Transcript Economic Overview

F UNDACION DE
I NVESTIGACIONES
E CONOMICAS
L ATINOAMERICANAS
Strengthening long-term growth in Argentina
D. Artana, E. Bour, J.L. Bour y N. Susmel
OECD Seminar “Beyond the crisis – Returning to sustainable growth in
Latin America”
Paris, November 24th 2010
Labor regulation is also rigid in our estimate of the EPL3
More
rigidity
Source: FIEL
And the tax burden is also high
Source: Artana, D. & I. Templado “Is the Argentine Revenue Effort Too High?” 2010.
New Exploration Contracts between 3.5 & 5
• Manufacturers pay on average US$ 3 per million BTU
Price controls of energy products are one factor that explains a
declining stock of reserves and production of natural gas
There was a reduction in informality, but 2003-09
average is similar to 1993-2000
Informality rates
• Reallocation from low productivity to high productivity
sectors was not very important
• Within-sector more consistent with some external
force that drives labor productivity up in all economic
sectors
And quality of education deteriorated in spite of some increase in public
expenditures as % of GDP
Quality
improved
Quality
worsened
We estimated determinants of growth in Argentina in
the period 1981-2009
• Stock of capital adjusted by utilization
• Labor adjusted by number of hours worked
– We also opened for Formal and Informal Workers
• Country risk as separate variable
• Terms of trade (Kehoe and Ruhl, 2007; Becker and
Mauro, 2003; Edwards, 2007; Cavalcanti Ferreira et
al (2010)
– Gain is similar to technological improvement
• We can estimate how much the gain in terms of trade
contributed to growth in 2003-2009
– One third when informal employment is included
– 73% in our best estimate that takes into account lagged
effects.
Conclusions
• Good luck made a substantial contribution to
Argentina’s growth since 2003
• Fiscal challenges that were a key factor behind
Argentina’s dismal performance in the past are
not such a big challenge (low debt, moderate
deficit). But filling the gap with taxes will be costly
given the already high tax rates on formal
activities
• Evidence points to the need to improve the quality
of micro policies and the investment climate … or
to bet for permanent luck