Argentina has been in industrial stagnation for 12 years: Kirchner’s autarchy ended up overcoming Menem’s openness
The opening to imports allowed an unprecedented takeoff in industrial activity since 1989, but the reversal of reforms precipitated a brutal fall of more than 9% since 2011.
Contrary to Kirchner’s rhetoric, greater openness to international trade allowed a strong take-off in industrial activity between June 1989 and the first half of 2011, only interrupted by the oscillations of Argentina’s unstable macro-economy.
The openly protectionist discourse of President Alberto Fernández and Minister Sergio Massa does not match the reality and rather bets on an autarkic model that reaped poor results in terms of industrial dynamism.
The model change took place during the government of Carlos Menem.
It was decided to eliminate all non-automatic licenses, quotas, and quantitative import restrictions.
At the same time, nominal tariff protection (including the statistical rate) decreased from 46% to 14% in the first years of Menem’s administration and remained relatively stable up to the present.
Industrial production grew by 56% in real terms during the Menem administration and doubled in size between 1989 and 2011.
Despite protectionist policies in the early years of Néstor Kirchner, Argentina maintained a stable import tariff structure, and non-automatic licenses never exceeded 15% until 2011.
Autarky began to be effectively implemented in 2012 with the implementation of the Advance Import Affidavits (DJAI) system, which targeted 100% of imports and allowed customs authorities to set arbitrary licenses on the bulk of the import volume.
All imports were subject to licensing, and in many cases, the delays were equivalent to a prohibitive tariff.
But the violent protectionist experience did not leave any positive results.
The argentine industry accumulated a drop of 10.1% during the DJAI system, preventing it from accessing basic inputs necessary to sustain the activity level and compete in world trade.
Since 2016, the system was replaced by the return of non-automatic import licenses, and its relative weight on the total tariff positions ranged between 20 and 34% during Mauricio Macri’s administration.
Later, President Fernandez generalized licenses under the new SIMI import system, and coverage rose to 45% of total imports.
The structure of the treatment of imports, between immovable tariffs and high quantitative restrictions, dramatically perpetuated the stagnation situation in the industrial sector, and INDEC’s manufacturing IPI accumulated a 9.2% retraction between November 2011 and January 2023.
Industrial production has been falling steadily for 12 years despite the numerous “promotion schemes”, subsidized domestic credits, tariffs, and licenses applied to foreign trade.
The autarkic model seems virtually exhausted.
With information from Derecha Diario
More: Argentina news in English, every day from The Rio Times.
Read More from The Rio Times