ARGENTINA

Argentine Republic

República Argentina

COUNTRY OVERVIEW

LOCATION AND SIZE.

Argentina is located in the southern region of South America. The nation borders Chile to the west and south; the Atlantic Ocean, Uruguay, and Brazil to the east; and Bolivia and Paraguay to the north. Argentina has a total area of 2,766,890 square kilometers (1,068,296 square miles) and is the second-largest nation in South America (after Brazil). It is about the size of the United States east of the Mississippi River. The nation's coastline is 4,989 kilometers (3,100 miles) long. Argentina's land borders total 9,665 kilometers (6,005 miles). This includes borders of 832 kilometers (517 miles) with Bolivia, 1,224 kilometers (760 miles) with Brazil, 5,150 kilometers (3,200 miles) with Chile, 1,880 kilometers (1,168 miles) with Paraguay, and 579 kilometers (360 miles) with Uruguay. Argentina has 30,200 square kilometers (11,660 square miles) of water within its territory. The country's capital, Buenos Aires, is located on the Rio de la Plata (an estuary of the Paraná and Uruguay rivers) on the Atlantic Coast. Buenos Aires has a population of 3 million, although the larger metropolitan area has 13 million people. The nation's second-largest city is Cordoba, located in the center of the nation, with a population of 1.2 million.

POPULATION.

Argentina's population is 36,955,182, according to a July 2000 estimate. In 2000, the population growth rate was 1.16 percent and the nation's birth rate was 18.59 births per 1,000 people. Its fertility rate is 2.47 children born per woman. This gives Argentina one of the lowest population growth rates in Latin America. The population is relatively young with almost half of all people under the age of 30. However, this trend is expected to slowly reverse itself so that by 2025, the differences in the number of people in each age group will be minimal. By 2050 the largest single group of people will be those aged 35 to 55. By 2010 Argentina's population is expected to exceed 41 million. Argentina's mortality rate is 7.58 deaths per 1,000 people, and its infant mortality rate is 18.31 deaths per 1,000 live births. In 2000, the life expectancy was 71.67 years for males and 78.61 years for females.

The majority of Argentines are of European descent (mainly Spanish and Italian). This group makes up 85 percent of the population. Mestizos (people of mixed European and Native-American descent) comprise 12 percent of Argentineans while Native Americans comprise 3 percent of the population. Spanish is the official language, although English, Italian, German, and French are also spoken in certain areas of the country. Most Argentineans are Roman Catholic (92 percent), but there are small numbers of Protestants (2 percent) and Jews (2 percent). The nation's indigenous population numbers about 700,000 and is concentrated in the northwest and some southern areas of the country. There are large immigrant communities in Argentina. During the 19th and early 20th centuries, there were several waves of immigration from Europe which included Germans, English, and Italians. From 1850 through 1940, approximately 6,608,700 Europeans emigrated to Argentina. During the late 20th century, new groups of immigrants settled in the country, including those from Syria and Lebanon. Middle Eastern immigrants now number about 500,000. The nation continues to encourage immigration from Europe through a variety of programs.

Argentina's economy has performed well over the past few decades and the nation enjoys one of the highest standards of living in Latin America. In 2000, the GDP per capita was US$10,000. About half of the people consider themselves to be middle-class. In addition, the literacy rate is 96.2 percent. Because of the relative wealth of the society, Argentina has recently experienced new waves of immigration, mainly from other Latin American countries.

The people of Argentina are highly urbanized. About 80 percent of Argentineans live in towns with populations of 2,000 or more. Some 13 million people—or about one-third of the population—live in the greater Buenos Aires metropolitan area. Because of this urban concentration, the nation's population density is quite low. Argentina ranks number 200 in the world in terms of population density with only 13.42 people per square kilometer (34.76 per square mile). In comparison, the population density of the United States is 28.4 per square kilometer (73.56 per square mile).

OVERVIEW OF ECONOMY

Argentina's economy is one of the richest and most diversified in Latin America. The nation has a variety of natural and other resources which have combined to produce an economy that is based on a strong industrial base, an export-oriented agricultural sector, and a growing service sector. The Argentine population is highly educated and skilled, and the country has a variety of natural resources including lead, zinc, copper, iron petroleum, uranium, and rich agricultural areas. However, after repeated periods of military dictatorship, the nation faced a variety of economic problems when the first sustained period of civilian control of the government began in 1983. By 1989, the nation had an enormous external debt , and inflation had reached a level of 200 percent per month. In response, the government undertook a variety of programs to reform and reinvigorate the economy. In 1991, it initiated a series of programs which provided a fixed exchange rate between the peso and the U.S. dollar and ultimately reformed the banking system. This dramatically lowered inflation and helped stabilize the economy. The government in 2001 continued an economic program which raised taxes and cut government spending in an effort to lower the nation's budget deficit and overall debt.

Argentina underwent an economic boom period in the early 1990s. By 1997, GDP growth had reached 8 percent per year. Reforms in the economy led to increased competition and output. These reforms also attracted significant new foreign investment. Between 1992 and 1999, exports more than doubled from US$12 billion to US$25 billion. In overall terms, international trade remains only a small part of the Argentine economy. In 1995 Argentina, Brazil, Chile, and Uruguay created a free trade area named MERCOSUR. The trade organization has dramatically lowered tariffs between the member nations with reductions in some tariffs of 100 percent. As a result, trade between the member states increased from US$4 billion in 1991 to US$23 billion in 1999. Argentina accounts for 27 percent of MERCOSUR's total GDP. Brazil is now Argentina's largest trading partner. Argentina's exports to MERCOSUR countries are expected to continue to increase and to help spur the economy.

In 1998, the nation began a severe recession that ended in 2000. In 1999, GDP fell by 3 percent, but by 2000 growth had returned at a 2 percent annual rate. However, unemployment in the nation continues to be problematic. Unemployment peaked in 1995 at 18.4 percent. Although it has fallen, it remained at 15.4 percent as of 2000. Increases in productivity and reforms of the labor market are expected to decrease unemployment as more foreign investors locate or relocate firms and factories in Argentina.

The strongest areas of the Argentine economy are telecommunications, food processing, banking, energy production, and mining. Food processing alone accounted for 23 percent of GDP in industry in 1998 and is one of the few areas in which Argentina has a trade surplus . The nation's large agricultural sector produces a variety of products that are used by domestic food industries and then exported. Agriculture provides about 40 percent of Argentine exports. Besides food processing, Argentina's main industries are automobile production, textiles, chemicals and petrochemicals, steel, mining, and consumer durables. After falling by 7 percent in 1999, industrial production recovered slightly in 2000, with a modest growth of 2 percent. Many major international car manufacturers have plants in Argentina, including Ford, Volkswagen, Fiat, General Motors, and Renault. Mining production is expected to double by 2004, with strong growth in gold and copper production. The Argentine telecommunications sector was one of the first in Latin American to be privatized . Since 1991, the sector has experienced continued growth as consumers have sought new technologies, including cellular phones, pagers, and cable television. Reforms in 1994 eliminated restrictions on foreign-owned banks, and insurance firms and many multinational financial companies operate in Argentina. Some of the larger firms include the U.S.-owned American Express Bank, Citibank, Chase Manhattan, Bank Boston, the Dutch-owned ABN Amro Bank, and the British-owned Lloyds Bank.

Argentina continues to face yearly deficits—US$4 billion or 2.5 percent of GDP in 1999 alone. In 1999, the country's debt was US$149 billion. However, Argentina is a net recipient of foreign aid. It receives about US$2 billion a year from international organizations such as the European Union (EU) and the World Bank. In 1999, the International Monetary Fund (IMF) established a contingency fund of US$7.4 billion that can be loaned to Argentina in order to maintain the nation's currency and economic stability.

POLITICS, GOVERNMENT, AND TAXATION

Argentina declared independence from Spain in 1816. The nation then underwent a political struggle between groups that favored a strong central government and those that favored a less rigid federal system. In 1853, the 2 factions established a new constitution and a government of national unity, thereby establishing Argentina as a constitutional democracy. The remainder of the 1800s were marked by increasing industrialization and a large amount of foreign investment, especially from Great Britain, in areas such as railways and port facilities.

Conservatives dominated Argentine politics until 1916 when the Radical Civic Union (URC) gained control of the government. The Radicals worked to expand political participation through fair elections and helped strengthen the political power of the middle class. However, in 1930 the military overthrew the legally-elected president. A succession of military governments tried to cope with the economic problems of the 1930s, but continued labor and social unrest led Juan Domingo Peron to power in the 1940s. Peron dramatically expanded union membership and the power of the working class. In 1947, women were given the right to vote. Peron and his wife Eva, popularly known as Evita, enjoyed great support among the working class and the poor. However, the Peron regime was marked by political corruption and repression. Peron also undermined the Argentine economy by nationalizing industry and trying to manage the economy through state-controlled economic policies and adherence to a series of 5-year plans. The military overthrew Peron in 1955, and through the 1950s and 1960s, Argentina had a succession of civilian and military governments, none of which could establish long-lasting political stability.

Meanwhile, the nation suffered from economic decline and a rise in both terrorism and formal rebellion by anti-government forces. This instability led voters to return Peron to power in 1973, with his third wife, Maria Estela, as his vice-president. However, both liberal and conservative extremist groups continued campaigns against the government, and the economy continued to decline. Peron died in office in 1974 and his wife, who succeeded him, was overthrown by the military in 1976. From 1976 to 1983, the military ruled Argentina and conducted a brutal campaign to eliminate opposition forces. At least 10,000 people were abducted and killed during this period that is known as the "Dirty War." Argentina also lost a war with Great Britain over possession of the Falkland Islands (called the Malvinas Islands by the Argentines). Popular pressure led to elections in 1983 and the restoration of democracy.

Argentina is once again a constitutional democracy. The 1983 elections installed Raul Alfonsin as president for a 6-year term. Alfonsin worked to establish civilian control over the military and fix the nation's economic problems. However, by 1989 inflation had soared to 4,923 percent and the country's economy was in shambles. Alfonsin was defeated in the elections in 1989 and replaced by Carlos Saul Menem. The inauguration of Menem marked the first peaceful transfer of power in Argentina in more than 60 years. Menem adopted a variety of reform programs which included privatization efforts and a pro-United States foreign policy. Menem also initiated monetary reforms which fixed the Argentine peso to the U.S. dollar.

In 1994, there were major revisions to the Argentine constitution. In the past, the president had been chosen by an electoral college, similar to that of the United States, for a 6-year term. Under the new constitution, the president is directly elected by the people for a 4-year term and can serve only 2 terms in office, but can be reelected after leaving office for at least 1 term. The president serves as the chief of state, the commander-in-chief of the military, and the head of the government. The Argentine president has more power than his American counterpart, including a line item veto (the ability to reject a single item from a legislative bill, rather than the whole bill). Argentina's legislative branch is a bicameral (2-chamber) body known as the National Congress. The upper chamber is the Senate, which has 72 members who are elected for 6-year terms. There are 3 senators for each of the nation's 23 provinces and the Federal District. The lower chamber is the Chamber of Deputies, which has 257 members who are elected for 4-year terms. Half of the deputies are elected on a proportional basis (each political party receives a percentage of the seats in the Congress based on their election totals, so that a party receiving 40 percent of the votes would receive 40 percent of the seats). The 1994 constitution improved the accountability of judges by establishing a Judicial Council which oversees judicial conduct. All judges are appointed by the president, subject to approval by the Senate. The nation's 23 provinces have significant power, not unlike the states in the United States, and each has a constitution that mirrors that of the national government.

There are 2 main political parties in Argentina. The Justicialist Party (JP) or Peronist Party is the party of Juan Peron. The JP is now a centrist party, but its main base of support continues to be with the working class and labor unions. Under Carlos Menem, the JP has embraced free-market, economic liberalization as the cornerstone of their economic program. The second major party in Argentina is the Union Civica Radical (Radical Civil Union or UCR), which evolved from the old Radical Party that was founded in 1890. The UCR's main base is among the middle class, and the party is now the more conservative of the 2 main political factions in Argentina. Under Raul Alfonsin, the UCR attempted wide-ranging economic reforms, but was unable to implement them in the face of popular opposition. Leftist members of the JP split with the party in the 1990s and formed the Front for a Country in Solidarity (FREPASO). In 1997, the UCR and FREPASO joined together in a coalition that is known as the Alliance for Work, Justice and Education, or simply as the Alliance. In 1999, the leader of FREPASO, Fernando de la Rua, was elected president. Despite the leftist leanings of FREPASO, its coalition with the UCR has brought the Alliance to the center politically. President de la Rua continued the economic reforms of Menem. There are also a number of minor and regional parties.

Under de la Rua, the government's policies were based on continuing liberalization of the domestic economy through privatizations and a reduced role for the state in the economy. The government is also working to reduce trade barriers and thereby increase foreign trade through integration in organizations such as MERCOSUR and direct trade agreements with other countries such as the United States. In its ongoing effort to increase trade, Argentina has worked to end a number of minor disputes with other countries, including border disputes with Brazil and Chile. Argentina has also restored relations with Great Britain, which were broken in the wake of the Falkland Islands war. The key component of economic policy that has united all of the main political parties is the continued fixed exchange rate between the peso and the dollar. This has served to practically eliminate inflation and to make Argentina attractive to foreign investors and to international organizations that provide economic assistance.

An ongoing problem for the government is the continuing budget deficit. By 1999, the deficit had climbed to 2.5 percent of GDP or almost US$9 billion. In an effort to reduce the deficit, President de la Rua implemented an economic program that expanded the privatization of government-owned businesses and included both spending cuts and tax increases. Among the most significant privatization programs over the last decade have been the selling-off of the nation's state-owned telephone company and reforms in the banking and insurance sector. The government has also expanded the availability of private pension plans, which has reduced the strain on the nation's social security system. Corporations in Argentina pay a standard 30 percent tax on profits each year. Individuals pay a graduated income tax that ranges from 11 to 30 percent, depending on income. There is also a 0.5 percent annual wealth tax on individuals who have a net worth of more than US$100,000.

Approximately 919,000 Argentines work for the government. In 2000, the government's budget was US$28 billion, but its revenues were only US$24 billion leading to a US$4 billion deficit. Repeated deficits have led to a large external debt of US$149 billion. In another effort to increase revenues, the government has been engaged in a long-running effort to improve tax collection and simultaneously decrease corruption in the public sector .

After decades in which it enjoyed a high degree of political power and prestige, the Argentine military has shrunk dramatically. The nation's military is now an all-volunteer force. In 1999, Argentina spent only 1.3 percent of GDP or US$4.3 billion on defense (compared with as much as 5 percent in the 1980s). Argentina has developed close military relations with a number of countries, including the United States, Israel, Spain, Germany, France, and Italy. In 1998, Argentina was designated a major ally by the North Atlantic Treaty Organization (NATO). Argentina has recently participated in a number of international humanitarian military operations such as the intervention in Haiti and NATO missions in the former Yugoslavia.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Argentina has a good infrastructure system in comparison with other Latin American nations, but many areas need significant improvement. The nation has 215,434 kilometers (133,870 miles) of roads, including 734 kilometers (456 miles) of expressways or highways, but only 63,553 kilometers (39,492 miles) of the country's roads are paved. Argentina has been the recipient of a number of aid packages to improve infrastructure. For instance, the United States has provided US$7 million and the World Bank provided US$450 million for highway construction. There is an extensive rail system that transports both freight and passengers around Argentina, with a total of 38,326 kilometers (23,816 miles) of track.

Argentina has 10,950 kilometers (6,804 miles) of navigable waterways. However, most of the country's major ports are located on the Atlantic coast, and little freight is transported along the inland waterways. The nation's main ports include Bahia Blanca, Buenos Aires, Comodoro Rivadavia, La Plata, and Mar La Plata (all located on the Atlantic Coast). Inland river ports include Rosario and Santa Fe, while the port of Ushuaia is located in the extreme southern tip of the nation near Cape Horn where the Atlantic and Pacific Oceans meet. Argentina has a small merchant marine of 26 ships with more than 1,000 tons of gross weight. This includes 11 petroleum tankers. In order to provide fuels to inland areas and ship resources to ports for export, there is a broad pipeline system. There are 4,090 kilometers (2,542 miles) of crude oil pipelines, 2,900 kilometers (1,802 miles) for other petroleum products, and 9,918 kilometers (6,163 miles) of natural gas pipelines.

Buenos Aires has an extensive system of public transportation, including subways and buses, but most smaller cities and towns in Argentina have limited transportation resources. Most major cities are connected by passenger railways and there is an extensive commuter rail system in the greater Buenos Aires metropolitan area.

There are 1,359 airports in Argentina, although only 142 have paved runways. Buenos Aires has 2 major airports. The first, Ezeiza International Airport, is the main point of arrival and departure for most international flights. Most domestic or regional flights, including those to Brazil, Uruguay, and Paraguay originate from the second major airport in Buenos Aires, Aeroparque Jorge Newbery. Most major international air carriers offer service to Buenos Aires, including the U.S. carriers United and American Airlines. Argentina's national airline is Aerolineas Argentinas. The government is involved in a program to privatize airports. Thus far, 33 major airports have been turned over to private companies to operate.

Argentina has a telephone density of about 20 private phones per 100 people. There are also some 12,000 public telephones. Deregulation of the telecommunications industry is ongoing, and service and infrastructure

have improved dramatically. Companies such as AT&T, MCI, and Sprint can now provide long-distance service to a limited degree. There are currently 40 earth stations that support the telephone system's microwave relay complex and 3 earth satellite stations. Nonetheless, many areas of the country experience telephone outages, particularly after heavy storms. There are also continuing restrictions on satellite services. The cable television system has also expanded and now includes a number of international channels such as CNN International, CNN Espanol, and MTV, as well as channels from Brazil, France, Germany, and Italy. Initiatives to increase Internet usage have broadened access and in 1999 there were 47 Internet service providers. By 2000, about 10 percent of the adult population used cellular phones (there are about 2.5 million mobile phones in use).

In 1998, total electric production was 75,237 kilowatt-hours (kWh). Fossil fuels provided 42.71 percent of production while hydroelectric sources provided 47.55 percent and nuclear power 9.47 percent. The electric industry in Argentina was deregulated in 1991, and most power distribution sources have now been privatized, although a small number remain under government control. Behind Venezuela, Argentina has the second-largest proven reserves of natural gas in South America with 24 trillion cubic feet. The country also has significant oil reserves (2.8 billion barrels) and produces about 900,000 barrels of crude oil per day.

ECONOMIC SECTORS

Argentina has a mixed economy that has well-developed agricultural, industrial, and service sectors. From the 1930s well into the 1970s, there was a concentrated effort to develop industries and expand industrial capacity. However, the economic problems of the 1970s and 1980s, combined with political instability, led to a period of decreased economic production and the decline of many of the country's major industries.

Agriculture remains a major component of Argentina's economy as crops and livestock provide much of the nation's domestic food needs. These products also provide raw materials for the growing food processing industry. Agriculture directly accounts for 7 percent of the nation's GDP. The agriculture sector is driven by the export of crops and livestock. This makes the sector vulnerable to economic problems with Argentina's main trading partners. In the past, Argentine livestock production suffered from problems with diseases such as hoof-and-mouth disease, as well as restrictions on imports by nations such as the United States. Beginning in the 1980s, agriculture in Argentina began to diversify beyond the traditional products such as beef and sheep. Many food-based oils and specialty crops are now raised. In addition to beef, some of Argentina's main agricultural products include sunflower seeds, lemons, soybeans, grapes, corn, tobacco, peanuts, tea, and wheat. Fishing has declined significantly in recent years as decades of over-fishing have limited stocks of the most popular catches.

Industry in Argentina is diversified and driven by a large and relatively affluent domestic market. Only recently has the nation begun to export significant amounts of manufactured or finished products. Argentina's membership in MERCOSUR has been one of the main factors driving industrial exports as it has expanded access to existing markets and opened new markets. Industry accounts for 29 percent of GDP. As a result of economic problems in Brazil, industrial production growth in Argentina declined by 7 percent in 1999, but rebounded in 2000 by posting a modest level of growth of 2 percent. Among the main industries in Argentina are food processing, automobile production, textiles, energy production, and mining. The nation also has a growing chemical industry.

The service sector is now the leading component of the Argentine economy. In 1999, it accounted for 64 percent of GDP. Much of the growth in the service sector has been the result of the economic liberalizations of the 1980s and 1990s. Several key sectors, including telecommunications and financial services, have seen dramatic expansions as foreign companies have invested in these areas, and there has been an increase in domestic consumer demand. While many segments of the service sector have experienced growth, the economic problems of the late 1990s led to declines in other areas. For instance, retail and wholesale businesses have seen little or no growth as consumer spending has been constrained by the most recent recession.

AGRICULTURE

Argentine agriculture has experienced a period of transition and diversification over the past decade. Traditional products such as beef and sheep have declined in relative value while newer products such as food oils have grown in popularity with farmers. Argentina is the world's fifth-largest producer of food and beef. It is also the world's largest producer of lemons and lemon juice and the largest producer of olive oil in South America. Finally, the nation is also one of the world's main producers of wheat and flour.

In 1998, the total value of agricultural exports was US$13.25 billion and the total value of imports was US$1.73 billion. In 2000, about 12 percent of the population was employed by agriculture. Agricultural workers earn an average of about US$400 per month, which is twice the national minimum wage. There are 40 million hectares devoted to agriculture in Argentina, of which 20-25 million hectares are used for grains and crops, while the rest is used for livestock grazing. In 2000, there were approximately 420,000 farms in the nation. However, the largest 10 percent of farms accounted for more than 50 percent of total production.

CROPS.

Since the early 1990s, agricultural production has increased dramatically, although there was a brief period of decline in 1999 when output fell by 4.7 percent. With that exception, production increased by an average of 10 percent per year during the 1990s. Lower demand for Argentine products by the nation's MERCOSUR partners may continue to constrain exports, but new access to markets in Europe and the United States has provided outlets for increases in production. The main crops include bananas, barley, potatoes, rice, sugar cane, soy beans and soy bean oil, corn, wheat, lemon juice, and sunflower seed oil. On average, each year Argentina produces about 200,000 tons of cotton, although the domestic market only uses about 80,000 tons. Total crop production in 1999 was 70.68 million metric tons. The largest crop yields were sugar cane at 19.4 million metric tons, soybeans at 18 million metric tons, wheat at 14.5 million metric tons, and corn at 13.18 million metric tons.

LIVESTOCK.

The main livestock products include beef and veal, chicken, duck, goose, horse, lamb, pork, and turkey. Argentina's geographic position makes it ideally suited for raising livestock. In most areas of the country, cattle and sheep may graze year round. Livestock accounts for about 85 percent of exports.

Argentine farms have some 53.6 million head of cattle. Each year the nation exports about 460,000 tons of beef. However, much of the beef production is consumed domestically; Argentina has the highest per capita beef consumption in Latin America, with an average annual consumption of 60 kilograms per person. Sheep and pig farming is also extensive. There are 21.6 million sheep in Argentina and 5 million pigs, but most pork production is for domestic consumption. The nation also produces 660,000 tons of poultry products each year.

Argentina is noted for its horses and has an international reputation for producing exceptional racing and show horses. There are some 3.3 million horses in the country. Besides producing thoroughbreds for competition, there is also extensive use of horses on ranches and farms as work animals.

The dairy sector is one of the strongest segments of agriculture. In 2000, dairy products were worth US$4.685 billion. Exports of dairy products totaled US$400 million that same year. Growth in the dairy sector was 4 percent in 2000, and it is expected to increase by at least 2 percent annually. In addition to milk and cheeses, a number of novelty products are produced, including cream cheese, frozen yogurt, ice cream, and specialty cheeses.

FISHING.

Argentina is among the world's top 20 fishing nations. Fishing accounts for about US$1.2 billion annually and total yearly catches often exceed 640,000 tons. Since the 1970s, fishing catches have increased by 400 percent. This has led to dramatic over-fishing and international efforts to limit catches on some species, mainly swordfish. Argentina is party to a number of international agreements which are designed to limit fishing and preserve species. However, the richness of the nation's coastal waters has led many fishing vessels, both Argentine and foreign-owned, to illegally over-fish many species, including swordfish and hake. Since the 1970s, the number of Argentines engaged in fishing has decreased by about 30 percent.

Hake is the most common catch and accounts for 60 percent of total harvests. Although Argentina is at the extreme southern range of swordfish, these fish are among the most valuable species caught. At its height, the swordfish industry routinely had annual catches of 500 tons; however, during the 1980s catches fell to 350 tons because of over-fishing. From 1993-1997, catches were down to the point that exports ceased entirely. Current production has risen again to 350 tons (where it has stabilized over the past few years) and exports have resumed.

FORESTRY.

Forestry accounts for only a small portion of the Argentine economy. Wood is mainly used as a building material and as a fuel source for rural Argentines. There are 59.5 million hectares (147 million acres) of timberland in the country. The main trees that are commonly harvested are elm, willow, oak, pine, and cypress. Cedar is harvested in small quantities for furniture manufacturing. White quebracho is often harvested for use as fuel wood and red quebracho is widely used to produce tannin for the tanning industry.

INDUSTRY

Industry in Argentina is highly developed and diversified. Argentine workers are skilled and educated, but recently labor costs have exceeded increases in production. As a result, many industries are no longer profitable since foreign manufacturers are able to produce the same items at a much lower cost due to their lower labor costs. Efforts to reform the nation's labor system by reducing the corruption of some unions have been unsuccessful. In addition, high interest rates, currently about 15 percent, make it difficult for domestic companies to get loans in order to restructure their operations. Nonetheless, many industries, including the chemical sector and energy production, remain profitable and have experienced growth. Argentina's geographic position allows it easy access to markets in Brazil and surrounding nations, and the country's rich natural resources provide the basis for continued expansions in certain industries. In 2000, 23 percent of Argentines worked in industry. The average wage for industrial workers is US$870 per month or about 4 times the national minimum wage.

FOOD PROCESSING.

The food processing industry takes advantage of the country's rich agricultural resources. Processed food products are consumed domestically and exported to Argentina's MERCOSUR partners and to markets in east Asia. In 1999, exports totaled US$89 million. Brazil alone accounts for 48 percent of Argentine processed food exports to MERCOSUR countries, followed by Uruguay at 19 percent, Chile at 17 percent, and Paraguay at 15 percent. Food processing accounts for about one-quarter of the total value of industrial production or about US$25 billion. Among the main segments of the industry are meat-packing, prepared dairy products, prepared fruits and vegetables, and cooking fats and oils.

MANUFACTURING.

Many of the main areas of the Argentine manufacturing sector have gone through economic difficulties that began in the late 1990s. The textile industry has been hardest hit. Since the 1980s, it has been undergoing a period of consolidation as smaller companies are bought out by larger firms. Efforts to make the sector more competitive with foreign suppliers have not been successful since the international firms have significantly lower labor costs.

A significant force in Argentine industry is automobile manufacturing. A number of international car companies have plants in Argentina which produce a variety of vehicles that range from passenger cars and light trucks to buses and commercial trucks. Ford, General Motors (GM), Volkswagen, Renault, Fiat, and Peugeot all produce passenger cars, while Ford and Mercedes Benz produce buses and truck chasses. By 1999, total annual production was about 350,000 units. Domestic growth is expected to average 10 percent per year over the next decade. MERCOSUR has helped spur this growth. After the establishment of the organization in 1995, Argentine exports of automobiles increased by 122 percent from 1995 to 1997. About 90 percent of exports went to Brazil. As a result of expected increases in production, several companies are planning major investments in new facilities. For instance, Ford is investing US$1 billion in new plants to manufacture Escorts and Ranger light trucks. Meanwhile, Toyota has begun construction of a US$150 million plant to produce small cars. Total foreign investments from 1995 to 2000 were US$8.53 billion.

MINERALS AND MINING.

Argentina has a variety of mineral resources. It has significant reserves of natural gas and oil, and has stocks of valuable minerals such as gold, copper, and iron. Argentina's natural gas sector is now privately owned, after the state monopoly Gas del Estado was split into a number of private companies in 1992. The largest pipeline company in Argentina (and all of South America) is TGS, which is 70 percent-owned by the U.S. company Enron. It provides two-thirds of Argentina's natural gas consumption. Many international companies have entered the Argentine oil market. Chevron, BP Amoco, Shell, Unocal, and the French-based company Total all have a presence in the country and seek to expand operations as exploration continues offshore on the country's continental shelf. The Argentine company Repsol-YPF accounts for about 50 percent of the country's total refining capacity, followed by Shell at 17 percent, and Esso at 16 percent. The remaining production is divided among 4 small companies. YPF has US$6 billion in annual revenues and plans to invest US$15 billion over the next decade in new oil exploration. By 1999, total oil production was 900,000 barrels per day, with exports of 372,000 barrels per day.

In 2000, total mining exports were US$1 billion. Estimates are that this figure will grow to US$2.3 billion by 2004, as total investments in mining are expected to reach US$5 billion by 2005. Major minerals include gold, lead, silver, uranium, iron, and zinc. In 1998, gold production amounted to 19,459 kilograms. Copper production was 170,273 metric tons, lead was 15,004 metric tons, and zinc was 35,560 metric tons. Several major international companies are investing in new operations in Argentina. Major mining companies include Japan's NKK and the Argentine company Minera Alumbrera.

In 1994, the nation's main steel company, Aceros Zapla, was privatized. Since then, steel production has increased at an average annual rate of 4 percent. Crude steel production averages about 4.19 million metric tons. The majority of steel products, almost 90 percent, are used domestically. Argentina also produces a variety of building products that are mainly used in the domestic market. Forest and timber plantations cover some 1 million hectares and produce mainly softwoods that are used to make plywood and other composite building materials. Declines in construction have hurt the building materials industry which has been operating at only 57 percent of capacity since 1997. Although the construction industry has been in decline, industrial production of building materials has increased—mainly as a result of exports. Production of cement in 1999 amounted to 6.9 million metric tons. However, two of Argentina's main cement companies, Loma Negra and Juan Minetti, are set to dramatically increase production. For instance, Juan Minetti is building a US$90 million plant that will allow the manufacturer to increase its production to 1.2 million metric tons of cement per year.

CHEMICALS.

The chemical industry in Argentina is one of the main segments of the nation's economy. Chemical production accounts for about 3 percent of GDP, or about US$10.75 billion in annual output. There are 2,300 chemical companies in Argentina. Of these, about 150 are considered to be medium or large in size (employing more than 100 people). In 1999 there were 64,410 people employed by chemical companies. While many other segments of the nation's economy have experienced little or no growth since the late 1990s, the chemical industry has had an average annual growth rate of 3.5 percent and an average growth rate of 3 percent in exports. Consumer demand has outpaced domestic production, however, and imports of chemicals rose 18.5 percent in 2000. Among the main chemical products are plastics and resins, especially those used in the production of manufactured products.

SERVICES

The Argentine service sector includes a variety of different types of businesses and companies. The most prominent segments of the sector include financial services, retail, and tourism. In 2000, 69 percent of Argentines worked in the service sector. On average, workers in the service sector earn US$710 per month, or about 3.5 times the minimum wage. Workers in the financial services sector are the highest paid in Argentina and earn an average monthly wage of US$1,840, while telecommunications workers earn an average of US$990 per month.

FINANCIAL SERVICES.

Financial services and insurance now account for 8 percent of GDP. After decades of financial instability, the Argentine banking sector has begun to experience growth and has gained credibility in international financial markets. Government reforms of the sector have dramatically increased its competitiveness. The most significant reform was the 1991 Convertibility Law, which fixed the peso to the dollar and ultimately lowered inflation to around 1 percent. Insolvency among debtors has kept consumer interest rates at a high 15 to 25 percent.

There was a significant period of consolidation in Argentine banking, and the number of banks declined from 206 in 1994 to 132 in 1998. The 20 largest banks in Argentina accounted for 75 percent of the nation's total bank deposits. Total deposits in 1999 exceeded US$80 billion, which marked a dramatic rise from 1995 when deposits hit a record low of US$37 billion. There are 31 major international banks in Argentina with 374 branches. The largest include American Express, Bank of America, Bank Boston, Chase Manhattan, ABN Amro, Deutsche Bank, Lloyds Bank, and Hong Kong and Shanghai Bank (HSBC). Six of the nation's 10 largest banks are American or European. The largest domestic commercial bank is Banco de la Nacion, which is government-owned. Efforts to privatize the bank have met with widespread opposition because of the potential for lay-offs.

Part of the growth in the financial sector has been spurred by government programs which established privatized pension plans. In 1997, total private pension assets amounted to 2 percent of GDP, or about US$6 billion. By 2010, this figure is expected to rise to US$118 billion. Since privatization, the insurance sector has increased by an average of 10 percent per year. From 1998 to 2000, the total value of the Argentine market increased from US$570 million to US$660 million. Foreign companies have increased their presence in Argentina, with U.S. firms providing US$200 million worth of insurance-related services.

RETAIL.

The retail sector in Argentina has experienced a period of decline since 1998. The country's economic slowdown has constrained consumer spending. However, some segments—including restaurants and certain retail franchises—have undergone continued growth. Small markets and family-owned retail outlets have gradually been replaced by larger chain stores. By 2000, about 80 percent of the nation's food and beverage sales were through supermarkets and large chain outlets. Argentina now has a number of major international hypermarkets (large stores which sell a variety of products, including food, clothing, hardware, and pharmaceuticals). Examples of these international hypermarkets in Argentina include Wal-Mart, Carrefour, Ahold Casino, and Makro. There are now 54 different chains in the nation. There are 10 Wal-Marts with combined sales in 2000 of US$300 million. The largest hypermarket is the French-owned chain Carrefour, which has 162 stores and sales of US$2.6 billion. In 2000, there were also 1,240 super-stores, 12,861 supermarkets, 100,884 grocery stores and 5,230 convenience stores.

One of the strongest segments of the retail market remains computer and computer equipment sales. In 2000, these products had sales of US$1.74 billion. The computer market is expected to increase by 10 percent annually over the next decade. U.S.-brand products account for 67 percent of the market. The leading U.S. firms are Compaq, Hewlett Packard, and IBM. Besides personal computers, the best selling products include printers, laptop computers, CD-ROM drives, hard drives, and memory expansion kits.

There are more than 30,000 restaurants in Argentina, about one-third of which are located in Buenos Aires. Despite the economic slowdown of the late 1990s, restaurant sales have averaged 10 percent growth over the past decade. The largest restaurant chain is Arcos Dorados, which operates McDonald's franchises. There are 160 McDonald's with average annual sales of US$230 million. Burger King is the second-largest chain with 25 stores and US$25 million in sales. Wendy's is number 3 and also has 25 stores and just under US$25 million in annual sales. The most profitable Argentine-owned restaurant chain is the La Caballeriza steak house, which has 4 restaurants and US$10 million in revenues. Almost 6 percent of total family income is spent dining out.

TOURISM.

In 2000, the tourist sector provided US$1.57 billion to the Argentine economy. This represented a 4 percent increase from the previous year. In 2000, 5 million foreign tourists visited Argentina. The nation has almost 6,000 hotels, 1,600 of which are located in Buenos Aires. Buenos Aires is the tourist capital of the country and accounts for 73 percent of the tourist trade. Many foreign tourists also visit the Argentine coastline and the southern region of the nation, Patagonia. A variety of international hotel firms have outlets in Argentina. The nation's largest hotelier is Sheraton, which has US$60 million in annual sales. The second-largest hotelier is Marriott, with annual sales of US$9 million. Despite the nation's recession, tourism grew by 1 percent in 1999. As the economy recovers, tourism is expected to expand by 11 percent per year. In 1999, there were 18 different high-level hotel construction projects underway.

INTERNATIONAL TRADE

Growth in foreign trade, especially trade with MERCOSUR partners, has been one of the main factors driving the Argentine economy. In 1990, 11 percent of the nation's GDP was tied to foreign trade; by 1999 that figure had grown to 17 percent. Exports account for 7 percent of GDP. Lower tariffs and improvements in domestic industries have helped decrease the nation's trade deficit, which fell from US$5 billion in 1998 to US$2.2 billion in 1999. In 1999 exports declined by 12 percent, while imports fell by 19 percent. Argentina has a large trade deficit with the United States. In 1999 it amounted to US$2.4 billion.

In 1999 Argentina's main export partners were Brazil with 24 percent of exports, the EU with 21 percent, and the United States with 11 percent. Its main import partners were the EU with 28 percent of imports, the United States with 22 percent, and Brazil with 21 percent. Increases in exports of beef and oil have helped drive exports. Following a brief period when beef exports were banned by several countries because of the potential for hoof-and-mouth disease, exports of beef and beef products have met or exceeded export quotas.

MERCOSUR serves as the main outlet for Argentine exports. In addition to Argentina, Brazil, Paraguay, and Uruguay, the trade organization now includes Chile and Bolivia as associate members. Brazil is the dominant economic force in MERCOSUR and accounts for 70 percent of the organization's GDP, while Argentina accounts for 27 percent. Intra-MERCOSUR trade rose from US$4 billion in 1991 to US$23 billion in 1998. Much of the increase

in trade has been the result of decreases in tariffs. Almost 90 percent of intra-MERCOSUR trade is now duty -free, but there are still substantial tariffs on goods imported from outside MERCOSUR. Approximately 85 percent of imported goods are subject to tariffs.

Argentina has initiated negotiations to enter into trade agreements with the EU, Mexico, and the Andean Pact (an economic organization of South American nations which includes Bolivia, Colombia, Ecuador, Peru, and Venezuela). It has also been supportive of the effort to develop a Free Trade Area of the Americas (FTAA) which would bring all of the nations of the Western Hemisphere together in a free trade organization. In 1994 the United States and Argentina signed a bilateral investment agreement which allows U.S. companies to invest in most sectors of the Argentine economy on the same basis as domestic companies. Argentina has trade treaties with 56 other nations.

Since Argentina fixed its currency to the U.S. dollar, it has become much more attractive for foreign investment. Spain is the largest investor in Argentina. The United States is the number two investor, and by 1999 direct U.S. investment was US$16 billion. U.S. investments are concentrated in manufacturing (at US$3.65 billion), finance, banking, and real estate (at US$3.8 billion) and petroleum (at US$1.565 billion).

Another broad effort to attract international trade has been the establishment of free trade zones . There are 3 large zones and a number of minor areas. The largest of these is the La Plata Free Trade Zone, which was established in 1997. The zone is close to Buenos Aires and has 500 meters of dock, 400,000 square meters of warehouse space, and 5,000 square meters of office space. La Plata has 1,942 different commercial users. The largest companies in the zone include Sharp, Pioneer, Daewoo, Ford, General Motors, Nike, Nissan, Mazda, and Zenith.

MONEY

Throughout much of the latter half of the twentieth century, Argentina was plagued by a weak currency and high inflation. In 1985, in an effort to fight inflation, which had reached 2,000 percent, the government replaced the nation's traditional currency (the peso) with a new currency called the austral. One austral equaled 1,000 pesos. However, inflation continued to rise. In 1989, inflation reached 5,000 percent, making the nation's currency almost worthless. In response, the government again changed the currency in 1992, replacing the austral with the nuevo peso Argentino (new Argentine peso). One nuevo peso was equal to 10,000 australs. Inflation was finally brought under control when the government fixed the nuevo peso to the dollar at a one-for-one

exchange rate . While this almost completely wiped out inflation, it also meant that the government has little control over the value of its currency. After the currency was pegged to the dollar, it once again became simply known as the "peso."

The Argentine peso is fixed at one-for-one exchange rate with the U.S. dollar. While the dollar fluctuates freely on world markets, it has brought a significant degree of monetary stability to the Argentine currency and economy.

The nation's currency and banking system are over-seen by the Argentine Central Bank, which was established in 1935. The Central Bank maintains currency reserves of US$25 billion, which would cover 9 months of imports. The bank has also arranged a US$7 billion emergency fund that is financed by international organizations and international banks. This fund may be used to protect the nation's financial stability. High interest rates continue to constrain the economy. On average, banks charge 10 percent interest to preferred business customers while consumers pay interest rates of between 15 to 25 percent.

The Buenos Aires Stock Exchange (BASE) was established in 1854. It is the oldest in Latin America. By 1996, BASE had a total market capitalization of US$45 billion and had 147 companies listed. The exchange is dominated by 3 companies—YPF, Telefonica, and Telecom—which together account for 50 percent of the total market.

POVERTY AND WEALTH

There are deep disparities in income and wealth in Argentina. In 2000, the richest 10 percent of the population earned 36 percent of the country's income, while the poorest 10 percent earned 1.5 percent of income. About 36 percent of the population lives below the poverty line. The nation's poverty level is US$490 per month for a family of 4. The average wage in the nation is US$676 per month, which is more than 3 times the national minimum wage. About 60 percent of workers earn less than

US$450 per month. About 20 percent of the population only lives on US$2 per day. As many as 8 million Argentineans work in the informal sector , or black market . In some areas of the country, the black market accounts for 60 percent of economic activity. These types of economic activities include personal service jobs (people who work as plumbers, electricians, domestic servants, and so forth). People who work in this informal sector also run small, unregulated shops and restaurants. Since these jobs are unregulated by the government, people do not pay taxes on their income and are therefore able to earn higher pay.

Government estimates are that 11 percent of the population cannot meet their basic food needs. Poverty rates are about 20 percent higher in the rural areas than they are in the urban areas. In the greater Buenos Aires metropolitan area the poverty rate is 29.8 percent, while in the subtropical jungle areas of the Northeast, the rate is 60 percent. The second-poorest area of the country is the mountainous region of the Northwest where the poverty rate is 53.6 percent.

Women make up a larger share of the poor. They comprise a large percentage (60 percent) of those employed in part-time or low-skill (and therefore low-paying) jobs. In overall terms, their poverty rates are twice as high as males. Children also have higher rates of poverty than the national average. About 50 percent of children under the age of 14 live in poverty.

WORKING CONDITIONS

The Argentine workforce numbers approximately 15 million (this includes those working or actively seeking employment). About 60 percent of the workforce is male. In 2000, the unemployment rate was 15.4 percent. The unemployment rate was highest in urban areas, and in Buenos Aires it was close to 18 percent. In addition to the high unemployment level, Argentina has a significant underemployment rate.

The nation's constitution guarantees workers the right to form unions, although union membership has steadily declined in Argentina. During the 1950s, about 50 percent of the workforce was unionized. However, by 2000, only about 35 percent of the workforce belonged to unions. For much of their modern history, unions were associated with Peron and during the early 1970s, Peronists accounted for 70 percent of union leadership. During the military regime that began in the late 1970s, the unions were purged of Peronists. Unions remain very active and in 2000 2 general, nationwide strikes virtually shut down most government and many private businesses. These strikes were in response to government labor reform laws. Foreign companies have found Argentina's labor market to be inflexible and expensive. Companies have to pay employees a month's salary for each year the employee has worked in cases of lay-offs, and labor agreements often forbid the transfer of employees from location to location or from job to job. Corruption in labor and government has often resulted in foreign firms being forced to pay large bribes in order to do business. One of the most celebrated cases occurred in 1994 when IBM officials were forced to pay millions in bribes in exchange for a US$249 million contract to provide computers for the Banco de la Nacion.

The national minimum wage is US$200 per month, but most workers earn more. All Argentinean workers are entitled to an annual bonus that is equal to 1 month's pay. This bonus is paid in 2 installments in June and December. The maximum work week is 48 hours and the maximum

workday is 8 hours. Work done beyond these limitations must be paid an overtime rate of 1.5 times salary. All workers receive annual vacation time which ranges between 14 and 35 days per year. Since 1995, average wages for Argentine workers have increased by 5 percent. Employers must contribute payments to workers' pension and health-care plans that equal 33 percent of the worker's salary. Individual workers make payments that equal 17 percent of their salary for these social guarantees. The retirement age is 60 for women and 65 for men. Upon retirement, workers receive a social security payment known as the "basic universal benefit." In order to qualify, employees must have worked a minimum of 30 years. Many workers have chosen to invest in the nation's private pension plans that pay an average of 20 percent per year more than the basic universal benefit.

Children under the age of 15 are not allowed to work, except in rare circumstances, usually on family farms. Government permits must be granted for these exceptions. Children between the ages of 15 and 18 may work up to 6 hours per day and a maximum of 35 hours per week. Studies have revealed that about 5 percent of children under the age of 15 are illegally employed. Women face discrimination in hiring and wages. On average, women earn about 70 percent of what their male counterparts earn in similar occupations. Only 12 percent of the executives of the nation's largest companies are female.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

1580. The Spanish establish a permanent colony in what is now Buenos Aires.

1776. Buenos Aires, a flourishing port, is made the seat of the newly established Vice Royalty of Rio de la Plata. The population of the Vice Royalty reaches 20,000.

1816. Jose de San Martin leads the struggle for independence in Argentina, Chile, and Peru. Argentina gains full independence and is initially called the United Provinces of the Rio de la Plata.

1819-20. Civil war between those Argentines who favor a strong central government and those who advocate a federal system with the provinces retaining significant political power.

1829. General Juan Manuel de Rosas is elected president. He institutes a federal system and the country's name is changed to the Argentine Confederation.

1853. Rosas is overthrown and a new constitution is promulgated. The nation changes its name to the Argentine Republic.

1879-80. The War of the Desert between Argentine troops and settlers and Native Americans ends with an Argentine victory. The suppression of the Native American tribes opens up the interior regions of the country for settlement by Europeans and greatly expands the area under agricultural cultivation.

1916. The period of conservative control of Argentina is ended following the election of a Radical Civic Union (URC) candidate as president.

1930. President Hipolito Yrigoyen of the URC party is overthrown by a military coup.

1943. A coup brings Juan Peron to power as part of a military government.

1946. Juan Peron is elected president.

1947. Peron announces the first of his 5-year economic plans. Women gain the right to vote.

1949. A new constitution is promulgated.

1952. Peron is reelected in an election marred by corruption and irregularities. Evita Peron dies from cancer.

1953. The government implements the second 5-year economic plan. Under this plan a number of commercial trade treaties are signed, including accords with Great Britain, Chile, and the Soviet Union. These agreements lead to a favorable balance of trade, but inflation rises to 200 percent and prompts widespread economic problems.

1955. The military ousts Peron from power in a civil war in which at least 4,000 people are killed.

1956. The constitution of 1949 is rescinded and the nation reverts to the 1853 constitution.

1959. The nation begins receiving substantial foreign loans and economic aid. By the following year, Argentina has received US$1 billion from the United States alone. These loans help maintain economic stability and high wages in spite of growing inflation.

1960-1980. Argentina is a member of the Latin American Free Trade Association (LAFTA). During this period, Argentine trade with other nations in Latin America expands significantly.

1973. Argentina has general elections which return Peron to power with his third wife as vice-president.

1974. Peron dies in office and is succeeded by his wife, Maria Estela.

1975. There is increasing instability in the nation as terrorist activities by both left-wing and right-wing extremist groups claim the lives of some 700 people in a one-year span. After inflation reaches 335 percent, there are widespread strikes and unrest as workers seek higher wages.

1976. The military again takes power and the constitution is once again rescinded. From 1976 to 1983 10,000 people "disappear" (the majority are secretly taken prisoner by the government and tortured and killed).

1980. The Latin American Integration Association (LAIA) replaces LAFTA. LAIA initiates a number of agreements which reduce tariffs between Latin American nations.

1982. Argentina is defeated by the United Kingdom in the Falkland Islands war after Argentine forces invade and conquer the territory known to the Argentines as the Malvinas Islands.

1983. The nation has democratic elections after popular pressure forces the military to cede power. Raul Alfonsin of the URC is elected president and the constitution is reinstated.

1989. Carlos Menem of the Peronist Party is elected president.

1990. A dramatic period of decline in the fisheries sector begins and, by 1993, exports of swordfish cease entirely and are not resumed until 1998.

1991. Reforms are initiated that ultimately fix the peso to the U.S. dollar. Laws are enacted to liberalize the telecommunications industry.

1992. Diplomatic and trade relations, which had been severed as a result of the Falkland Islands War, are reestablished with Great Britain.

1993. A new law liberalizes the mining sector and leads to dramatic growth in the industry.

1994. The constitution is amended. The U.S. and Argentina sign a bilateral investment treaty. All restrictions on foreign ownership of banks are rescinded.

1995. Menem is reelected president. Argentina, Brazil, Chile, Uruguay, and Paraguay join together in a free trade agreement known as MERCOSUR.

1997. The United States allows imports of Argentine beef for the first time in 60 years. The government initiates a program to establish a number of free trade zones in order to increase trade.

1999. Fernando de la Rua of the Alliance is elected president. Argentina assumes the chairmanship of the Free Trade Area of the Americas (FTAA) Negotiating Committee. The nation undergoes a recession in which GDP drops 3 percent and exports by 25 percent.

2000. Argentina and Brazil negotiate new agreements that strengthen MERCOSUR by further lowering trade barriers.

2001. The recession continues. Unemployment rises to approximately 20 percent. In mid-December, 2 days of rioting sweep the nation and lead to President de la Rua's resignation. Predictions are made that the Argentine government soon will default on debts totaling almost US$100 billion.

FUTURE TRENDS

Argentina has undergone a dramatic economic transformation since the early 1980s. Throughout most of the second half of the 1900s, Argentina suffered from high inflation and economic instability. Although the population was generally well paid and GDP per capita was among the highest in Latin America, inflation eroded the value of employees' wages. Corruption and inefficiency also plagued Argentine companies. Inflation reached a crisis level in the 1980s, and forced the nation to acquire a large foreign debt in order to maintain living standards. When Argentina fixed its currency to the U.S. dollar, it began a period of economic recovery, which continues. Government efforts to reduce expenditures and privatize many state-owned businesses also helped spur economic growth. The nation's economy is now well-placed to compete with other countries and to expand Argentina's share of international trade.

While the most significant economic reforms have already been implemented, there remains the need for a number of other structural readjustments. In overall terms, Argentine workers are not as productive as their counterparts in countries such as Brazil or Chile. The nation's workers are high-paid, however, and this means that labor costs in Argentina are high when compared to other nations in MERCOSUR. In addition, a number of state-owned companies, including the country's largest bank, still need to be privatized. Long-term economic growth is also dependent on the elimination of the government's annual deficit and reductions in the national debt .

Membership in MERCOSUR and other economic organizations will continue to expand Argentine foreign trade. International support and aid for Argentina, including loans from the World Bank and the International Monetary Fund, have alleviated some of the pressure of the large national debt, but further assistance is necessary to ensure continued economic growth. The reform and partial privatization of the nation's pension system has increased the capital available to companies to invest in new equipment and new products. In addition, the establishment of free trade zones has lured a significant amount of foreign investment and a number of foreign companies to Argentina. These factors should allow the nation to continue its economic recovery in the wake of the recession of the late 1990s.

DEPENDENCIES

Argentina has no territories or colonies.

BIBLIOGRAPHY

Coffey, Peter, editor. Latin America: MERCOSUR. Boston: Kluwer Academic Publishers, 1998.

Economist Intelligence Unit. Country Profile: Argentina. London: Economist Intelligence Unit, 2001.

Embajada Argentina en Washington D.C./Argentine Embassy in Washington D.C. <http://www.embajadaargentina-usa.org>. Accessed August 2001.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed July 2001.

U.S. Department of State. Argentina: Country Reports on Human Rights Practices, 1999. <http://www.state.gov/g/drl/rls/hrrpt/1999/index.cfm?docid=372>. Accessed February 2001.

— Background Notes: Argentina. <http://www.state.gov/r/pa/bgn/index.cfm?docid=2904>. Accessed February 2001.

— FY 2001 Country Commercial Guide: Argentina. <http://www.state.gov/www/about_state/business/com_guides/2001/wha/index.html>. Accessed February 2001.

Whittle, Janet, et al. Argentina Business: The Portable Encyclopedia for Doing Business With Argentina, 2nd edition. San Rafael, CA: World Trade Press, 1998.

—Tom Lansford

CAPITAL:

Buenos Aires.

MONETARY UNIT:

Peso (P). One peso equals 100 centavos. Coins are in denominations of P5, 2 and 1 and 50, 25, 10, 5 and 1 centavos. Peso paper currency is in denominations of P100, 50, 20, 10, 5 and 2.

CHIEF EXPORTS:

Edible oils, fuels and energy, cereals, feed, motor vehicles.

CHIEF IMPORTS:

Machinery and equipment, motor vehicles, chemicals, metal manufactures, plastics.

GROSS DOMESTIC PRODUCT:

US$367 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$23 billion (f.o.b., 1999 est.). Imports: US$25 billion (c.i.f., 1999 est.).