By Matt Randall
Argentina is a beautiful and expansive country with rich culture and incredible food. I experienced all of this once before when I visited Argentina in 2010 for my brother's wedding to a woman from Tilcara, Jujuy, a very small city in northern Argentina. The experience was wonderful but one thing that I distinctly remember is how remote and rural almost everywhere in Argentina felt - except Buenos Aires. In the seven years since I was there, this fact has become even more pronounced. The population of Argentina is about 40 million people according to their 2010 census. Buenos Aires had a population of about 13 million in the same time, so almost 1 out of every 3 people in Argentina live around Buenos Aires. Interestingly, the population of Buenos Aires metro has stayed around 3 million - but the surrounding area has ballooned almost fivefold to around 10 million. This huge influx of people has dramatically increased the importance of the city and also vastly increased the wealth concentrated in Buenos Aires. The economic importance of Buenos Aires is hard to understate. It is the financial, industrial, and commercial hub of Argentina accounting for around US$84.7 billion (US$34,000 per capita) in Gross Geographic Product which amounts to nearly a quarter of Argentina's GDP. It is the 13th largest economy among world cities and the destination for most of the foreign investment in Argentina. This was summed up nicely by our Scalbl project sponsors StartupXperience, who said "If you are going to do business in Argentina there is only one place to go - Buenos Aires". All of these facts point to one thing - Buenos Aires the heart of the Argentine economy and culture and we will be incredibly lucky to be able to experience the energy firsthand in a few weeks.
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By: Catherine Humphrey
I thoroughly enjoyed the discussion with Axel, Pablo and Sergio at the beginning of February. I learned many things about Buenos Aires that I could not have learned by simply combing through articles online. Their passion for their country made me even more excited to visit Buenos Aires. Although I found the culture of Argentina, such as the wine and meat production, interesting, Argentina’s current economic state peaked my interest as it is quite different than the United State’s economic environment ever was. In Argentina, economic instability has run rampant for many, many years. Apparently, the average rate of inflation since 1991 is a whopping 20%. Furthermore, inflation reached 44% in 2016. In an article published on the Argentina Independent, one reader states “I live day to day, worrying about everything”. This reader is referring to the fact that the cost of living is increasing at absurd rates and it is difficult for the even the middle class to keep up. In an attempt to support spending, the government enables cardholders of a special issue card to purchase goods in 12 interest free payments (Wakefield, Elke). Furthermore, the retirement age of Argentinian’s has risen and is seemingly non-existent as many working class people have had to continue working well into the years that Americans would have already retired (Engelmann, Nicholas). It is also interesting that Argentina’s new business oriented government is attempting to reduce inflation to just 5% by 2020. In order to accomplish this, they will need to reduce subsidies, eliminate inefficient taxes, and offer tax amnesties to attract offshore wealth to the country (Wakefield Elke). Engelmann, Nicholas. “Argentina’s Inflation Problem, and How It’s Permeated Every Aspect of the Culture.” Pastemagazine.com. N.p., 7 dec. 2016. Web. 22 Feb. 2017 Wakefield, Elke. “Living with 40% Inflation.” The Argentina Independent. N.p., 30 June 2016. Web. 22 Feb. 2017. Rebekah Paul
Argentina is the world’s fifth largest wine producer and as such, wine has had a significant impact on the nation’s economy. Argentina first emerged on the international wine market between 1850 and 1880. Since then, the country has often been called a “Sleeping Giant” because it holds the greatest land area suitable for wine growing and is proportionally underutilized. Argentina boasts of vineyards at altitudes as high as 1400 meters above sea level. Eighty percent of the total vine production is located in the west-central region of Mendoza which contains over 800 wineries. Even though Argentina is one of the world’s largest producers of wine, only 10% of this production is exported. When the country began exporting wine in the 1990’s, significant advancements to wine making were developed in order to improve quality and sustain production. Currently, annual exports exceed $600 million with the US as the biggest consumer. The devaluation of the Argentine peso in 2002 further fueled the wine industry. The monetary shift created a more competitive position for ARgentina within the global markets. As demand for wine continues to grow globally, the Argentinian wine industry holds quite a bit of promise. http://www.thomaswhite.com/world-markets/argentina-towards-stability-and-growth http://www.winesofargentina.org/argentina/historia/ Tiffany Lyons
February 2nd was a great kick-off in preparation for the trip to Argentina. Tucked away in a noisy corner of The Wine Spot we enjoyed a taste of the local culture while learning from 3 Argentinian alumni. One of the things that stuck out to me was that the French influence mentioned in culture and architecture actually showed its influence in the business environment as well. It is very difficult to open a new business in Argentina due to all of the regulations and required paperwork. This mean the start-up environment is also difficult to break into. As we meet with the Argentinians, participants of Scalbl, and government officials it will be interesting to see how the recent changes in political leadership will impact the business culture of Argentina and what we can learn from both their culture and their business. Argentina's beef reputation is one part culinary art and one part economics. After doing some research I found that at one point in time, Argentina was the 3rd largest beef exporter in the world. In the US, our beef, most often is barbecued. Many times, one might use a propane grill to heat the meat and seal in the flavor. In Argentina, beef is prepared in the Asado style. This technique cooks the meat far slower and places an emphasis on ever so slightly smoking the beef. Wood is the standard heat source and briquettes are used to start the fire. Cows in Argentina are exercised regularly and feed grass outside, in stark contrast to cows in the US. This combination of altered diet and Asado style cooking produces a truly signature dish. Beef supply in Argentina has dramatically influenced by government policy as well as economic factors. Volatile trade policies such as export freezes and tariffs have stifled foreign demand. This has caused Argentina to become only the 4th largest exporter of beef in South America and 10th in the world. Moreover, the governments decision to allow the peso to devalue by 30% noticeably contracted supply by 8 million cattle. Beef futures, however, have rebounded as the newly elected administration, under President Mauricio Macri has pledged to reform the agriculture sector to make it more globally competitive. After our meeting with Axel, who originated my interest the Beef industry, I am excited to experience a dish for myself. -Evan Harris http://www.beefmagazine.com/beef-exports/argentina-revive-beef-exports-bolster-producer-profitability James Tanner As the current regime of Argentina has taken over the country has faced economic uncertainty. The value of the Argentinian Peso decreased 30% overnight in 2015 and the economy has been trying to grow back ever since. As the economy is seeking to expand the startup community in Argentina is looking to grow with it. The Asociacion de Emprendedores de Argentina (Argetnina's Assocation of Entrepreneurs) is looking to eliminate the red tape currently found in public policy to make it easier for startups to form and for the necessary venture capital infrastructure to be created. If the ASEA is successful then Argentina will be able to position itself as an economic driver in Latin America and capitalize on their ability to welcome top talent from around Latin America as it is able to leverage its amazing Euro-Latin cultural that is distinct in the region. A successful startup community means an increase in economic value for the region as new jobs and companies are created. It will be interesting to see if this legislation is passed and its impact as our trip nears. http://www.startupbuenosaires.com/en/blog/2017/01/11/13397.html Over in the Wine Spot we met with some amazing people from Argentina (Axel, Pablo and Sergio. The spot was pretty crowded so we had to divide in groups and let each speaker lead the group. Awesome insights were gathered from all of them but I got the opportunity of being in Axel's group. Axel talked to us about the hyperinflation Argentina is going through. Inflation is so high that coming to the USA and be in a capitalist country seems like a breeze and makes them buy everything they want. This hyperinflation is affecting overall services in Argentina even though a new government is uprising but is still too new to know what is going to happen. After doing some research we can see that up to 2016 Argentina's inflation is around 30% which is still not normal at all compared to USA and United Kingdom who are close to 0 and China around 4.5%, meaning that there is a lot of opportunity for economic reform and hopefully with a new government this is on the political platform. Axel also talked to us about how BBQs are so different from the USA. These take all day and a lot of family and/or friends get together and grill meats for more people than what are present. "Vegetarians might not have a lot of options in Argentina" - Axel. Sources: -http://wolfstreet.com/2016/07/04/inflation-in-argentina/ - Edwin Pacheco Colón
By George MannI learned a great deal about the Argentinian business environment during our conversation with Axel, Pablo and Sergio. What interested me most was Axel’s comment regarding the difficulty and duration for starting a business in Argentina. |
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