributed to the fall of Argentina from its hegemonic position as one of the strongest economic forces in Latin America, and the world as a whole. It would be incorrect to say that the nation isn’t still affected by its past, nevertheless, the tough days are over and the future is starting to look promising for the first time in decades. Argentina’s economy is rising from the ashes.
Where and How do I Invest in Argentina – Agriculture is Open for Foreign Investment
Investment opportunities in Argentina are ripe for the picking. The oil and gas sectors have always been strong, industry in cities such as Cordoba is booming and the tourism industry remains very strong, especially in Buenos Aires and Patagonia.
The Argentinan agricultural sector provides a solid base for the economy and provides a wealth of business opportunities for foreign investors. The rise of the Agriculture sector after a slump during the beginning of the 21st century can be attributed partly to the reduction/elimination of export taxes and the dismantlement of export quotas which were affecting the production. These restrictions have been removed and producers are now starting to regain their competitiveness in the global economy – opening doors for investors looking to get involved in the Argentinian agriculture industry.
Various reasons explaining Argentina’s Agriculture strength:
- Competitive advantages in areas such as soil potency, rainfall, existing infrastructure and wealth of arable land.
- A range of climates (proving opportunities in a diverse range of agricultural areas).
- Recent growth in the production and exportation of cereals (notably corn, wheat, and soy).
Agriculture in Argentina is an attractive sector for foreign investment in Latin America. Below are three main sectors with promising investment opportunities.
Exporting Agricultural Products
Argentina is one of the greatest agriculture exporters worldwide. In fact, Argentina is the fourth largest corn exporter and leads the world in the export of soy meal and soy oil. While this offers opportunities for global investors, Mexico seems particularly adapted to invest in this sector. A changing relationship with the USA could result in alterations to the world’s largest free trade agreement, the North American Free Trade Agreement (NAFTA). Mexico, a big player in the trading industry, is one the largest consumers of corn and it imports most of it from the USA. Should changes occur within the NAFTA agreement, Mexico might have to look elsewhere to meet the nation’s demand for corn. Argentinian corn could be the answer to this problem. The opportunities for exportation does not stop at corn. A varied climate means export opportunities exist for many products including wine, fruit, vegetables, wheat etc.
Modernizing Transport and Logistics
Argentina is one of the great food producers, and as the world population increases and globalisation continues to grow, the need for efficient transportation of food around the globe will become vital for economic prosperity. After years of lack of investment in transport, the opportunities for foreigners in the modernization of transportation and logistics in Argentina are growing. Upgrades to roads and ports will be vital to the growth of international trade in Argentina.
The skills and capabilities that Argentina possesses in the production of high-quality food and food-based products outdo their logistic and transportation capabilities. The need for Argentina to improve the transportation of goods around Argentina, Latin America and the world creates opportunities for foreign companies with modern and efficient transportation and logistics knowledge and technology. This need, combined with new governmental policies encouraging foreign participation create a climate for foreign investment in this attractive Argentinian sector.
Looking forward to the future, nations around the globe are slowly shifting towards renewable energy consumption. Countries such as Sweden, Denmark, and Argentina’s western neighbour, Chile are leading the way in the developing the use of renewable energy. Argentina has a unique combination of climates which suit certain types of renewable energy perfectly. Southern Argentina (Patagonia) has strong winds all year round, favouring the creation of wind energy. The north-western part of the country enjoys clear skies, making the solar energy a viable sector to invest in. The country has set a target to produce 20% of its electricity through the means of renewable energy by 2025. The current government has reached out to groups such as the International Finance Corporation (IFC) and other institutions in order to reach their objectives. This includes large, medium and small-scale projects in regions throughout the country, and in a variety of fields (wind, solar, biomass etc.). Investors with skills, knowledge, and expertise in renewable energy have promising opportunities in Argentina.
How to Invest in Argentina?
If you want to successfully do business in Argentina, start by collaborating with a local entity. Whether you’re planning on forming a company, partnering with a customs agent or working through a strategic joint-venture, you will necessarily need to be assisted by a company which offers back-office services. As the economy of Argentina opens up, fruitful business opportunities become available for investors. But these can’t act alone seeing the complexities of Argentina’s market.
Please watch the video below which offers you answers to the main challenges you will have to face when doing business in Latin America.
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