Investment And Innovationkey Drivers Of Argentina’S Economic


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Investment And Innovationkey Drivers Of Argentina’S Economic

  1. 1. Investment and innovation: key drivers of Argentina’s sustainable economic development Beatriz Nofal (Ph.D), President Argentina’s Investment Development Agency Tokyo, May 2008
  2. 2. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  3. 3. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  4. 4. Argentina is facing an extraordinary opportunity to reach the next station on the path towards economic development Factors Productivity Innovation GDP per capita US$ PPP ARGENTINA Argentina’s Investment Development Agency < 2,000 2,000 –3,000 3,000 – 9,000 9,000 –17,000 > 17,000
  5. 5. Argentina Spain 13.307 30.120 GDP per cápita U$S PPP Year 2007* *Estimated Source: ProsperAr based on FMI World Economic Outlook Database, April 2007 By stabilizing the economic growth at moderately high rates, we can reach the development and equity levels of recently developed countries in one generation Argentina Spain 0,33 0,49 Income Distribution Gini Coefficient Source: ProsperAr based on INDEC and OECD Stat. Argentina’s Investment Development Agency
  6. 6. Argentina offers an extraordinary investment opportunity given the combination of high and sustainable economic growth, favorable terms of trade and a competitive base of production factors. STRUCTURALLY COMPETITIVE FACTORS OF PRODUCTION KNOWLEDGE NATURE CULTURE ARGENTINA’S SUSTAINABLE ECONOMIC GROWTH Five years of steady growth at an average rate of 8.8% Twin Surpluses: fiscal and external Flexible and Competitive exchange rate Prudent monetary policy Record profitability FAVORABLE INTERNATIONAL SCENARIO Favorable terms of trade and high prices of agricultural “ commodities” and raw materials. Global Integration of Value Chains and off shoring New global consumption patterns (product differentiation) Accumulation of foreign exchange reserves and reduction of public debt Increasing demand for renewable energy sources Marked reduction of unemployment and poverty levels Rich culture Modern Industries Entrepreneurial and innovative capacities Skilled Human Resources Abundant Natural Resources
  7. 7. Over the past five years, Argentina ranked among the fastest growing economies worldwide. In 2007, the annual GDP growth rate was 8.7% and the average annual growth rate during the last five years has been 8.8%. For 2008, the estimated growth rate is in the order of 8% Average: 10.6% Average: 8.8% Average : 5.1% Average : 3.6% Average : 2.3% Source: ProsperAr based on IMF WEO database, 2007.
  8. 8. Growth is based on solid macroeconomic fundamentals that strengthen the country’s economy, making it more resilient vis-à-vis external shocks, and ruling out the possibility of a crisis in the mid-term. Macroeconomic sustainability results in higher predictability, a key factor for investment. Fiscal and Current Account Surplus (in billions of pesos) International Reserves (in billions of dollars) Source: ProsperAr based on Ministry of Economy and Production. During the first quarter of 2008, tax revenues increased at a faster rate than public expenditure and international reserves continued growing steadily.
  9. 9. Investment has grown steadily, at higher rate than GDP, leading to robust employment growth. *Estimated Source: ProsperAr based on INDEC and Ministry of Economy and Production GDP, Investment and Employment In % and Index numbers 1997=100
  10. 10. Likewise, there has been important productivity gains in the industrial sector, as the surge in production outpaces the rise in employment. + Productivity + Production + Employment + Productivity + Production - Employment = Productivity - Production - Employment Industrial Production, Employment and Productivity
  11. 11. One of the cornerstones of the current macroeconomic program is the maintenance of a flexible and competitive exchange rate. USA RER EURO RER Brazil RER Nominal ER (US dollar) Nominal and Real Exchange Rate (RER) EURO - USA – Brazil. Inverted Scale Source: ProsperAr based on INDEC
  12. 12. Argentina’s exports and imports are at record-high levels. The country has experienced a sizable and persistent trade surplus over the past eight years. Argentinean International Trade Millions of dollars Source: ProsperAr based on INDEC
  13. 13. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  14. 14. Productive Capacities <ul><li>Rich culture and outstanding cultural productions in various fields </li></ul><ul><li>Distinguished international figures and works of art </li></ul><ul><li>Rich Urban life with a wealth of cultural possibilities </li></ul><ul><li>International destination chosen for its quality of life and tourism </li></ul><ul><li>High entrepreneurial and innovative skills (ranked 10 th in the GEM 2007) </li></ul><ul><li>Strong industrial tradition </li></ul><ul><li>Modern infrastructure and technological availability </li></ul><ul><li>World-class producers of agricultural and industrial commodities </li></ul><ul><li>Competitive private sector </li></ul><ul><li>Preferential Access to Mercosur market at 0% tariff </li></ul><ul><li>Qualified Human Resources </li></ul><ul><li>High level of education and training </li></ul><ul><li>Prestigious Universities </li></ul><ul><li>Excellent Research Centers </li></ul><ul><li>Outstanding health indicators </li></ul><ul><li>Abundance of land and natural resources </li></ul><ul><li>A wide variety of mineral and energy resources </li></ul><ul><li>Diversity of regions, topography and climate </li></ul><ul><li>High commitment with environmental protection and sustainable development </li></ul>Argentina’s economic growth is supported by an attractive and competitive resource endowment base which combines a pool of talented people, abundant natural resources, a wealth of culture and significant entrepreneurial and business skills... Nature Knowledge Culture Cesar Milstein – Nobel Prize Federico Leloir– Nobel Prize
  15. 15. Argentina’s high educational standards are similar to some developed countries. Source: ProsperAr based on GED 2006, UNESCO. Adult Literacy Rate (+15 years) % School Attendance Expectations In years
  16. 16. Argentina socioeconomic indicators are the highest in Latin America and are among the top 40 in the world, out of 177 countries. Fuente: UNDP Report of Human Development 2007. 52 40 70 38 2007/2008 Ranking 306 268 444 344 720 Researches in R&D (for every million inhabitants 1990-2003) 81 75 81 86 89 Gross schooling rate 89,9 91,6 95,7 88,6 97,2 Literacy (% over 15 years old) … 198 109 115 301 Physicians/1000 inhabitants 87 83 100 97 99 Deliveries performed by specialized staff (%) 91 97 95 90 96 Population with sustainable access to improved water source 10 5 4 7 3 Undernourished Population … 655 720 1520 1274 Health Care Expenses (PPA in US$ per capita) 26 22 8 31 15 Infant Mortality Rate (0/000) 72,8 75,6 78,3 71,7 74,8 Life Expectancy at Birth (years) 0,803 0,829 0,867 0,800 0,869 Human Development Index (HDI) Region Average Mexico Chile Brazil Argentina Socioeconomic Indicators
  17. 17. Likewise, Argentina shows significant innovative and creative abilities. Source: Prosperar based on US Patent and Trademark Office Patents per million of inhabitants registered at the US Patent and Trademark Office Patents 1963-2005 Patents 1998-2005 Patents 2003-2005
  18. 18. Argentina has been honored with five Nobel Prizes: three of them related to Science –received by Houssay, Leloir and Milstein- who graduated from Public Universities <ul><li>BERNARDO A. HOUSSAY </li></ul><ul><li>He was awarded the Nobel Prize in Physiology and Medicine in 1947 for his discovery of the part played by the hormone of the anterior pituitary lobe in the metabolism of sugar. </li></ul>LUIS FEDERICO LELOIR He was awarded the Nobel Prize in Chemistry in 1970 for his work in biochemistry. He discovered sugar nucleotides and their function in the biosynthesis of carbohydrates. CÉSAR MILSTEIN He was awarded the Nobel Price in Physiology and Medicine in 1984 for developing the hybridoma technique for the production of monoclonal antibodies.
  19. 19. Likewise, the country has fully exploited its wealth of natural resources becoming a leading producer and/or exporter in various agroindustrial segments. <ul><li>The Argentine territory has almost 250,000 km2 of farmland. </li></ul><ul><li>This large quantity of fertile land together with a competitive industry places Argentina as the world’s: </li></ul><ul><ul><li>N ° 1 producer and exporter of Sunflower Oil. </li></ul></ul><ul><ul><li>N ° 1 exporter and 3 rd leading producer of Soy Oil. </li></ul></ul><ul><ul><li>N ° 1 exporter and 3 rd leading producer of Honey. </li></ul></ul><ul><ul><li>N ° 1 exporter of Horse Meat. </li></ul></ul><ul><ul><li>N ° 1 exporter of Pears. </li></ul></ul><ul><ul><li>2 nd leading exporter of Peanut Oil. </li></ul></ul><ul><ul><li>3 rd leading producer of Beef. </li></ul></ul><ul><ul><li>3 rd leading producer of Soy Beans. </li></ul></ul><ul><ul><li>3 rd leading producer and the N ° 1 exporter of Lemons. </li></ul></ul><ul><ul><li>5 th leading producer of Wine. </li></ul></ul>Source: ProsperAr based on FAO.
  20. 20. A long industrial tradition has enabled us to reach an extensive and diverse manufacturing development. <ul><ul><li>A significant number of transnational corporations have been present in the country for decades. </li></ul></ul><ul><ul><li>A group of prime national companies world-class. </li></ul></ul><ul><ul><li>A segment of flexible, innovative and dynamic small and medium sized enterprises (SMEs) </li></ul></ul><ul><li>As an example, the annual production capacity of local industry includes : </li></ul><ul><ul><li>7 million tons of vegetable oils and over 20 million in by-products, </li></ul></ul><ul><ul><li>Over15 million hectoliters of wine, </li></ul></ul><ul><ul><li>400 thousand tons of tanned leather, </li></ul></ul><ul><ul><li>1.2 million tons of paper, </li></ul></ul><ul><ul><li>200 thousand tons of PVC and over 1.5 million tons of derivatives such as propylene and polyethylene. </li></ul></ul><ul><ul><li>275 thousand tons of raw aluminum, </li></ul></ul><ul><ul><li>5 million tons of steel </li></ul></ul><ul><ul><li>4.15 million tons of seamless and non-seamless pipes, </li></ul></ul><ul><ul><li>550 thousand automobiles. </li></ul></ul>
  21. 21. As a member of MERCOSUR, Argentina enjoys preferential access (no import tariffs) to a highly attractive market: 265 millions of consumers and joint GDP of U$S 1.800 billions in 2007. MERCOSUR + partners in FTA’s (3) GDP*: US$ 2,300 Billions Population: 381 Millions Atlantic Ocean Pacific Ocean MERCOSUR MERCOSUR (1) GDP*: US$ 1,575 Billions Population: 238 Millions MERCOSUR + Venezuela (2) GDP*: US$ 1,800 Billions Population: 265 Millions <ul><li>MERCOSUR is a common market formed in 1991 by Argentina, Brazil, Paraguay y Uruguay. </li></ul><ul><li>Venezuela is under negotiations process to become a full member of MERCOSUR. </li></ul><ul><li>Bolivia, Chile, Peru, Colombia y Ecuador are associated members. </li></ul><ul><li>*Estimated 2007 </li></ul><ul><li>Source: ProsperAr based on IMF World Economic Outlook, October 2007. </li></ul>
  22. 22. Intra and extra-Mercosur trade has grown significantly over the last six years. Intra-regional exports peaked in 2007 Fuente: ProsperAr en base al INDEC Increase in Intra and Extra Mercosur’s Exports ( %) Intra Mercosur Exports Extra Mercosur Exports 1990 – 2007 713.4% 350.6% 1990 – 1998 393.5% 42.7% 1998 – 2007 64.8% 215.9%
  23. 23. Argentina is the main growth engine of Mercosur’s intra-regional trade Mercosur intra-regional imports grew from U$S 20 billion in 1998 to U$S 33 billion in 2007. Two-third of that growth (64%) was explained by the increase in Argentina’s intra-regional imports, while Brazil only accounted for 17% of it. However, Brazil’s import demand grew from U$S 57.6 billion in 1998 to U$S 135.5 billion in 2007, but 96.5% of that growth was explained by extra-regional imports Fuente: Prosperar en base a INDEC y CEI
  24. 24. The combination of these resources and capacities results in a supply of competitive goods and services that are very attractive and complementary to world demand trends. Premium Food, Organics and with traceability Increasing global demand of: Premium Wines Premium Beef Olive oil and other vegetables oils Organic products Technological and Differentiated Industries Precision Machinery Shipbuilding industry Biotechnology Software Fashion design High value added Professional Services Business Professional Services Health Services High Education Services Cultural Products and Services International demand of cultural goods Entertainment and works of art with national identity Tourism and Leisure in unique places Increasing flows of International tourism European and American citizens with a second alternative housing, outside of its own country Natural Products, High Quality Raw Materials and Bioenergies Increasing global demand of: Soy and Grains Fruits Fishing Mining Biofuels
  25. 25. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  26. 26. Argentina offers a favorable political/institutional framework for investment. Full enforcement of civil and democratic rights. Argentina is a country where freedom prevails in every area, as confirmed by the 2007 Freedom in the World report. Democracy Within a framework of freedom and full enforcement of the rule of law, our country has moved consistently towards strengthening the democratic system. Strategically Safe Country There are neither terrorist groups, drug trafficking gangs or organized crime activities registered nor differences between religious or ethnic groups that could affect the institutional and economic life or the security of the country. Country of choice among multinational companies Argentina ranks 18th out of 25 countries of choice among the largest 100 multinational corporations, according to a UNCTAD report. Good quality of life Argentina ranks among the 10 best countries according to the 2007 quality-of-life index prepared by the specialized publication International Living. Preferred international tourism destination Buenos Aires was rated the 2nd best city to visit (Travel & Leisure 2007).
  27. 27. Foreign direct investments in Argentina are widely protected by domestic law and by bilateral investment protection treaties, and receive equal treatment to local investors (National Treatment) <ul><li>The Argentine Constitution gives foreigners an equal treatment and recognizes they have the same rights than native citizens. </li></ul><ul><li>The Foreign Investments Act (enacted in 1976) defines the legal framework for foreign investments and gives equal treatment to local investors. </li></ul><ul><li>Foreign investors may: </li></ul><ul><li>Transfer liquid and realized gains from their investments abroad, as well as repatriate their investments. </li></ul><ul><li>Use any of the legal organizational forms provided by national laws. </li></ul><ul><li>Use domestic credit with the same rights and under the same conditions than local companies owned by nationals. </li></ul>International negotiations Regional Level: The Southern Cone Common Market (MERCOSUR) made up by Argentina, Brazil, Paraguay, Uruguay and Venezuela, in addition to Bolivia and Chile as Associate States. Bilateral Level : Argentina has subscribed fifty-eight (58) Bilateral Agreements for Mutual Promotion and Protection of Investments (APPRI). Multilateral Level: Argentina has been a member of the World Trade Organization (WTO) since 1995 and has participated as observer in the Investment Committee of the Organization for Economic Cooperation and Development (OECD) since 1996. Additionally, it is a member of the Multilateral Investment Guarantee Agency (MIGA).
  28. 28. Argentina offers an attractive set of fiscal investment incentives that may be used by both local and foreign investors. <ul><ul><li>Horizontal Incentives: to any region or economic activity; to reduce the fiscal burden during the initial investment period </li></ul></ul><ul><ul><ul><ul><li>Promotion of Investment Law (N° 26.360): Early reimbursement of VAT and/or accelerated amortization for capital goods and infrastructure. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>0% import tariff for capital goods. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>0% import tariff for all goods that are part of large investment projects. </li></ul></ul></ul></ul><ul><ul><li>Sectorial Incentives : aimed at promoting specific economic sectors. </li></ul></ul><ul><ul><ul><ul><li>- Software - Mining - Tourism - Biofuel </li></ul></ul></ul></ul><ul><ul><ul><ul><li>- Biotechnology - Forestry - Automotive </li></ul></ul></ul></ul><ul><ul><li>Regional Incentives : Provincial promotion schemes and support for infrastructure for investments </li></ul></ul><ul><ul><ul><ul><li>Exemptions on provincial taxes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Support for infrastructure investments </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Facilities to purchase and lease public goods. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Public services at competitive costs </li></ul></ul></ul></ul>
  29. 29. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  30. 30. To continue growing at high rates, investment and innovation are key success factors
  31. 31. Investment has recovered and grown steadily since 2002, reaching a record high-level as a percent of GDP. In 2007 gross fixed capital grew at a 14.4% annual rate, and represented 22.7% of the country’s GDP, the highest rate in the last 30 years. Source: ProsperAr based on DNCN, INDEC. Gross Fixed Capital Investment At current prices. Percent of GDP Gross Fixed Capital Investment/GDP Ratio At prices of 1993. Percent of GDP
  32. 32. Argentina’s investment/GDP ratio (at current prices) is the highest in Latin America. *2006 Source: ProsperAr based on different Nationals Statistics Institutes of the region. Gross Fixed Capital Investment/GDP ratio by country in Latin America Year 2007, at current prices
  33. 33. 1992-2000 average without privatizations U$S 5300 M Foreign Direct Investment has recovered and is currently above the average of the 1990s, excluding privatizations. However, Argentina faces the challenge to recover its average historical share of FDI flows into South America. ** 1999 was the year of aquisition of YPF, the public oil company, by Repsol from Spain Source: ProsperAr based on INDEC Total FDI and net FDI (without privatizations) -millions of US dollars- Argentina’s share of South American FDI inflows, (includes privatizations) * Preliminary estimates Source: ProsperAr based on INDEC and UNCTAD
  34. 34. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  35. 35. Notwithstanding the positive results, Argentina faces important challenges in terms of investment To increase and sustain high investment/GDP ratios, consistent with the requirements of a sustainable growth and price stability. To improve the quality of investment. To increase our participation in world and regional flows of Foreign Direct Investment To promote further global value chain integration of international companies with their suppliers and clients To support the growth and internationalization of local companies To meet the increasing demand for energy and infrastructure that results from strong economic growth Challenges Significant increase in Investment as a percentage of the GDP Investments mainly oriented to tradable sectors of the economy. Recovery of Foreign Direct Investment after 2004 Public investment accompanying investment of the private sector Investment growth coupled with employment growth Results
  36. 36. <ul><li>Greater productive diversification , with a growing participation of value-added and differentiated goods, propelled by a strong domestic demand. </li></ul><ul><li>Higher value of exports and exports/GDP </li></ul><ul><li>Higher participation of differentiated and value-added products and services in total exports. </li></ul>High-Value Added Agribusiness Products Biotechnology Differentiated manufacturing Software and IT Services Tourism Education, Health 15 Traditional Export Groups 82% High Value Added Exports 18% 15 Traditional Export Groups 70% High Value Added Exports 30% Source: FORTEZA, J. (2007) For sustainable economic growth and development it is necessary to consolidate macroeconomic stability and to build microeconomic and institutional capacities which will allow us to produce and sell innovative and high value-added products and services in the domestic and international markets. 2006 US$ 54,000 M 2016 US$ 100-120,000 M Exports of Goods and Services
  37. 37. In this sense, Argentina has several success stories in a wide range of sectors and activities with high growth-potential, usually found in economies that are knowledge-and innovation- oriented. Natural Products Food Products Raw Materials Biotechnology and Natural Sciences Design- Intensive Manufacturing Hi-tech and Value-Added Professional Services Business Processes Outsourcing (BPO) Real-estate and Tourism Development Culture
  38. 38. To reach the next stage in the path towards sustainable development requires … STRATEGIC VISION BUILDING SOLID CONSENSUS INNOVATION, EDUCATION, Science & Technology NEW INVESTMENTS A BRIDGE BETWEEN THE GOVERNMENT AND THE PRIVATE SECTORS … within an institutional change-driven environment.
  39. 39. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  40. 40. Given the extraordinary opportunity Argentina faces in the world economy the country's Investment Development Agency, ProsperAr, was created to: … contribute to the optimization of Argentina’s investment and innovation environment. … support the development and internationalization of local companies … encourage national and foreign investment Argentina’s Investment Development Agency
  41. 41. Our vision is that that fostering Argentina’s entrepreneurship and innovation skills will increase investment and improve its quality. Argentina’s Investment Development Agency INVESTMENT ENTREPRENEURSHIP INNOVATION
  42. 42. Argentina’s Investment Development Agency constitutes an institutional innovation in terms of its mission and organizational design. <ul><li>Governance Model: </li></ul><ul><li>National Investment Council: </li></ul><ul><li>Minister Chief of Cabinet </li></ul><ul><li>Minister of Economy and Production </li></ul><ul><li>Minister of Foreign Affairs </li></ul><ul><li>Advisory Councils: </li></ul><ul><li>Private and academic sector </li></ul><ul><li>International </li></ul>Public-private coordination and collaboration Economic-Financial Autarchy Legal status Ability to perform in the public and private law fields Ability to send correspondents abroad Autonomy Board members hold a 4-year term of office The president’s rank is equivalent to that of a Secretary of State and the Directors rank to that of Undersecretary of State Stability Yearly rendering of accounts Internal Audit Department in coordination with the National Audit Commission Transparency Yearly rendering of accounts Internal Audit Department in coordination with the National Audit Commission Transparency Argentina’s Investment Development Agency
  43. 43. We have launched ten programs within five major areas of activity to optimize the investment and innovation environment. Programs <ul><li>Communicating the country’s sustainable economic growth and investment opportunities; </li></ul><ul><li>b) Creating a differential country image aligned to its identity: knowledge+ nature+ culture </li></ul>1 Creating a diferential image for Argentina 2 Personalized investor services Services to investors Active Investor Dialogue Financial instruments to facilitate investment and productive innovation 10 4 5 Enhancement of Investment and Innovation Environment Boost Investment Environment 6 Identification of investment and innovation opportunities and matching them with potential investors Investment- focused Missions Atract and Generate Investment Promoting the internationalization of local firms “ Pioneers Program”: enhancing the growth of innovative firms 7 8 9 Development and internationalization of local firms Fostering the integration of local suppliers to Global Value Chains 3 Argentina’s Investment Development Agency Projects Federal Network for Investments Investment Database
  44. 44. ProsperAr has in its governance model concrete public-private collaboration working schemes. <ul><li>National Council on Development Investments </li></ul><ul><li>- Chief of Cabinet </li></ul><ul><li>Minister of Economy and Production </li></ul><ul><li>Minister of Foreign Relations, International Trade and Worship </li></ul>Internal Audit Department Superior International Advisory Council Advisory Council: private sector Board of Directors * President (1) Dr. Beatriz Nofal Members (2) Mr. Daniel Falcón Ms. Luciana Pagani Argentina’s Investment Development Agency
  45. 45. With public-private coordination and a collaborative environment, we want to maximize the impact of our work regarding: Differential Strategy and Positioning Concrete Initiatives and Projects High-Impact Tools <ul><li>Differential strategy and positioning of Argentina in productive activities with high-growth potential. </li></ul><ul><li>Initiatives for optimizing the innovation and investment environment. </li></ul><ul><li>Investment projects to take advantages of opportunities or to close competitive gaps. </li></ul><ul><li>Refinement of the Agency’s programs to: </li></ul><ul><ul><li>Stimulate domestic and foreign direct investments. </li></ul></ul><ul><ul><li>Support the growth and internationalization of domestic companies. </li></ul></ul><ul><ul><li>Improve access to financing and capital. </li></ul></ul>Argentina’s Investment Development Agency
  46. 46. In conclusion, at ProsperAr we work within a public-private collaborative framework with the goal of making investment and innovation the engines of sustainable development. To achieve this goal, it is necessary to continue consolidating sustainable macroeconomic growth and to build social consensus aimed at enhancing a natural resource based export economy with the application of new investment, knowledge and innovation to produce also world-class competitive high value added products and services.
  47. 47. <ul><li>Investment Opportunity </li></ul><ul><ul><ul><li>Macroeconomic Sustainability </li></ul></ul></ul><ul><ul><ul><li>Competitive Production Factors </li></ul></ul></ul><ul><ul><ul><li>Incentives and Investment Environment </li></ul></ul></ul><ul><ul><li>Investment Performance </li></ul></ul><ul><ul><li>Future Challenges </li></ul></ul><ul><ul><li>ProsperAr </li></ul></ul><ul><ul><li>Argentina - Japan bilateral relations </li></ul></ul>Table of Contents
  48. 48. Investment announcements made by Japanese companies in Argentina In millions of dollars Source: ProsperAr based on CEP * The investments mentioned above correspond to companies’ announcements taken from the media. Investments in greenfield, expansion of existing plants and mergers & acquisitions have been considered. Japanese direct investment has contributed significantly to the building of productive capacities in our country, with strong participation in the automotive industry. 584,4 538,7 Total 0,0 5,0 Transport terminals 0,0 35,1 Telecommunications 0,0 83,0 Petrochemical 0,0 19,1 Fishing 0,0 106,7 Machinery & Equipment 0,0 16,8 Diary products 0,0 17,7 Hotels & restaurants 0,9 0,0 Shipping 2,6 0,0 Retail 3,9 49,0 Metallic minerals 4,2 8,0 Electronic devices & domestic appliances 5,0 14,0 Beverages 12,2 21,5 Auto parts 13,2 0,0 Research & Development (R&D) 105,7 4,6 Rubber products 436,8 158,2 Automotive 2002-2007 1990-2001 Sector
  49. 49. Some major Japanese companies present in Argentina World-class leading Japanese companies have been actively present in our country for several decades Source: ProsperAr based on CEP Various industries Marubeni Various industries Mitsubishi Diary products Yakult Electronics (retail) Canon Shipping NKY Motorcycles Yamaha Auto parts Denso Manufacturing Beverages Kataoka Electronic & domestic appliances Sony Beverages La Superiora Metallic minerals Japan Oil, Gas and Metals Electronic & domestic appliances Newsan Automotive (retail) Nissan Auto parts Araco Software NEC Motorcycles & Automotive Honda Motors Rubber products Brigestone/Firestone Automotive Toyota Sector Company
  50. 50. Argentina-Japan Trade. 1996/2007 millions of US$ Source: ProsperAr based on INDEC Renewed dynamism has been observed in bilateral trade flows over the last three years…
  51. 51. Japan's share in Argentina's Exports and Imports Source: ProsperAr based on CEP and INDEC ... with a recovery of Japan's share in total Argentine trade, although this share remains relatively low showing a significant growth potential.
  52. 52. Source: ProsperAr based on CEP and JETRO Argentina's share in Japan's Exports and Imports Likewise, Argentina's share of Japanese trade also shows signals of recovery, but it continues at low levels.
  53. 53. Exports to Japan Imports from Japan Primary Products: 58.2% MOA (farming & livestock manufactures): 21.7% MOI: (industrial manufactures): 17.3% Fuel & Energy: 2.9% Capital Goods Parts & Accessories: 37.2% Capital Goods: 28.4% Intermediate Goods: 16.7% Consumer Goods: 9.2% Passenger vehicles: 8.3% Source: ProsperAr based on INDEC Argentina - Japan trade breakdown Year 2007 Bilateral trade has a clear specialization pattern. Exports from Argentina are mainly primary products (58%) while imports from Japan are concentrated on capital goods and their parts (65% of total imports).
  54. 54. Trade flows with Japan and investments* made by Japanese companies in Argentina. Millions of USD Investment and trade flows between Japan and Argentina are clearly complementary. Source: ProsperAr based on CEP * The investments mentioned above correspond to companies’ announcements taken from the media. Investments in greenfield, expansion of existing plants and mergers & acquisitions have been considered.
  55. 55. To conclude... <ul><ul><li>An important recovery of trade and investment flows has been observed between Japan and Argentina over the past few years </li></ul></ul><ul><ul><li>The challenge is to continue increasing the intensity of bilateral trade flows and to improve Argentina’s export composition towards higher value added products and services. </li></ul></ul><ul><ul><li>Japanese direct investments in Argentina, and maybe Argentinean investments in Japan -although to a lesser extent- can contribute to meet that challenge. </li></ul></ul>
  56. 57. Muchas Gracias Thank you To learn more about how to invest in Argentina, contact ProsperAr: Florida 375, 8th Floor Suite B (C1005AAG) Buenos Aires Argentina Tel: (+5411) 4328-9510 email: