Can Argentina take advantage of the opportunities that the world offers today? The start of the second day of the 58th IDEA Colloquium, which takes place in the city of Mar del Palata, revolved around this axis. Argentina is a great producer of energy and food, two products that the world demands today. “There are two sectors that are on the discussion table today, but it is not known if this will be the case in the medium and long term. Today is for the war. But to take advantage of this, you have to have gas, liquefy it and take it to Europe, and I don’t know if Argentina is prepared for that. But if the opportunities are not taken advantage of, the country is not going to capitalize on them, if it does not play the match, it is also going to lose this World Cup”, analyzed crudely and with some irony by Xavier Sala i Martin, professor of Economics at Columbia University, in a virtual interview with Paula Altavilla, vice president of IDEA and country president for Argentina, Uruguay & Paraguay of Schneider Electric.
Therefore, the key is to think in the long term, where innovation and technology play a key role. “You have to ask yourself if the country is capable of developing it,” Sala i Martin questioned critically, and exemplified: “If Jeff Bezos had been Argentine, would we have Amazon today? The answer is no. So, you have to ask why. And the answer is that many things would fail: Bezos would not have found the necessary infrastructure, nor financial support; he, too, would not have found the necessary regulation, in Argentina it would have been ‘unfair competition against businesses in Buenos Aires’ and those who sell online would have been punished. That’s why, If Bezos had been Argentine, there would be no Amazon. There are the keys to what Argentina has to solve”.
However, Argentina has 11 unicorns and a huge potential in the knowledge economy, Altavilla retorted. “Yes, and a large number of Argentines are in Silicon Valley and they have to ask themselves why they are there and not in Argentina”, the economist answered.
“It would be important to have a vision of the country,” the Columbia professor insisted before the attentive gaze of 800 business leaders. “In recent decades, politics was on one side and companies on the other, and society on the other. Argentina should find an objective, to stop being emerging and emerge, It is the country that had the most potential 100 years ago and the potential was never realized. You have to achieve a country dream. If each one goes one way and they do not agree, it cannot be achieved. There are many opportunities in the world, but only the countries that take advantage of them will win, the rest will see the train go by, ”she elaborated.
A while earlier, he had summarized the three trends he sees in the world. The first is a question about the future of China. “For the first time it is not the locomotive of Asia, it is not the country that is growing the most. And there is a possibility that it will enter into a crisis,” he warned.
Then he mentioned deglobalization. “In 1990 we created a world embedded in hyperglobalization that worked very well with the just in time as a flag. But it began to collapse due to the crisis in 2007 and things got worse in 2016, when the United States hired an orange president [por Donald Trump]. Then the covid came and showed that the system was fragile and the lockdowns stopped the production chains. So today the big companies seek to diversify and passed from just in time to the just in case”, he explained, and mentioned the example of the United States, which today seeks to bring chip factories back to its country.
Another trend he mentioned was the role of technology companies, which “followed their course and will be a major determining factor in the functioning of the economy in the future.”
He also mentioned the public spending, with an ever larger state. “High expenses were seen with covid and bailouts of billions of euros in Europe. There are also expenses in energy transitions and there is a huge expense in pensions. Public spending and deficits are skyrocketing, and with them inflation,” she analyzed.
And he delved into the role of the State. “State intervention returns, but not in the Argentine sense, that it should move to the right, because it’s too far to the left. The change for Argentina would be to liberalize”, he criticized.
However, he said that the role of governments should be to establish the bases to have a competitive economy, with reasonable institutions, judicial independence, and without excessive regulation. Because the State does not know, no matter how much it seems to know. You have to be willing to move on when there are problems. Governments do not have the determination and incentives that businessmen have”, he concluded.
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“If Jeff Bezos had been Argentine, Amazon would not exist”