Productivity Growth, Structural Change and Reforms in Argentina

PRESENCIAL:  FCE-UBA Av. Córdoba 2122, CABA, Argentina.

Abstract

While a significant number of countries have experienced a slowdown following a long period of strong productivity growth, Argentina has exhibited the opposite pattern, with very low long term productivity growth interrupted by a couple of periods with unsustainable increases. This is changing nowadays due to a profound structural shift driven by natural resource endowments, technology, and external prices which seems able to produce a reversion of the historical trend. This policy discussion paper examines the nature of sectoral productivity changes relevant for this structural shift, which we consider irreversible. We examine the conditions for a shock in mining and energy to raise aggregate productivity growth and available evidence on the role of reforms in productivity growth enhancing. This current shift is also based on signi icant impacts on trade integration, resulting from import entry in key manufacturing sectors, and on the recon iguration of the services sector in response to digitalization and AI. Five issues related to the sustainability of this structural change are raised, exploring potential vulnerabilities. These factors include the real exchange rate, the tax regime and windfall saving for hydrocarbons, industrial reorganization facing imports entry, the level of infrastructure spending, and job absorption. They are all colinear to address the pressure that structural change causes on the large metropolitan area of Buenos Aires.

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