Stabilization is just the first step. Argentina needs a growth strategy based on sectors with high innovative potential that can attract foreign direct investment, generate quality employment and increase exports.
The Argentine economy initiated a remarkable recovery that few considered possible. With poverty descending from 52.9% to 38.1% in the 2nd quarter of 2024 (INDEC), the country began a stabilization path. This change, driven by the measures of austerity and macroeconomic prudence of Javier Milei, should be used to build an economy based on innovation and growth.
However, stabilization is just the first step. Argentina needs a growth strategy based on sectors with high innovative potential that can attract foreign direct investment, generate quality employment and increase exports.
A recent report by the International Bases Foundation and we are innovation entitled “Promote innovation as an engine of economic growth in Argentina” identifies 4 key sectors with high potential and relative ease of implementation: agrotechnology, green hydrogen, lithium production and innovative consumption products.
Four key sectors for economic takeoff
Argentina has an extraordinary potential in 4 sectors that could become sustainable growth engines. As 3rd World Food Exporter, the country saw its position in international markets eroded, with a participation that fell from 2.7% to 2.2% in a decade, victim of counterproductive policies that penalize the producer with retentionswhile the rest of the world subsidizes agriculture. However, there is already an ecosystem of 165 companies specialized in agrotechnology that only expect a propitious framework to unleash an innovation boom.
At the same appropriate, the Argentine territory offers ideal conditions for the production of renewable energy, especially in Patagonia with its exceptional winds and in the north with its solar potential, positioning the country as a natural producer of green hydrogen, a market that will reach US $ 30,000 million in 2030. This potential is internationally recognized with the European commitment of 200 million euros and the investment of Fortescue of 8.4 billion, although it is required to accelerate the implementation of the implementation regulatory to capitalize it.
The lithium sector experiences its own revolution with the implementation of direct lithium extraction (EDL), which reduces water consumption by 50% and shortens the productive cycles of 18 months only days. Projects such as Rincón de Rio Tinto already implement systems that recycle 80% of the water used, while new clay deposits are discovered in San Juan and geothermal salmueras in La Rioja that could triple reserves by 2035.
In addition, Argentina’s position as a world producer of tobacco could be transformed into a platform for the manufacture of innovative products of nicotine, a market that is projected at US $ 63,000 million by 2032, generating quality employment and multiplier effects in related industries, although currently blocked by a prohibitionist regulatory framework.
Put the engines running
To capitalize on these opportunities, Argentina needs an integral approach that simplifies the regulatory framework, eliminates commercial barriers and generates confidence in investors. This implies reducing capital controls, establishing tax incentives for key sectors and creating areas that stimulate industrial concentration. Infrastructure improvement and strengthening international trade agreements, particularly with the EU and the US, would complement these structural reforms, creating an ecosystem conducive to foreign direct investment.
Proactive reforms can redefine the economic trajectory of Argentina. The 4 identified sectors represent opportunities with truly transformative potential. The key is to finish abandoning the interventionism of past decades and allow entrepreneurial talent, natural resources and qualified human capital that characterize the country flourish in an environment of economic freedom and legal certainty.
President of the Base International Foundation and CEO of Somos innovation.
Source: Ambito
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