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).

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.

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.

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.

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.).