ArgentinaMacroeconomic and SMEs OverviewMacroeconomic and SMEs Overview
Lic. Evelin GoldsteinLic. Evelin GoldsteinConsulting
Undersecretariat of Small and Medium Enterprises and Regional DevelopmentSecretariat of Industry, Commerce and SMEs
Ministry of Economy and Production
May 2007
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Topics of the Presentation
1. Crisis, Recovery and Development of Argentina’s Economy
2. SMEs Overview
3. SMEs Problems
4. SMEs Public Policies
Crisis, Recovery and Development of
Argentina’s Economy
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
New growth drivers for Argentina after the crisis
Destruction of National Industry
Convertibility Plan
Recovery and growth
Ec
on
om
ic c
ris
is
CompetitiveExchange
rate
TwinSurpluses(fiscal and
Commercial)
More active role ofThe government
The 90’s After devaluation (2002)
Fixed andOvervaluated
Exchangerate
Market’sliberalization
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Growing after the Crisis
Source: Ministry of Economy and Production.Source: Ministry of Economy and Production.
Gross Domestic Product
0
50
100
150
200
250
300
350
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Mill
ons
of d
olla
rs
GDP Growth: 9% per
years in re
al term
s
Overvaluated exchange rate
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
43
48
40
41
42
43
44
45
46
47
48
49
Average 97-2001 Average 2002-2005
Solving the Problem of Unemployment
Employees for every millon of product
Source: Ministry of Economy and Production
+12.2%
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Increasing investments to support growth
Source: Ministry of Economy and Production
Note: Fixed Gross Domestic Investment (FGDI) in Dollars.
Fixed Gross Domestic Investment
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
In m
illo
ns
of
do
llars
0%
5%
10%
15%
20%
25%
FGDI FGDI/GDP
FGDI/GDP: 22%
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Results of supporting a competitive exchange rate
Source: Ministry of Economy and Production.
Balance of Payments
-5,00%
-4,00%
-3,00%
-2,00%
-1,00%
0,00%
1,00%
2,00%
3,00%
4,00%
5,00%
1997 1998 1999 2000 2001 2002 2003 2004 2005
Primary Superavit Global Financial Result Current Account Result
% of GDP
Argentina’sSMEs Overview
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Growth of SMEs Start-ups
Source: Ministry of Labor and Social Security
Note: Almost all start-ups are of SMEs. Data is of the Second Quarter of every year.
8,8% 8,9% 8,4% 7,6% 6,9% 6,4% 5,1%
9,1%
13,8%
11,9%12,0%
0
10
20
30
40
50
60
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
In th
ousa
nds
0%
5%
10%
15%
20%
25%
30%
% o
f tot
al
Start-ups Sart-ups Rate %
Enterprises Start-ups
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Also there are closings...
Source: Ministry of Labor and Social Security.
Evolution of Start-ups and closings +50,000 new enterprises per year
0
50
100
150
200
250
300
350
400
450
500
Th
osa
nd
s o
f E
nte
rpri
ses
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
TotalEnterprises
Closings
Start-ups
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
-
20
40
60
80
100
120
140
160
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Bas
e In
dex
199
6=10
0
The role of MiSMEs in Employment
Source: Ministry of Labor and Social Security.
MiSMEs: +47%
Between 2002 and 2005 MiSMEs Employment increased 47%, whereas in
big firms 22% in the same period.
Evolution of MiSMEs Employment
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Dynamic SMEs exporters
Exports of SMEs grew 57% during the last three years.
There are 6,000 exporting SMEs and about 2,000 more that are starting to export.
It is possible to find different markets and production sectors.
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
SMEs exports tendency
0
100
200
300
400
500
600
700
800
900
1000
III-2003 IV-2003 I-2004 II-2004 III-2004 IV-2004 I-2005 II-2005 III-2005 IV-2005 I-2006 II-2006
Total SMEs Industrial SMEs
I Semester 2006: +17%
Source: Ministry of Economy and Production.
Millons of dollars
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Credits for SMEs
Source: Central Bank of Argentina.
Nota: SMEs loans of less than $ 1 millon are considered.
0
2000
4000
6000
8000
10000
2002 2003 2004 2005 2006
Evolution of SMEs Debt
Millons of Dollars
Main Problems of SMEs in Argentina
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
SMEs ProblemsFinancing:•Bank restrictions•High interest rate• Limited Guarantees for loans•Many SMEs are not registered•Few developed capital market
InsufficentInvestment
SMEs use their own resources to finance investment
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Other SMEs Problems
•Lack-of qualified employees•Weak relationship between entrepreneurs•Lack-of professionalism•Few resources for technology and innovation•Low productivity•Lack-of market information
Public Polices for SMEs
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
General Areas of Action
TRAINING TRAINING and and
START-UPSSTART-UPS
TRAINING TRAINING and and
START-UPSSTART-UPSFINANCINGFINANCINGFINANCINGFINANCING
DEVELOPMENT DEVELOPMENT OF DIFFERENT OF DIFFERENT
INDUSTRIESINDUSTRIESAND REGIONSAND REGIONS
DEVELOPMENT DEVELOPMENT OF DIFFERENT OF DIFFERENT
INDUSTRIESINDUSTRIESAND REGIONSAND REGIONS
FOREIGNFOREIGNTRADETRADE
FOREIGNFOREIGNTRADETRADE
Subsidized Subsidized
Credits for Credits for
MiSMEsMiSMEs
Mutual Mutual
Guarantees Guarantees
companiescompanies
Tax benefits for Tax benefits for employee trainingemployee training
Subsidies for Subsidies for quality improventquality improvent
Start-up Start-up DevelopmentDevelopmentProgramProgram
Net AgenciesNet Agencies
ClustersClusters
SW IndustrySW IndustryPromotionPromotion
Support of Support of
the first exportthe first export
Exports groupsExports groups
Trade Trade
promotionpromotion
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
The Net of Development Agencies is formed by non-profit insitutions with public and private participation
The Agencies objective is to promote the local economic development through the SEPYME’s program.
The Net is an instrument to improve the relation between SMEs and the SEPYME.
Net of Development Agencies
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
NortheastNortheast 9 Agencies9 AgenciesCuyoCuyo
7 Agencies7 Agencies
NorthwestNorthwest 5 Agencies5 Agencies
CenterCenter 14 Agencies14 Agencies
Buenos AiresBuenos Aires
16 Agencies16 Agencies
PatagoniaPatagonia 12 Agencies12 Agencies
Net of Development Net of Development AgenciesAgencies
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Clusters
Promote the integration of the production
at regional levels through the
strengthening of the relation between
enterprises, Public sector, and research
institutions
ObjectiveObjective
MeansMeans •SEPYME’s Programs of Financial Aid (FONDER)
•Support and advice for the design of association projects
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Financing
Subsidized RatesSubsidized Rates RegimeRegime
Subsidized RatesSubsidized Rates RegimeRegime
The objective is to reduce financial cost
of SMEs loans by subsiding interest
rates. Credits are offered by banks.
The objective is to reduce financial cost
of SMEs loans by subsiding interest
rates. Credits are offered by banks.
Global Credits Global Credits ProgramProgram
Global Credits Global Credits ProgramProgram
The purpose is to offer long-term loans
for SMEs with low interest rates.
Funds are provided by the IDB.
The purpose is to offer long-term loans
for SMEs with low interest rates.
Funds are provided by the IDB.
Mutual Guarantee Mutual Guarantee Companies (SGR)Companies (SGR)Mutual Guarantee Mutual Guarantee Companies (SGR)Companies (SGR)
Business companies facilitate financial access to SMEs through guarantees.
Business companies facilitate financial access to SMEs through guarantees.
Lic. Evelin GoldsteinLic. Evelin Goldstein ARGENTINAARGENTINA
Financing (cont.)
National Fund for National Fund for SMEs (FONAPYME)SMEs (FONAPYME)National Fund for National Fund for
SMEs (FONAPYME)SMEs (FONAPYME)
This Program finances investment inproductive development. Projects are evaluated by SEPYME. The interest rate is variable.
This Program finances investment inproductive development. Projects are evaluated by SEPYME. The interest rate is variable.
National Fund for National Fund for Micro-EnterprisesMicro-Enterprises
(FOMICRO)(FOMICRO)
National Fund for National Fund for Micro-EnterprisesMicro-Enterprises
(FOMICRO)(FOMICRO)
Entrepreneurs can borrow money without guarantees. Interest rates are low. Funds are provided by the National Bank of Argentina.
Entrepreneurs can borrow money without guarantees. Interest rates are low. Funds are provided by the National Bank of Argentina.
This Program provides subsidized credits for clusters. Funds are provided by the National Bank of Argentina.
This Program provides subsidized credits for clusters. Funds are provided by the National Bank of Argentina.
National Fund for National Fund for Regional Development Regional Development
(FONDER)(FONDER)
National Fund for National Fund for Regional Development Regional Development
(FONDER)(FONDER)
Muchas Gracias
Thank you
Evelin Goldstein
Ministry of Economy and ProductionSecretariat of Industry, Commerce and SMEsUndersecretariat of Small and Medium Enterprises and Regional Development
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