OECD Economic Surveys: Argentina 2017
Multi-dimensional Economic Survey
Following years of unsustainable economic policies, Argentina has undertaken a bold turnaround in policies, which has helped to stabilise the economy and avoid another crisis. Building on this reform progress should help lay the foundations to raise the material living standards and well-being of all Argentinians, including the most vulnerable. This Survey discusses the challenges ahead and the policy options to address these challenges. Improvements in the areas of regulation on product markets, labour markets, competition, taxes, infrastructure, education, trade policy and financial markets would strenghten investment and productivity, which are the basis for sustainable income gains. Some of these reforms will involve adjustment costs as jobs will be lost in some firms and sectors and created in others, but well-designed policies can protect the poor and vulnerable from the burden of adjustment. A current focus on strengthening the social safety net and efforts to improve the quality of education are part of such policies, as is labour market support for affected workers. The benefits of stronger growth will depend on improving the distribution of income, which is currently very unequal and leaves one third of the population in poverty, with more at risk of falling into poverty. Efforts are also underway to reduce inequalities in the access to quality education. Public transfers to reduce inequality and poverty will continue to play an important role, together with stronger efforts to curb labour market informality.
SPECIAL FEATURES: PRODUCTIVITY; INCLUSIVE GROWTH
Structural reforms to boost growth and living standards in Argentina
Over the last decades Argentina’s living standards have lost ground relative to other developed and emerging economies. Putting Argentina on a path to stronger, inclusive and job-rich growth requires boosting productivity and strengthening investment through wide-ranging structural reforms. Areas that require reforms include the regulation of product and labour markets, taxes, infrastructure, skills, innovation, trade policy, rule of law and financial markets. Beyond changing the rules, implementation and restoring institutional capacity are equally important. Enhancing competition, for which implementation and institutions are particularly relevant, would stimulate private investment, facilitating the creation of new firms and jobs, and would bring benefits to consumers through lower prices. Finding the right packaging and sequencing of reforms is important to exploit synergies across different areas, to manage trade-offs and to protect the vulnerable from the costs of adjustment. In this context, improving active labour market policies and training can support workers in acquiring new skills and in getting ready for new jobs, improving their capacity to adjust to a changing economy.