Argentina: a strategic destination for productive investment

Undersecretariat for Investment Development and Trade PromotionMinistry of Foreign Affairs and Worship

2013

Why invest in Argentina?

Why invest in Argentina?

1. Sustainable economic growth

2. Attractive business profitability

3. Strength to face the global crisis

4. Strategic location

5. Openness to the world

6. Diversified economy

7. Abundant and diverse natural resources

8. Skilled and highly creative workforce

9. High levels of scientific, technological and productive innovation

10. Modern infrastructure and high-quality connectivity

Sustainable economic growthA dynamic economic model based on social inclusion

One of the fastest-growing countries worldwide: leader in Latin America for the past decade.

Sustainable macroeconomy: sustained external surplus, accumulated international reserves, substantial reduction in public debt and fiscal solvency.

Record investment rate for the last 30 years in 2011 (22.8% in 2012).

Record-high exports close to US$ 100 billion for goods and services in 2011 (US$ 96 billion in 2012).

Dynamic domestic market: private consumption

has grown at an average rate of 7% per year in

real terms since 2003.

1

Average growth rate of GDP (2003-2012)

Source: Ministry of Foreign Affairs and Worship (MREC) based on IMF

.

Argentina boasts the highest economic growth in the region

3.8%

1.3%1.3%

4.1%

7.2%

0%1%2%3%4%5%6%7%8%

Argentina

Peru

Venezuela

Urugu

ay

Ecuador

ColombiaChile

Bolivia

Brazil

Paraguay

Mexic

o

Rest of t

he world

Latin Americ

a and the C...

European U

nion G7

18.115.9 15.3

13.611.9

10.8 10.7

6.1 5.1

18.4

10.1

Chile

Argentina

Urugu

ay

Mexic

o

Venezuela

Brazil

Colombia Peru

Ecuador

Paraguay

Bolivia

1

Five million new jobs created; a decrease in

unemployment levels from 21.5% in 2002 to

7.2% in 2013.

Economic policies prioritize socioeconomic

integration and social inclusion as primary

goals.

Improved income distribution: the Gini ratio

reduced from 0.53 in 2003 to 0.42 in 2012.

Inclusion of the most vulnerable age groups

into social security coverage; substantial

reduction in poverty and indigence levels.

Ranked as a Very High Human Development

country in the United Nations 2012 Human

Development Index.

Source: MREC based on IMF

GDP per capita (PPP) In thousands of current international US$ (2012)

Argentina ranks as a very high human development country (UNDP)

Sustainable economic growthA dynamic economic model based on social inclusion

8.7%

1.3%

10.8%9.7%

0%

2%

4%

6%

8%

10%

12%

1993-2000 2002-2003 2004-2007 2008-2012

Attractive business profitabilityProductive investment delivering high returns

High profitability in a wide range of productive sectors.

New record-high profits from Foreign Direct Investment (FDI) as a percentage of assets, with the annual average exceeding 9% in the last four years.

Profits over sales above 13% for the 500 non-financial private companies in 2006-2011.

More than 2,000 multinational companies operating in diverse sectors share a long-term vision and renewed investment commitments.

2

FDI profits (as a percentage of assets)

Argentina offers high profitability for FDI

Source: MREC based on Argentina’s National Institute of Statistics and Censuses (INDEC)

2

22%19% 18% 18% 17% 17%

14% 13% 12% 11% 11% 10% 8%

0%5%

10%15%20%25%

Beve

rage

s

Med

icine

s

IT se

rvice

sHo

useh

old

appl

ia...

Chem

ical i

ndus

try

Med

ical i

nstr

umen

ts

Adve

rtisin

g

Mac

hine

ry

Texti

les

Food

Plas

tics

Win

eAu

tom

otive

Profitability as a percentage of assets(2010)

Source: MREC based on Argentina’s Federal Administration of Public Revenues (AFIP)

Argentina offers profitable

opportunities in a wide range of

sectors

Attractive business profitabilityProductive investment delivering high returns

5.5%

3.3%

1.8%

0.5%0.0%

5.6%

Emergingeconomies

Argentina LatinAmerica

World Developedeconomies

EuropeanUnion

Strength to face the global crisisEffective public policies aimed at fostering demand

An inclusion-based model for growth, in which the strong and dynamic domestic market is one of the key pillars.

Proven ability to sustain the economic growth cycle from the on-start of the global crisis, exceeding the average of emerging countries.

Low level of public debt and high level of international reserves, increasing capacity to implement counter-cyclical public policies.

Job protection and social inclusion policies drive domestic demand and production.

Investment promotion initiatives such as credits facilities for the productive sector and a construction plan to build 400,000

homes.

3

Source: MREC based on IMF

Annual average variation of GDP(2008-2012)

.

Argentina registers sustained growth in the face of the global crisis

European Union United States Latin America Argentina

2007 (pre-crisis scenario) 2012 (current scenario)

3

Source: MREC based on IMF

Public debt as a % of GDP and variation in percentage points (2007-2012)

+28%+41%

+4%-20%

Argentina is pursuing its debt reduction goal

despite the global crisis

Strength to face the global crisisEffective public policies aimed at fostering demand

0

100

200

300

400

500

600

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Intra MERCOSUR

Extra MERCOSUR

Strategic locationStrong ties with Latin America

Located in a region endowed with resources to meet current and future local and global demands.

Strategic player within the main food exporting region in the world.

Share of world resources: 27% of potable water; 12% of arable lands; 21% of native forests; and sufficient hydrocarbon resources to satisfy demand for more than 100 years.

A motor for Latin America’s increased integration in terms of economy, politics, society and culture.

High economic growth, an expanding domestic market and a dynamic middle-class.

4

Source: MREC based on the Center for International Economy (CEI), INDEC and IMF

Intra-MERCOSUR exports and MERCOSUR exports to the world - 2002=100 index - In millions of US$ - Annual average growth rate 2002-2012

Argentina is part of a dynamic region strengthening its ties

+18.6%

+13.6%

Strategic location Strong ties with Latin America

Full MERCOSUR member, together with Brazil, Paraguay, Uruguay and Venezuela:

Preferential access (0% tariff) to a regional market of 279 million inhabitants and aggregate GDP of US$ 3.6 trillion.

Great industrial complementarity and opportunities to deepen productive specialization.

Member of UNASUR (Union of South American Nations); ALADI (Latin American Integration Association); and ECLAC (Commission for Latin America and the Caribbean).

Regional leader in the defense of the democratic institutions in Latin America

Open and welcoming immigration policies in place with other countries in the region .

4

Member countries

Associated countries

(under ratification process)Associated countries

0

5,000

10,000

15,000

20,000

25,000

30,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Primary products Agricultural manufactures Industrial manufactures Fuels and energy

Openness to the worldGlobal economic integration

G-20 Member .

Active presence in several international organizations, including the World Trade Organization, G77+China, United Nations, UNCTAD, ECLAC and FAO, among others.

Global economic insertion and expanding South-South cooperation ties.

Strengthening of the bilateral relations with the BRICS as well as other developing countries.

Highly dynamic exports, with values tripling over the past eight years.

Diversified export basket with shipments to more than 150 destinations.

Trade growth with the rest of the world (2003-2012) of 14.6% per year.

One of the countries with the least restrictive FDI legislation in the world: 11th worldwide, 2nd in G-20 and 2nd in Latin America (OECD).

Open multicultural society without ethnic or religious conflicts.

5

Exports by major itemsIn millions of US$ (2002-2012)

Source: MREC based on CEI

Argentina expands its exports in all economic sectors

Diversified economyInvestment opportunities in every productive sector of the economy

Diversified productive matrix with investment opportunities in every sector.

Great technological development in the agrifood value chain, including innovation in seeding, direct sowing, precision agriculture, agricultural machinery production, silo bag storage and vaccine development for animal health, among others.

Leading country in the international food market, with exports exceeding US$ 25 billion (2012).

One of the world’s main exporters of oils, cereals, meat, fruit, honey and wine.

High sanitation and environmental standards that meet the most demanding requirements from global food and beverage consumers.

Industrial structure with a strong tradition in countless diverse productive sectors: agroindustry, textiles, footwear and handbags, chemicals and pharmaceuticals, capital goods, durable consumer goods, automotive and auto parts.

6

6.9%

10.9%

9.4%

8.8%

6.6%

6.4%

6.1%

4.7%

4.2%

1.0%

GDP (all sectors)

Transport, storage & communications

Construction

Wholesale and retail trade and repairs

Manufacturing industries

Other service sectors(*)

Hotels and restaurants

Electricity, gas and water

Real estate, business and renting

Agriculture, livestock, hunting, forestry, fishing, andmining and quarrying

Diversified economyInvestment opportunities in every productive sector of the economy

6

Dynamic growth of industrial exports (13% per year in 2003-2012), gaining share in total external sales.

Accelerated development of renewable energies, biotechnology, software, creative industries and other frontier sectors.

Main tourism destination in South America, with almost six million tourists per year in 2011.

Highest proportion of FDI projects with high technological intensity in South America (ECLAC).

Increase in the productive capacity of domestic and foreign companies, with 97% of FDI flows being directed to new projects and expansion (compared to 43% in the 1990s).

Gross added value per sectorAverage growth rate per year (2003- 2012)

Argentina has a diversified economic structure

Source: MREC based on INDEC

*Including: Financial intermediation; Public

Administration and Defense; Teaching, health and social

work; Other community. Social, personal and domestic services.

Abundant and diverse natural resourcesRich resources available for sustainable development

7

Second largest country in Latin America; 8th in the world: 3.8 million km2.

Highest agricultural productivity levels in the world.

Vast extension of fertile land for agriculture: 9th largest extension of agricultural area in the world with 147 million hectares of arable lands (FAO).

Ample forest resources: more than 33 million hectares of native forests and 1.2 million hectares of planted forests (FAO).

4,500 km of mountain ranges with mining resources: gold, copper, lithium, carbon, lead, zinc, tin, silver and potassium.

4,700 km coast along the Atlantic Ocean with rich fisheries.

7

Vast oil and gas resources with exploration and exploitation opportunities.

Ranked 2nd and 4th worldwide in shale gas and shale oil reserves.

High development potential for hydraulic energy, which accounts for more than one third of the country’s total electricity output.

Promising developments in renewable energy (wind, biofuel, solar, geothermal, biomass).

Position Product

1st

Concentrated lemon juice, peanut oil, soybean oil, soybean cakes, horse meat, yerba mate, soy

2nd

Corn, honey, sunflower oil, prepared peanuts, shelled peanuts, peanut cakes, sorghum, safflower oil.

3rd Grape juice, cotton oil, non-pitted olives, birdseed, dried plums, whole powdered milk, wheat meal, soy.

Exports – Main products (2010)

Source: MREC based on FAO

Abundant and diverse natural resourcesRich resources available for sustainable development

Skilled and highly creative workforceArgentine talent

8

Workforce internationally renowned for its skill set, creativity and versatility.

More than 99,000 graduates from higher education programs and almost 11,000 postgraduate students from 115 universities across the country enter the labor market each year.

Economically active population (EAP) with the highest education level in Latin America.

Latin American country with the highest number of Nobel Prizes awarded in science (three prizes).

Highest level of public investment in education in the region (equal to 6% of GDP).

The most dynamic work productivity in the region in recent years (ECLAC).

9.19.710.210.310.410.510.510.911.611.9

02468

101214

Arge

ntina

Chile

Peru

Ecua

dor

Para

guay

Boliv

ia

Uru

guay

Mex

ico

Colo

mbi

a

Braz

il

8

Source: MREC based on ECLAC

EAP’s average number of years of education in urban areas (2011)

4.8%4.1%4.2%4.5%

5.3%5.6%6.0%

0%

2%

4%

6%

8%

Argentina Brazil Mexico Colombia Chile Paraguay LatinAmericaand the

Caribbean

Public spending on education to GDP - in % (2011)

Argentina’s workers have the highest education level in the

region

Argentina bets on education

Skilled and highly creative workforceArgentine talent

High level of scientific, technological and productive innovation Toward greater competitiveness and higher added value

9

Development of knowledge and technological skills at the service of productive activity.

Creation of the Ministry of Science, Technology and Productive Innovation in 2007 .

Scientific and Technological Pole (opened in 2011) recognized for its contribution to scientific development, production and dissemination of knowledge.

Fifty five per cent increase in the number of R&D professionals over the period 2003-2011.

Highest ratio of researchers to the economically active population (EAP) and ranked 3rd in terms of the number of R&D technicians, measured as total number per million inhabitants in Latin America (World Bank).

9

Source: MREC based on the Ministry of Science, Technology and Productive Innovation

Investment in science, technology and R&D activities 2003-2010 (% of GDP)

0.46

0.7

0.41

0.62

0.3

0.4

0.5

0.6

0.7

0.8

2003 2004 2005 2006 2007 2008 2009 2010

Inversión actividades CyT Inversión en I+D

About 500 researchers and 1,000 research fellows join the National Technical and Scientific Research Council (CONICET) each year.

Largest number of nuclear plants in Latin America: Atucha I, El Embalse and Atucha II.

Development of aerospace projects led by INVAP, a public company of world renown for satellite development and other space projects.

One of a few countries in the world with multispecies cloning capacities.

Argentina invests in R&D

High level of scientific, technological and productive innovation Toward greater competitiveness and higher added value

Investment in Sc & Tech Investment in R&D

Modern infrastructure and high-quality connectivityA strong network in expansion

10

Public investment at a historic high (going from 0.7% of total public spending in 2002 to 3.5% in 2011).

Well-developed transport and infrastructure system: more than 39,322 kilometers of national roads and 195,837 kilometers of provincial roads; one of the longest rail road networks in the world (36,000 kilometers); 43 ports and 54 airports.

High rates of internet penetration into companies and homes.

2nd country in Latin America with the highest number of mobile lines per 100 inhabitants (World Bank, 2011).

Modern infrastructure and high-quality connectivityA strong network in expansion

10

Source: MREC based on the Ministry of Economy (MECON)

Argentina increases its productive capacity

23.1%

20.6%22.8%

24.5%

21.6%21.1%

0%

5%

10%

15%

20%

25%

30%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Public investment Private investment Total

Investment rates at constant pricesLinked series: total, public and private investment (% of GDP)

Thank you!