Chapter I
Country profile
The eighth-largest country by land area, running 3,700 km from the subtropical Chaco to Tierra del Fuego. About a third of its people live in Greater Buenos Aires.
- Capital
- Buenos Aires
- Official language
- Spanish
- Land area (WDI, 2024)
- 2.74 million km²
- Population (WDI, 2025)
- 45.9 million
- Political system
- Federal presidential republic
- Subdivisions
- 23 provinces + the City of Buenos Aires
- Currency
- Argentine peso (ARS)
- Memberships
- Mercosur, G20, WTO (1995)
Structural breaks, 1880–2025
- 1880–1930
Agro-export boom. British-built railways and European migrants open the Pampa. Argentina becomes a "granary of the world", the textbook land-abundant Heckscher-Ohlin exporter.
- 1930–1976
Import-substitution industrialization. Tariffs, import licences and cheap credit shelter infant industries behind high walls. This is the policy our Ch. 8 lecture used as its Argentine example. Ch. 8
- 1991
Convertibility and Mercosur. The peso is pegged one-to-one to the dollar, tariffs fall, and the Treaty of Asunción creates Mercosur.
- 2001–02
Default and devaluation. The peg collapses. A commodity-price boom then drives growth of 8–9% a year through 2007.
- 2011–2023
Stagnation. Capital controls (the cepo), repeated recessions, an IMF program in 2018 and accelerating inflation.
- 2024–
Stabilization and opening. Fiscal adjustment, the RIGI investment regime (Ley 27.742), currency controls eased in 2025, and new trade frameworks with the EU and the US.
Human development against the region
Argentina's Human Development Index is 0.865, rank 47 of 193, in the "very high" group (UNDP Human Development Report 2025, 2023 data).
Table 1. Social indicators, latest year
| Country | Life expectancy (yrs, 2024) | Tertiary enrolment (% gross, 2023) | Gini (2024) | Poverty, $3.00/day (%) | GDP per capita (US$, 2025) |
|---|---|---|---|---|---|
| Argentina | 77.5 | 107.8 | 42.4 | 1.0 | 14,898 |
| Chile | 81.4 | 110.2 | 43.0 | 0.4 | 17,995 |
| Uruguay | 78.3 | 80.0 | 40.0 | 0.2 | 25,216 |
| Brazil | 76.0 | 69.7 | 50.3 | 3.0 | 10,713 |
| Mexico | 75.3 | 48.2 | 42.6 | 1.6 | 13,889 |
| Latin America & Caribbean | 75.8 | 58.9 | – | 4.3 | 11,095 |
Chapter II
Macroeconomy, business climate & institutions
Twenty years of boom, bust and stop-go. Real GDP fell in 9 of the 21 years from 2005 to 2025, and dollar GDP in 2025 was only about 6% above its 2017 peak.
Figure 1. GDP and real growth, 2005–2025
Bars: GDP, current US$ billion (left axis). Line: real GDP growth, % per year (right axis).
- GDP at PPP, 2025
- $1.49 trillion
- Real growth, 2025
- +4.4%
- CPI inflation, 2024
- 219.9% (133.5% in 2023)
- Current account, 2025
- −1.1% of GDP
Source: World Bank WDI (NY.GDP.MKTP.PP.CD, NY.GDP.MKTP.KD.ZG, FP.CPI.TOTL.ZG, BN.CAB.XOKA.GD.ZS).
Figure 2. Worldwide Governance Indicators, 2025
Governance score, 0–100 (higher is better), for Argentina and three neighbours.
Table 2. Where Argentina ranks
| Index | Argentina | Rank |
|---|---|---|
| Voice & accountability (WGI) | 65.9 | 3rd of 11 |
| Political stability (WGI) | 68.4 | 3rd of 11 |
| Government effectiveness (WGI) | 58.0 | 3rd of 11 |
| Regulatory quality (WGI) | 53.9 | 5th of 11 |
| Rule of law (WGI) | 56.9 | 3rd of 11 |
| Control of corruption (WGI) | 40.3 | 5th of 11 |
| Corruption Perceptions Index 2025 (Transparency International) | 36 / 100 | 104th of 182 |
| Logistics Performance Index 2022 (World Bank) | 2.8 / 5 | LAC average 2.69 |
| Doing Business 2020 (World Bank, discontinued) | 59.0 | 126th of 190 |
| Business Ready, B-READY (World Bank) | to add | to add |
Argentina's institutions rank in the top third of South America, behind Uruguay and Chile, but corruption control and regulatory quality lag. Regulatory quality matters for trade through licensing and customs. For investors the bigger problem is policy reversal: the swings in Figure 1 are why RIGI promises legal stability in writing (Chapter VII).
Chapter III
Openness & trade patterns
One of the most closed economies in the Americas. Trade was 41% of GDP in 2005 and 30% in 2025, while the Latin American average rose to 49%. Argentina sells goods at a surplus and buys services at a deficit.
Figure 3. Trade openness, 2005–2025
(Exports + imports of goods and services) ÷ GDP, %.
Figure 4. Goods and services balances, 2005–2025
Balance-of-payments basis, current US$ billion.
Figure 5. What Argentina exports, 2004, 2014 and 2024
Share of goods exports by HS group, %. Total exports in US$ billion at right.
The 20-year story. Manufactures rose during the 2000s boom (machinery and vehicles from 9.5% to 15.4% of exports by 2014), then fell back to 11.5%. Fuels collapsed after 2004 and are recovering with Vaca Muerta. The export base remains tied to the land.
Figure 6. Main trading partners, 2024
Share of Argentina's goods exports and imports, %.
Concentration. Exports are spread across partners: the Herfindahl index is 0.058 and the top two take 25%. Imports are more concentrated (HHI 0.113), with Brazil and China supplying 43%. Argentina depends on Brazil on both sides.
Does Argentina's trade follow gravity?
Yes, and closely. We regressed log exports to each partner on the partner's log GDP and log distance from Buenos Aires.
Figure 7. Exports against distance, 2024
Each dot is a partner. Vertical: log exports adjusted for partner size (ln exports − 1.155 × ln GDP). Horizontal: distance between capitals, km (log scale).
Both elasticities have the textbook sign and size. A 10% larger partner buys about 11.6% more, and 10% more distance cuts exports by about 14.5%. The class estimate on 2024 world data was −1.46 for distance; ours on Argentina alone is −1.45. Neighbours sit above the line, because Mercosur, a shared language and land borders add trade beyond what distance predicts. Vietnam and Malaysia are outliers too: they buy soymeal for livestock and aquaculture, comparative advantage pulling against distance.
Chapter IV
Specialization & comparative advantage
Balassa's revealed comparative advantage: RCA = (Xi,k / Xi) ÷ (XW,k / XW). Above 1, a country exports more of a good than its size in world trade predicts.
Table 3. RCA by HS chapter, 2023, Argentina and regional peers
Land-abundant, not mineral-rich
Figure 8. Arable land per person, 2024
Hectares per person.
Argentina has six times the world's arable land per person. Yet natural-resource rents are only 2.7% of GDP (2021), against 16.9% for Chile and 7.9% for Brazil (WDI, NY.GDP.TOTL.RT.ZS). The World Bank's rent measure counts oil, gas, minerals and forests but not farmland. So Argentina is land-abundant rather than mineral-rich, and its RCAs line up with Heckscher-Ohlin: very high in land-intensive farm goods, near zero in capital- and skill-intensive machinery.
Nunn shows that countries with better contract enforcement specialize in goods that need relationship-specific inputs: machinery, electronics, vehicles. Argentina's rule-of-law score (56.9) trails Chile and Uruguay, and its top RCAs are in goods sold on organized exchanges at reference prices (soymeal, grains, vegetable oil), which need almost no relationship-specific contracting. Its RCA is 0.18 in machinery and 0.02 in electrical machinery. This pattern fits Nunn's prediction. Vehicles (RCA 1.5) are the exception, and they run inside multinationals that write their own contracts (Chapter VI).
Has the pattern shifted?
It has been stable at the top and has shifted at the margin. Farm RCAs dominate as before. Manufacturing's export share fell from 15.4% to 11.5% (2014–2024), leaving vehicles as the only manufacturing RCA above 1. Fuels (0.74) and lithium (24.7 for carbonate) are the new frontier, so Argentina is moving toward extractive commodities, not away from them. Firm-level exporter data (size, productivity) are not covered here because no comparable public microdata is available.
Chapter V
Position in global value chains
Argentina sits at the upstream end of most chains. It sells soymeal, grain, crude and lithium carbonate that other countries turn into feed, fuel and batteries. The OECD counts it among the economies least integrated into GVCs, mainly because forward participation is low.
Beans are crushed at home and shipped as meal, which becomes feed in Vietnam, Indonesia and Europe.
Carbonate is exported (RCA 24.7); refining and cell-making happen in Asia.
Crude and gas exports are rising: HS 27 was $7.6 billion in 2024.
Engines and parts come in; assembled pickups go to Brazil, through vertical multinationals (Ch. 6).
Figure 9. What Argentina imports to produce, 2024
Top HS chapters, % of goods imports (US$ 60.8 billion).
Value added versus gross exports. Argentina's main exports (farm goods, crude oil) use few imported inputs, so the foreign value-added share of its gross exports should be low, the opposite of an assembler like Mexico or Vietnam. The exact OECD TiVA figures (foreign value-added share, EXGR_FVASH, and forward participation) still need to be added; the OECD site blocks automated download. GVC ranking: OECD Economic Surveys: Argentina 2019, from TiVA.
Chapter VI
Foreign direct investment
Inflows averaged 1.9% of GDP over 2015–2024, about half of Brazil's 3.4% and well below Chile's 4.7%. The inward stock is $127.6 billion, about a fifth of GDP, and it sits mostly in factories and mines.
Figure 10. FDI inflows and outflows, 2005–2025
% of GDP. Bars: net inflows. Line: net outflows (Argentine investment abroad).
Figure 11. Who owns it
FDI stock by immediate investor country, end-2023, US$ billion.
Figure 12. Where it goes
FDI stock by sector of the receiving firm, end-2023, US$ billion.
What foreign firms are looking for
Two motives from Ch. 6 dominate. Resource-seeking investment goes to mining, oil and gas (23% of the stock) and to agri-food traders. Market-seeking and vertical investment goes to autos, where Ford, Toyota, VW and Stellantis split production across Mercosur. Low labour costs barely feature: there is no export-processing assembly like Mexico's maquilas.
Does Argentina invest abroad? Only a little. Outward FDI has run at 0.2–0.5% of GDP a year since 2007 (WDI), so it is not a significant source of national income. The large Argentine multinationals, such as Techint (steel pipes), Arcor (food) and Mercado Libre (e-commerce), are the exception.
Greenfield or M&A? In 2023 mergers and acquisitions were a net outflow, because foreign owners were selling (BCRA Q4 2023: −$35 million). New money came as reinvested earnings and intra-firm debt rather than new projects. A greenfield breakdown needs fDi Markets data, which the team does not have.
Chapter VII
Trade policy & major agreements
High tariffs set at the Mercosur level, taxes on its own exports, and a run of new agreements since 2025 that would be the biggest opening since the 1990s.
- WTO member since
- 1995 (GATT 1967)
- Applied tariff, simple mean, 2022
- 11.95% (Brazil 13.3%, Chile 1.0%)
- Applied tariff, trade-weighted, 2022
- 6.45%
- Peak Mercosur external tariff
- 35%: cars, apparel, footwear
Sources: WTO country profile; WDI TM.TAX.MRCH.SM.AR.ZS and TM.TAX.MRCH.WM.AR.ZS (from UNCTAD TRAINS); Mercosur common external tariff.
Table 4. Major preferential agreements
| Agreement | In force | Type | Scope | Note |
|---|---|---|---|---|
| Mercosur (Brazil, Paraguay, Uruguay; Bolivia full member 2024) | 1991; common tariff 1995 | Customs union | Goods, services | Imperfect: national exception lists; autos and sugar outside free trade |
| Mercosur–Chile (ACE 35) | 1996 | FTA | Goods | Deepened by the Argentina–Chile FTA (2019: services, investment, e-commerce) |
| Mercosur–Bolivia (ACE 36) | 1997 | FTA | Goods | Superseded as Bolivia joins Mercosur |
| Mercosur–India | 2009 | PTA | Goods, limited | About 450 tariff lines |
| Mercosur–Israel; Mercosur–Egypt | 2011; 2017 | FTA | Goods | In force for Argentina |
| EU–Mercosur partnership and interim trade agreement | Signed 17 Jan 2026 | FTA | Goods, services, investment, procurement | Referred by the European Parliament to the EU Court of Justice; ratification pending |
| US–Argentina reciprocal trade and investment framework | Announced 13 Nov 2025 | Framework | Goods, investment | Access for US beef, poultry and machinery; a framework, not yet a treaty |
Non-tariff measures
Import licensing was the binding constraint for a decade. From 2022 every import needed SIRA approval tied to access to dollars; SEDI, a lighter system, replaced it in December 2023. SPS rules on beef, citrus and poultry shape farm trade. UNCTAD TRAINS counts by measure type still to add.
Export taxes
The derechos de exportación tax Argentina's own comparative-advantage goods. Soybeans carried a 24% duty before the latest cuts, and Decree 423/2026 schedules reductions through 2028. By Lerner symmetry, an export tax works like an import tariff: both shrink trade.
Investment rules and zones
Most bilateral investment treaties were signed in the 1990s, and Argentina became a frequent respondent in investor-state arbitration after 2001. UNCTAD IIA Navigator count of BITs in force still to add. Zones: the Tierra del Fuego special customs area (1972) and free zones under Ley 24.331 (1994). RIGI (Ley 27.742, 2024) gives large projects 30 years of tax, customs and currency stability.
Controversies
The 2012 expropriation of 51% of YPF from Repsol led to a 2023 US court judgment of about $16 billion against Argentina. Capital controls ran in 2011–15 and from 2019, and were largely lifted for individuals in April 2025.
Chapter IX · Case study
The Fuegian experiment: an infant industry at the end of the world
In 1972 Ley 19.640 made Tierra del Fuego, 3,000 km from Buenos Aires, a tax- and duty-free zone. Phones, TVs and air conditioners are assembled there from imported kits and shipped north into a market walled off by the 35% external tariff. The regime now runs to 2038. Fifty years on, has the infant grown up?
The Ch. 8 argument Oct 29 lecture
Comparative advantage can be learned. If Home's productivity in a new industry rises with experience, as in H(t) = A − B/t, temporary protection lets it ride the learning curve until it overtakes the foreign producer. After that crossover date the protection should come off and the industry should export. The test follows directly: if the Fuegian learning curve existed, electronics should by now show a revealed comparative advantage and real exports.
Try it: when should Argentina have opened?
Home output per worker in electronics H(t) = A − B/t, with t in years since 1972. Foreign = 2. Textiles = 2 in both countries.
The scorecard
- Years of protection (regime runs to 2038)
- 54
- RCA, electrical machinery (HS 85), 2023
- 0.02
- Brazil's RCA, with its Manaus zone
- 0.09
- HS 85 exports vs imports, 2024
- $0.19 bn vs $6.1 bn
RCA, exports and imports: UN Comtrade, team calculation. Regime: Ley 19.640 (1972); Decree 727/2021 extends it to 31 December 2038.
The regime did what it was legally designed to do: it put factories and people on a strategic, remote island. It did not do what the infant-industry argument promises. After five decades there is no export breakthrough (RCA 0.02, exports of $0.19 billion against $6.1 billion of imports), and the island assembles imported kits for a captive home market. In the model's terms the data fit a learning ceiling of A ≤ 2: Home never overtakes Foreign, there is no optimal opening date, and protection only shifts costs onto consumers.
This matches the lecture's reading of the evidence: few if any subsidized industries gain a lasting edge, and Brazil's computer policy is a known failure. It also fits Ch. 6. Tierra del Fuego imports whole kits, the opposite of Costa Rica, where CINDE drew Intel into a global value chain and the country moved up into medical devices.
How we would test it properly, after Juhász
Juhász used the Napoleonic blockade as a natural experiment: it raised trade costs more in northern France, and spinning capacity grew most there. The Fuegian analogue treats the 2009 expansion of the regime as a shock to one province: Spt = ap + bt + β·(TdFp × Post2009t) + ept, where S is electronics employment or exports by province. A large β on employment and β ≈ 0 on exports would confirm relocation without learning. This needs INDEC provincial manufacturing employment, 2003–2024, still to collect.
The new industrial policy is different. RIGI (2024) does not pick infant industries. It bids for large projects where Argentina already has a natural advantage: lithium, copper, shale and fertilizer. That is a shift from creating comparative advantage to unlocking one that already exists.
Appendix
Sources & methods
Every statistic comes from a government or intergovernmental source, except the Corruption Perceptions Index that the guidelines require. All charts and tables were built by the team from raw downloads. Data accessed 10 November 2026.
- World Bank, World Development IndicatorsIGO
GDP (current, PPP, per capita, growth), population, land and arable land, trade/GDP, BoP goods and services, FDI in and out, inflation, current account, tariffs (from TRAINS), LPI, life expectancy, literacy, tertiary enrolment, Gini, poverty, resource rents. - World Bank, Worldwide Governance IndicatorsIGO
Six governance scores (0–100), 2025 release; regional ranks by the team. - UN ComtradeUN
Argentine exports and imports by HS chapter and partner (2004, 2014, 2024); world exports by reporter (2023) for RCA; product lines 283691 (lithium carbonate), 030617 (frozen shrimp), 2204 (wine), 710812 (gold). - Banco Central de la República ArgentinaGovernment
Informe sobre Inversión Extranjera Directa al 31/12/2023: FDI stock by origin and sector, flow components. - U.S. Energy Information AdministrationGovernment
Today in Energy (December 2025): crude output and Vaca Muerta's share; shale resource estimates. - U.S. Geological Survey, Mineral Commodity Summaries 2026: LithiumGovernment
Argentina's mine production (23,000 t Li, 2025 estimate) and reserves (4.4 Mt). - USDA Foreign Agricultural ServiceGovernment
Oilseeds Annual and Livestock and Products Annual (GAIN): soymeal and soy oil export rank; beef exports and destinations. - UNDP, Human Development Report 2025UN
HDI value and rank. - OECD Economic Surveys: Argentina 2019IGO
GVC participation ranking (from TiVA). - World Trade OrganizationIGO
Membership, regional trade agreements. - Transparency International, CPI 2025NGO, required by the guidelines
- Boletín Oficial de la República ArgentinaGovernment
Ley 19.640 (1972); Decree 727/2021; Ley 27.742 (RIGI, 2024); Decree 423/2026; Ministry of Economy Resolution 1157/2026. Also USTR (Nov 2025 fact sheet) and the Council of the EU on EU–Mercosur. - Natural EarthPublic domain
Country, province, river and lake outlines for the map, projected and simplified by the team. Terrain on the map is illustrative.
Methods
Revealed comparative advantage. RCAik = (Xik/Xi) ÷ (XWk/XW), with the world as the sum of 167 Comtrade reporters with 2023 data, at HS-chapter level unless noted.
Gravity. OLS of ln(exports to j, 2024) on ln(GDPj, 2024) and ln(distance). N = 145. Coefficients: GDP 1.155 (s.e. 0.063), distance −1.448 (0.223), R² 0.70.
Concentration. Herfindahl index = Σ sj² over all partner shares.
Export groups. HS 01–24 food and farm; 25–27 fuels and minerals; 28–40 chemicals and plastics; 71–83 metals and gold; 84–89 machinery and vehicles; the rest, including HS 99, is "other".
OECD TiVA: foreign value-added share of gross exports and forward participation (Ch. V). World Bank B-READY score, if Argentina is covered (Ch. II). UNCTAD TRAINS NTM counts and the IIA Navigator BIT count (Ch. VII). INDEC provincial employment for the Tierra del Fuego test (Ch. IX). The OECD and UNCTAD sites block automated download, so these need a manual export.