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Foreign Investment in Argentina Research Paper

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Updated: Oct 1st, 2020

Argentina is the fourth largest investment ground in Latin America when it comes to Foreign Direct Investment (FDI) volume by stock. In regards to the influx of FDI, Argentina is ranked sixth in the region. France, Spain, and the United States are the three key investing nations that are firmly rooted in Argentina. Compared to other nations in South America, Argentina enjoys a vibrant workforce that is competent and highly skilled (“Argentina: Foreign investment” par.9).

In regards to the human development indices, Argentina enjoys the highest index in the Latin American region. The country has also enjoyed robust economic growth for several years (“Argentina Market” 7).

The country’s main investors in 2014 included Luxembourg, France, Uruguay, Germany, Switzerland, Chile, Brazil, the Netherlands, Spain, and the United States. The United States topped the list in terms of investment by country. The sectors that received the most investment included mining, communication, finance, chemicals and plastics, and oil (Micklethwait and Porzecanski par. 7).

The 2014-2015 Investment Aid research study by the Argentinean government also revealed that most foreign investors prefer investing as public limited companies and making a subsidiary form of investment (“Bueno Aires Herald.com” par. 3). Foreign investment can also be encouraged or restricted by the nature of government measures that have been put in place (Zervos par. 3). As it stands now, government policies offer incentives to investors to encourage them to pump more capital investments into Argentina. Adequate infrastructure and capital goods are also necessary in order to boost FDI to Argentina. In addition, foreign investment may also be increased through financing programs that inject surplus capital into Argentina’s economy (“Argentina: Foreign Direct Investment” par. 8).

Kiesnoski notes that despite efforts to increase FDI, Argentina has also experienced several economic problems (4). For example, Uruguay and Argentina came into a deep and long-standing conflict when the latter established pulp mills in the Uruguay River. This development affected diplomatic and trade relations between the two nations and consequently had an effect on foreign investments.

In spite of the many foreign investment hurdles facing Argentina, freedom to establish a foreign multinational firm is readily granted. In other words, foreign investors can do business in any sector of the economy (“2015 Investment Climate Statement” par. 5).

The political and economic environment in the past 22 years

When President Kirchner was in power, the country plunged into huge internal and external debts. It reached a point when Argentina failed even to settle its debtors. A court ruling was also slammed by the government. Debt restructuring program adopted by the regime did not succeed. The US-Argentina’s political relations also worsened with President Kirchner accusing the US administration of interfering with its internal political affairs.

Macri’s reforms and what they signal

Job cuts both in the public and private sector has been witnessed since Macri took over as the President. Over 100,000 job slots have been lost with the main aim being to streamline the national budget, improve manpower and professionalism (Mason and Lough par. 4). Macri has also promised to re-link his country with the world community and international economy. The president has pledged to fast-track a more inclusive economy coupled with sustainable growth (“Stratfor” par. 4).

Macri has now forged a close political friendship with the United States to boost bilateral relations. Capital and trade regulations have also been lifted by President Macri. Other reforms include reducing bloated power subsidies and abolishing debt deal with the US creditors (Candia par. 6). These reforms signal President Macri’s bid to recapture the seat again especially after taking the country out of its current economic and political limbo.

SWOT and PE analysis of Argentina


  • Advanced transport infrastructure;
  • Diversified exports;
  • Strong manufacturing sector that accounts for nearly 30% of FDI;
  • Qualified labor;
  • High level of education.

Adequate natural resources such as minerals, energy and agricultural


  • Inflation rate still high;
  • Unstable leadership;
  • Mediocre Business climate;
  • Lack of access to global financial markets;
  • Inadequate investment in energy;
  • Less rigorous budgetary policy.


  • Ready external markets for its products.
  • Strong bilateral relations with strong economies such as Canada and the United States.
  • Emerging modern technologies.


  • Stiff trade competition from Latin American countries.
  • Poor foreign investor confidence until when reforms will be successful.
  • Holdout dispute with bondholders.

PE, Reforms and Outlook

Politically, Argentina is expected to recover its stability in the South American region especially after the current reforms are successful. Economically, Argentina is on the right path for a robust economic growth. It is still among the top three best performing economies in Latin America (“Major macroeconomic indicators” par. 7). The right political will and development of trade incentives can indeed bring back Argentina’s progressive economic growth.

The main thing lacking in the reforms is the implementation phase. This phase should be carried out expeditiously and cautiously. However, the economic and political outlooks of Argentina show a brighter future largely due to the current reform agenda. Most of the reform elements that President Macri has put in place are viable and bound to turn the country around.

In recap, foreign investment in Argentina is still profitable for investors across the globe regardless of the tough economic conditions the country has passed through in the recent years. Major players such as the United States and European nations are still eying Argentina for foreign investment.

Works Cited

“2015 Investment Climate Statement.” Bureau of Economic and Business Affairs. 2015. Web.

Trading. 2016. Web.

“Argentina: Foreign investment.” Establish Overseas. 2016. Web.

“Argentina Market.” . N.d. Web.

“Bueno Aires Herald.com.” JP Morgan: it’s time to invest in Argentina. 2015. Web.

Candia, Maria. Can Mauricio Macri Save Argentina’s Economy?. 2016. Web.

Kiesnoski, Kenneth. . 2013. Web.

”. Argentina. 2016. Web.

Mason, Jeff, and Richard Lough. . 2016. Web.

Micklethwait, John, and Katia Porzecanski. Argentina Eyes $20 Billion in Investment in 2016, Macri Says. 2016. Web.

“Stratfor.” Argentina’s New President Lays the Groundwork for a Better Economy. 2016. Web.

Zervos, Sara. Argentina: Get Ready To Invest (And Travel!). 2016. Web.

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IvyPanda. "Foreign Investment in Argentina." October 1, 2020. https://ivypanda.com/essays/foreign-investment-in-argentina/.


IvyPanda. 2020. "Foreign Investment in Argentina." October 1, 2020. https://ivypanda.com/essays/foreign-investment-in-argentina/.


IvyPanda. (2020) 'Foreign Investment in Argentina'. 1 October.

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