The Importance of the Agricultural and Infrastructure Sectors in the Argentinean Economyl

Topics: Agriculture, Policy, Public policy Pages: 7 (2271 words) Published: March 2, 2013
The Importance of the Agricultural and Infrastructure Sectors in the Argentinean Economy Case studies involving the PMP (policy making process)

A key feature of economic development in Argentina has been its high economic volatility which has encompassed periods of high economic growth and high productivity gains followed by periods of persistent under performance ending in severe crisis damaging overall productivity. Considering the last crisis of four decades ago, the overall balance of economic and social progress has been highly disappointing. Exploring the reasons for this outcome is a complex task, as such in this paper, several key economic and institunational features will be highlighted in order to represent an important part of the three fold problem. Firstly a brief review will be made of the policy making process in Argentina (PMP).Secondly, focus will be given to the productivity issues of two sectors at the overall level, whereby case studies on the infrastructure and agricultural sectors will allow illustration of the outcomes of activity in both sectors under the associated policy making process. The configuration and workings of political institutions in Argentina are not conducive to effective compromise and cooperation. In sum, what exists in Argentina is a configuration that fosters non cooperative behaviour in the policy making process .Key actors either have short horizons ,wrong incentives or both Some potentially important actors such as legislators, justices or key civil servants have very short horizons. The potentially long lived and powerful governors have only marginal incentives towards the provision of public goods, and political bargains take place in executive quarters, in meetings of the president with governors, or occasionally in meetings of national party leaders, where no structure has been put in place for the institutional enforcement of bargaining. Public policies in this South American country are deficient in several dimensions. The effect of these policies depend not only on their content, that is ,whether tariffs are high or low, whether there are redistribution towards some sectors or others ,but also if they are stable or predictable, whether the respond to change in the underlying economic condition, whether there is good coordination among policy making units, including appropriate investments and whether the state has the capacity to enforce its legislated policies. Against this backdrop of the unstable condition of policy making .the economic sectors of Argentina has suffered immensely, especially the agricultural and infrastructural sectors. In understanding the policies that have affected the agricultural sector, the role of agriculture in Argentina’s economy needs to be addressed. With an average gross domestic product (GDP) of about U.S$5.00 per capita in 2005-07, Argentina is classified as an upper middle class economy by the World Bank. As the economy has developed overtime, agriculture’s share of GDP has tended to fall. However this share has doubled since 2000, and in 2005-07 has accounted for a sizable 9%of GDP. Agriculture ha accounted for an even larger share of total employment, indicating that wages in the sector have been smaller than wages in the services and manufacturing sectors. The sector has been estimated to have contributed almost one-fifth of Argentina’s GDP in 2003-05,if activities directly related to primary agriculture are included.(Fundacion Producir Conservado 2007) In 2003 about 5.59 million people were either directly or indirectly employed by it through upstream or downstream linkages ,amounting to about one- third of the country’s employment in 2003,(Llach,Harrigue, and O’Connor 2004) taxes collected by government from agriculture accounted for 40% in 1997-2001 and more than 45%in 2002-05 (Fundacion Producir Conservado 2007)

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