FDI in Argentina after the crisis

~Stefan Stoev

~Babawande Afolabi

“The Ever Wavering Tide”

Presentation Overview

The Framework Down the Memory Lane The Crisis Post-Crisis FDI after the Crisis Conclusion References

The Framework…

Even though the Argentine FDI has recovered after the financial crisis, it is still a subject of fluctuations.

Down the Memory Lane…

Pre 1990s

Hyper inflation Floating exchange rate Negative GDP growth

1989-1999 Carlos Menem Convertibility Plan Curb in Inflation Increase in FDI inflow Increase in GDP

Down the Memory Lane…

Negative account balance

Budget DeficitHuge BorrowingExternal Factors

Down the Memory Lane…

The Crisis (2001/2002)…

Default on the outstanding public debt Increase in unemployment and increased poverty Lost confidence in the country’s financial system Reduced FDI

Post Crisis…

Currency floated and Depreciated Trade deficit turned into surplus Government deficit turned into surplus Economic growth reached 9% FDI picked up

FDI After the Crisis…

There is still a lack of confidence “What is frustrating isn’t just that the

first image of the country has tended to obscure the second, it’s that many foreign economists still are looking for excuses not to acknowledge the success story.”

Alfonso Prat-GayCentral Bank President

FDI after the Crisis

Year Amount (US$Billion)

2003 1.6

2004 4.6

2005 5.0

2006 3.3

Mounting Shortfall in Gas and Power Production Speculation about current economic growth Government controls

*www.unctad.org

FDI after the Crisis…

Concentrated in the Construction industry till 2004

Now concentrated in the Manufacturing industry

Increased investment in the energy sector

Conclusion

Even though the FDI has risen quite beyond the fall of 2001, it’s still contending with inconsistency and gradually lagging behind when compared to fellow Brazilian and Mexican big economies.

• The Economist, The Economist Intelligence Unit. Retrieved May 30, 2007 from

http://economist.com/countries/Argentina• Encyclopedia Britannica (2007). Argentina. Retrieved May 30, 2007 from http://search.eb.com/eb/article-9109725• Central bank of Argentina (2007). Monetary Policy. Retrieved May 29,

2007 from http://www.bcra.gov.ar/

• Argentine Government (2007). Economy. Retrieved May 29, 2007 fromhttp://www.argentina.gov.ar/argentina/portal/paginas.dhtml?pagina=391

• Background notes. Argentina, Retrieved May 29, 2007 fromhttp://www.state.gov/r/pa/ei/bgn/26516.htm

• Proquest (2007), Investors in Argentina feel burned. Retrieved May 29, 2007 from http://proquest.umi.com/pqdweb

• Data Processing Information Architects (2007). Argentina FDI. Retrieved May 29, 2007 from http://web.lexis-nexis.com/universe

References…