Soon, Argentina will face a crucial election for its future. The US -Argentina Business Council ( USABC ) of the United States Chamber of Commerce, based in Washington DC, believes that a solid and close economic-trade relationship between both countries is fundamental so that Argentina can get out of its current crisis. The organization believes that the US can be a strategic ally for sustained economic growth in Argentina.

The US and Argentina have a long history of commercial relations

This year, the United States and Argentina celebrate two hundred years of diplomatic relations, and the private sector has made a vital contribution to developing a prosperous and mutually beneficial relationship. More than three hundred American companies are based in Argentina, some of which have been in the South American nation for over one hundred years. The United States has historically been the primary source of foreign direct investment in Argentina, with an investment stock estimated at 16 billion dollars. The United States is also Argentina’s third trading partner – after Brazil and China – which in 2022 represented almost $30 billion in trade in goods and services.

However, the bilateral economic relationship has yet to reach its full potential. With an increasingly complex business environment marked by record annual inflation, increasingly strict controls, and trade barriers, trade is declining. Restrictions have increased through mandatory import permits and increasingly limited access to the foreign exchange market. These circumstances can be detrimental to continuing economic growth in Argentina.

The USABC has identified a series of initiatives and reforms in areas linked to trade, energy, and innovation that it believes, regardless of who is elected president in the upcoming contest, the future government of Argentina should promote to achieve its enormous potential, and with which the Council is fully committed to collaborating.

On the part of the United States, the USABC believes that a Critical Minerals Agreement (CMA) should be promoted with Argentina. This country’s lithium carbonate production is estimated to triple to 120,000 tons by 2024. However, without a free trade agreement or CMA with the United States, American companies will not be able to benefit from the inflation reduction law and will not see Argentina as a competitive supplier of lithium.

A Critical Minerals Agreement will fortify economic growth in Argentina

That is why the USABC proposes to develop an ambitious work agenda that mobilizes the Argentine and US diplomacies to take concrete steps toward signing a CMA. Furthermore, the organization firmly supports the IMF agreement with Argentina. With inflation above 150%, a growing fiscal deficit, and a significant contraction in economic activity, the USABC urges the United States government to continue supporting the IMF program to promote economic growth in Argentina.

Likewise, the United States – Argentina Business Council believes including Argentina in the Alliance for Economic Prosperity in the Americas (APEP) is essential. At the 2022 Summit of the Americas, APEP was launched to address inequality, foster integration, generate high-quality employment, and foster democratic values. The USABC proposes that the US authorities invite Argentina to join APEP at this initial stage.

The Council believes that the Argentine government should implement an open and transparent consultation process to address trade obstacles. It is evident that the economy is in a critical situation, but current trade restrictions discourage investment and growth. Mandatory import licenses generate unnecessary costs, bureaucracy, and uncertainty, which harms economic activity and job creation, affects competitiveness, and discourages investment in promoting Argentina’s economic growth.

Access to foreign exchange markets is critical to sustained growth

Furthermore, the country must lift exchange restrictions. Companies that cannot access the foreign exchange market practically cannot operate, and by limiting their ability to repatriate dividends, the incentives to invest in Argentina are blurred and constitute a further impediment to the country’s sustained growth.

Finally, Argentina must unleash its full export potential by eliminating duties and restrictions on exports. To consolidate its profile as a reliable global supplier of food, minerals, and energy, the country must thoroughly review measures that discourage exports, starting with eliminating or reducing export duties and prohibiting the export of certain products.

The United States – Argentina Business Council invites the next government to deepen its relationship with the US private sector and actively work on a joint agenda in strategic sectors for both countries, such as agribusiness, biotechnology, energy, and aerospace.

US trade and investment can grow significantly in the right business climate and contribute considerably to Argentina’s economic growth. In that sense, the USABC believes and shares the perspective of Argentine political leaders that a structural change is necessary that allows Argentina to achieve its promising future. The USABC appreciates that each of the leading candidates for the country’s presidency recognizes, in their own way, this reality, and the organization has a firm commitment to helping Argentina emerge from the current crisis and resume sustained economic growth, the elimination of poverty, and the prosperity of its people.

The United States Chamber of Commerce and its member companies want to be key partners that support positive steps on this new path for economic growth in Argentina.

According to the Central Reserve Bank of Peru, Peru maintains solid macroeconomic fundamentals that give it the capacity to respond to economic shocks.

At the recent Investor Day 2023, organized by the Lima Stock Exchange Group (BVL), Adrián Armas, Central Manager of Economic Studies of the Central Reserve Bank of Peru (BCRP), presented the economic perspectives of the Peruvian market and the current situation of the global economy.

Below is a summary of his presentation:

Global economic growth and risks

The International Monetary Fund (IMF) has revised its global growth forecasts for this year, going from a modest 2.8% to a more optimistic 3%. This improvement is primarily due to the moderation of some risks, such as the banking crisis.

The economic indicators of the United States have exceeded some expectations, which influences the outlook for inflation rates and control. However, there is a lagging effect of the measures taken, and it is essential to highlight that the risk of banking crises in the United States has been reduced if The IMF has identified several risks that could affect global economic activity:

– High Inflation: Inflation could remain high or even increase due to events such as an escalation of the war in Ukraine and extreme weather events.

– Turbulence in the Financial System: The tightening policies of central banks could generate turmoil in the financial system.

– China’s Slow Recovery: Despite the IMF’s projection of 5.2% growth in China, more recent data suggests a slower economic recovery.

– Fiscal Debt Overhang: Tensions related to fiscal debt could spread to other economies.

The terms of trade remain favorable at levels above the average of the last two decades. This leads to having a strong trade balance.

Outlook for Peru

In the global context of favorable terms of trade, leading to a surplus trade balance, Peru has faced political challenges in recent years, which has led to the rotation of presidents and authorities. 2021, in particular, experienced the largest short-term capital outflow in decades due to political uncertainties.

However,  according to the Central Reserve Bank of Peru, the country maintains solid macroeconomic fundamentals that give it the ability to respond to economic shocks. Stability is one of the best assets of the Peruvian economy, and its currency, the Sol, has proven to be one of the most stable in the region, with limited depreciation.

Peru has international reserves equivalent to 29% of GDP, the highest in the region and comparable with Far Eastern economies.

National Economic Activity

While Peru has maintained solid average economic growth of 4.3% annually over the past two decades, it has recently faced obstacles, such as the anchovy fishing ban, social conflicts, and adverse weather conditions. In the first half of the year, GDP experienced a drop of -0.5%.

Business expectations were affected, and although there was a slight recovery in July, challenges remain in private investment and consumption, according to the Central Reserve Bank of Peru.

Monetary Policy and Inflation Projection

The BCRP has maintained the reference interest rate at 7.75%, with an inflation rate decreasing significantly. Unlike other countries in the region, Peru registers one of the lowest and most stable inflation rates in the current century, around 3%. Inflation decreased to 5.88% in July after reaching a maximum of 8.81% in June 2022, partly due to climatic factors and rising food prices.

The same has yet to happen in neighboring countries where their rates have risen to double digits, such as Brazil and Colombia, which are at 13.25%, Mexico at 11.25%, and Chile at 10.25%. (Data as of August 17, 2023).

The Central Reserve Bank of Peru is working with a scenario of relative political stability. The markets are attributing growth for this year of 1.3%, and for next year, it is projected to be 2.7%, with Peru becoming the country in the region with the highest growth in 2024.

Solid fundamentals, according to the Central Reserve Bank of Peru

Peru stands out for its solid macroeconomic fundamentals: low inflation rates, high international reserves, low financing costs, and orderly public finances. Economic recovery is linked to socio-political stability and a favorable environment for doing business.

The country is projected to be one of the fastest-growing countries in 2024, and inflation is expected to enter the target range as the effects of adverse weather events on food prices dissipate.

Peru is a good choice for foreign direct investment

Peru is an attractive destination for foreign direct investment (FDI) due to its robust economic fundamentals, strategic geographic location, and commitment to fostering a business-friendly environment. With a consistently growing economy, Peru has demonstrated resilience and stability, offering investors a predictable landscape. The country’s strategic positioning as a gateway to the Pacific provides access to key Asian and American markets, enhancing trade opportunities. Additionally, Peru has actively engaged in trade liberalization, signing numerous free trade agreements that facilitate market access and reduce trade barriers. The government’s dedication to economic reforms, such as streamlining bureaucratic processes and improving infrastructure, further enhances the ease of doing business.

Natural resource abundance, including significant mineral and agricultural wealth, presents lucrative investment prospects, particularly in the mining, agriculture, and renewable energy sectors. Peru’s diverse and dynamic economy and skilled workforce make it an ideal investment destination. Moreover, ongoing efforts to promote sustainability and responsible business practices align with global trends, fostering a positive image for environmentally conscious investors. In conclusion, Peru’s stable economic growth, strategic location, commitment to reforms, and abundant natural resources collectively make it an enticing option for foreign direct investment.

The technology sector in Colombia has been growing in recent years, so much so that this sector currently occupies an integral part of the gross domestic product (GDP) and the country’s labor market.

According to Colombia’s Software and IT Federation (Fedesoft), since 2010, companies belonging to the technology sector in Colombia have grown progressively. For that year, the sector’s sales as a percentage of GDP was 0.40%, while in 2015, it increased to 1.19%.

After five years and driven by the pandemic, the country’s technology industry grew 7.3 times its value and generated over 150 thousand jobs, reaching 2.94% of GDP, a figure maintained in 2021 and 2022.

The above statistics have led to the country being positioned as the fourth largest country in Latin America for the technology market, surpassed only by Brazil, Mexico, and Chile.

Global innovation index

As is customary, every year, the World Intellectual Property Organization (WIPO) publishes its report on innovation. In the 2022 edition, the technology sector in Colombia registered an improvement compared to the 2021 edition.

What is the Global Innovation Index? This is a report carried out by WIPO that provides results parameters and classifies 132 economies based on their technological innovation ecosystems.

To rate each country, WIPO measures innovation by considering approximately 80 indicators grouped into innovation inputs and results.

Some of the indicators that are taken into account are:

• Institutions
• Human capital and research
• Infrastructure
• Credit
• Investment
• Bonding
• Creation
• Absorption and dissemination of knowledge

In that order of ideas, the results in 2022 that the technology sector in Colombia obtained were quite positive, as it rose in the rating by occupying position 63, compared to 2021, when it was ranked 67.

Additionally, the country ranked 15th among the 36 upper-middle-income countries and fourth among the 18 economies of Latin America and the Caribbean.

The above is because Colombia performed above the average of upper-middle-income countries in three of the seven pillars analyzed: infrastructure, business sophistication, and institutions.

Another relevant fact from the 2022 Global Innovation Index report was that the technology sector in Colombia performs better in innovation inputs than in production.

This means that innovative products are different from the investment made in technology. In other words, the investment is good, but its benefit is limited.

The banking sector is the most innovative

Despite this imbalance between investment and production, the country stands out in areas such as fintech, health, gas, oil, energy, logistics, telecommunications, marketing, and big data.

Fintech technology applied to the banking sector has become a benchmark in the region due to the maturation and modernization of systems, among many other activities that have facilitated access to financial services.

In fact, according to Asobancaria, in the last five years, these entities have invested just over 700,000 million in technological innovation in digital services. An example is some figures that Asobancaria, in its Sustainability Report, has revealed. In 2021 alone, 32% of the transactions that consumers made were carried out in physical channels, while 48% moved through digital channels.

Consequently, physical offices decreased by 3.1% annually, going from 7,238 in December 2020 to 7,014 in 2021. This reduction was more noticeable in cities such as Bogotá, Medellín, Cali, Bucaramanga, and Barranquilla.

Likewise, the report highlighted that as of December 2021, there were 394,728 correspondents, of which 957 were mobile and 161 digital.

Correspondents are understood as those devices with which a third party makes available to a user a web or mobile application that connects to the bank’s network to use its services.

For its part, Colombia Fintech has demonstrated that the country is the third economy in Latin America in the digital banking segment, with a growth of 39%.

Export quality software in the technology sector in Colombia

In this boom of the technology sector in Colombia, it is worth highlighting the role that the software and information technology industry is playing. In 4 years, the country went from having 8,800 to 10,000 companies dedicated to software development activities.

The emergence of these new companies has also promoted the export of their technological solutions to countries such as the United States, Ecuador, and Mexico, whose participation is 33%, 14.1%, and 8.3%, respectively.

Technology challenges in Colombia

Although the indices show that the country has made serious progress, there are still several challenges for technology in Colombia to benefit all population sectors and some industries that have yet to be left behind.

To achieve this, the existing digital divide in rural areas must be reduced, women should be included more in this sector (offer them financial products and services in accordance with their reality), and MSMEs should be trained in the use of these digital tools since many of these Small businesses view the use of technology for their operations with suspicion.

Another challenge is to work and deepen the regulation of all these applications since there are still specific gaps that can generate problems in the future.

Despite challenges, investing in the technology sector in Colombia presents a multitude of compelling benefits. Firstly, Colombia boasts a rapidly growing tech ecosystem characterized by a pool of highly skilled and talented professionals, many of whom are educated in top-notch institutions. This ensures access to a dynamic and innovative workforce, crucial for the success of any tech-driven enterprise. Additionally, the Colombian government has demonstrated a strong commitment to fostering the sector’s growth through various incentives and policies, including tax breaks and grants, encouraging local and foreign investors to participate in this burgeoning industry. Furthermore, the country’s strategic geographic location in Latin America is a gateway to a vast and expanding market, offering ample opportunities for market expansion and regional collaboration. With a steadily increasing internet penetration rate and a tech-savvy population, the demand for digital solutions and services in Colombia is poised for sustained growth. Ultimately, investing in the technology sector in Colombia not only offers the potential for lucrative returns but also contributes to the advancement of a dynamic and forward-thinking economy in the region.

The decision to maintain operations in Costa Rica was mainly due to the quality of its labor force being a part of a democratic and stable country, as well as the time zone that is congruent with that of the United States. It is mainly because of these factors that Intel is committed to innovation and development in Costa Rica.

Intel ceased its manufacturing operations in Costa Rica in 2014

The technology multinational Intel, which closed its manufacturing plant in Costa Rica in 2014, is successfully moving towards a Research and Development Center in which it has opted for the talent of Costa Rican workers, a senior company official recently expressed.

In a recent interview, the general manager of Intel Costa Rica, Vincent Guglielmetti, stated that the last two years have experienced “big changes” for the benefit of the company and the Central American country.

“What has happened in the last two years was a great change. We see it as a great transformation. Intel is still in Costa Rica and is very strong. We are moving towards what the country needs: knowledge-based development of the economy,” he stated.

Intel announced in April 2014 the gradual closure of its microprocessor assembly plant in Costa Rica, which meant the dismissal of 1,500 workers.

Official data indicate that in 2013, the technology giant’s exports represented 13.7% of the country’s sales of goods and services. The innovation and development in Costa Rica that was the result of Intel’s presence was significant.

According to Guglielmetti, the decision to transform the manufacturing plant in Costa Rica was “difficult” to make. However, it had to be made from the “competitiveness perspective.”

The corporation currently employs 2,100 workers in Costa Rica, many of them from the previous project. Intel in Costa Rica hopes to continue growing. Although there are still no numbers on Intel’s progress in recent months, the company manager asserts that the process has been “successful.”

Intel has bet on innovation and development in Costa Rica

“When we announced the closure of the plant, the idea was that the research center was going to employ only 1,200 people, and that was what we thought in December 2014. At that time, we were at 1,600 employees, but we could keep some people given the changes we made, and now we have a staff of 2,100. It is a very significant change that shows success,” expressed Guglielmetti. Intel believes that at this level of employment, the company can achieve innovation and development in Costa Rica.

The Research and Development Center is currently the largest in Costa Rica. It is dedicated to the design of prototypes, testing, mapping, and validation of integrated circuit solutions, platforms (“laptops” and tablets), as well as software creation.

These technologies are designed for the future, which is why employees work on miniaturism, artificial intelligence, or advanced technology.

“The country began to evolve towards a more technological and informational approach, and that has allowed us to advance to a level of greater innovation. In addition, the talent was here in Costa Rica to continue investing,” said Guglielmetti.

According to the American executive, the decision to maintain operations in Costa Rica was mainly due to the quality of the Costa Rican labor force, being a democratic and stable country, and the time zone in sync with that of the United States.

“I think that a very competitive issue is the quality of human resources. Costa Rica has invested in many activities in finance, human resources, engineering, and shared services disciplines. Other companies such as Hewlett-Packard and Procter & Gamble have service centers here because the country has invested in it,” said the general manager of Intel.

Education institutions must keep up with workforce demands

Despite this, according to Guglielmetti, one of the challenges is that fewer and fewer professionals graduate as engineers or information technologies. Universities do not teach all the necessary skills, so they must train personnel when they start working with Intel so that innovation and development in Costa Rica can continue at the required pace.

Regarding the challenges as a country, Vincent Guglielmetti indicated that foreign investment is arriving, “but not necessarily the infrastructure to support it.”

“The roads have not changed; there is congestion everywhere, and if people live on the other side of San José, it is a problem for them to get to their workplace. The country has infrastructure and public services challenges that must be addressed,” said Guglielmetti.

Among the goals for the medium and long term, Intel seeks to continue to grow with local talent and include more women within the organization’s workforce to foment innovation and development in Costa Rica.

“From a diversity and inclusion perspective, we have chosen to increase women’s employment in technical areas to 40% between now and 2020. Currently, we are at 22%, but not only hiring them but ensuring that we are creating the environment for them to have a balance from a life perspective,” said Guglielmetti.

Intel’s Research and Development Center in Costa Rica is the largest opened by the company worldwide. It has eight business units.

Intel also operates a Global Services Center in the country that employs 1,000 people and contributes to the organization’s innovation and development in Costa Rica.