ARGENTINA, DOING BUSINESS IN



Argentina is the third largest economy in Latin America, after Brazil and Mexico. Argentina has a gross national product (GNP) of roughly $326.4 billion. Its real domestic growth at the end of the 1990s was stable at roughly 4 percent, but this gives only a partial picture of the Argentine economy. The nation's GDP fluctuated wildly throughout the nineties, at least in part due to the aftershocks of the Mexican Peso Crisis of 1995. Thus, its GDP in the early 1990s was consistently between 6 percent and 8 percent, but nosedived to -4.6 percent in 1995. By 1996, the economy had largely recovered, with GDP of well over 4 percent, reaching a high of 8.3 percent in 1997. The next year's halving of Argentina's GDP, however, can actually be seen as the strength of the national economy in the aftermath of the 1997 East Asian Economic Crisis, whose effects were felt in force in South America in 1998.

By the end of the 1990s, Argentina was averaging exports of more than $25 billion annually. By far its greatest export destination is its Mercosur partner Brazil, which accounted for over 26 percent of all exports. Its next largest export destinations are, respectively, the United States at 8.5 percent, Chile at 7 percent, the Netherlands at 6.7 percent, and Italy at 3.5 percent.

Argentina's imports also depend heavily on Brazil and the United States, which together accounted for more than 40 percent of all Argentina's imports at just under 21 percent each. Much of the rest of Argentina's imports come from the European Union (with 17.7 percent from Italy, France, and Germany alone).

Argentina is the second largest country in Latin America geographically. Indeed, at slightly over 1 million square miles (2.8 million square kilometers), Argentina is the eighth largest country in the world. Argentina's geography, however, is rather unique. Cone-shaped, Argentina is about two and one half times longer north-south (2070 miles/3330 kilometers) than it is east-west (a mere 860 miles/1384 kilometers at its widest on the nation's northern border, and the country is considerably narrower for most of its length). Most of its north-south border is shared with Chile, its neighbor to the west, from which it is geographically cut off by the largely impassable barrier of the Andes. This has led Argentina to develop somewhat independently from the rest of Latin America, with a decidedly European influence to its culture. Even the European influence however, has historically been moderated by Argentina's position in the extreme southern part of the globe.

For all its great size, Argentina is sparsely populated. Argentina has a population of just over 36 million people. While this makes the country the fourth most populous nation in Latin America (after Brazil, Mexico, and Colombia), Argentina is about on par in population with Europe's mid-size states (Spain, for example).

Moreover, Argentina's population is not evenly distributed. Buenos Aires is the fifteenth largest metropolitan area in the world. With a population of 11.2 million people, greater Buenos Aires is home to just under one of every three Argentines. When one combines greater Buenos Aires with the large number of Argentines in such other major cities as Córdoba, Rosario, and Tucumán, fully 87 percent of Argentines live in urban areas. This leaves large expanses of the Pampas and Patagonia very sparsely populated. In turn, the population distribution has led to a marked dichotomy in Argentina between the city and the country.

Despite its relatively sparse population, the Pampas and countryside hold a strong sway over Argentina's national characteristics. The self-conception of Argentines is intermixed with the rugged individualism of the gaucho in a manner somewhat akin to the U.S. self-conception of the cowboy tradition. This too has reinforced the city-country dichotomy.

THE EFFECT OF IMMIGRATION

Argentina began its rise to economic importance in the late 19th century during the beginning of its great wave of immigration. Indeed, Argentina, like the United States, was the center of one of the greatest waves of immigration in world history. Between 1850 and World War II, 3.5 million immigrants poured into Argentina. This has given Argentina a notably different character than much of the rest of Latin America. Both the cultural roots and the ethnic make-up of Argentina are predominately European. The European immigrants displaced the vast majority of the native Indian population, and unlike much of the rest of Spanish America, very little Indian influence is present in either Argentine ethnicity or cultural behavior. Today well over 85 percent of all Argentines consider themselves of fully European descent, while the majority of the remaining 15 percent view themselves as mestizo (mixed European and Indian) heritage. The number of Indians today has been estimated at under 100,000, and most Argentine Indians live in relatively remote areas.

Argentina was also never a major center of the slave trade, so that today Argentina has very little African influence, and with the exception of late 20th century immigrants, virtually no black population. The only notable non-European influence in Argentina's ethnic make-up rests with the Arabic and East Asian groups, many of whom have arrived in recent decades.

By the beginning of the 20th century, Argentina had became a rising economic power of considerable importance, in part fueled by the entrepreneurial spirit of many of its new immigrants. The Great Depression, however, sent the country into considerable upheaval, which deepened during World War II.

THE PERÓN PERIOD

The economic and political upheaval fueled by the Great Depression and World War II led to the rise of Argentina's most controversial leader, Juan Domingo Perón. Even decades after his death, Perón'slegacy can provoke strong disagreement among Argentines. What is not subject to debate is the fact that Perón was the dominant figure in both Argentina's political and economic arena for the next 30 years, and his legacy is still strongly apparent in the nation today.

Perón was an admirer of the Italian dictator Benito Mussolini. In his "cult of personality," Perón brought the fascist leader's concept of rule by grand show to Argentina. Perón and his followers led a coup d'état during World War 11, seizing control of Argentina's Labor Department in 1943. Perón ousted leftists and revamped Argentina's unions. As his influence grew, he was named Vice President and War Minister of the still-neutral nation. Opposition from military leaders as well as alienated left-wing politicians led to Perón's resignation and imprisonment in October 1945. Eight days later his allies had forced the government to release him, and before the month was over, Perón married Maria Eva Duarte.

His new wife, nicknamed Evita, was a highly charismatic figure who influenced the masses and remade Perón as a supporter of the dispossessed (called the descamisados —"the shirtless ones"). Evita had herself been among the country's poor, and convincingly conveyed to disadvantaged Argentines that she understood their plight.

After Juan Perón's election as President in 1946, Evita became a power in her own right. She worked with her husband to shape the Perónista policies toward social welfare programs. Evita was equally influential in promoting the rights of women. Under Perón, Argentina stayed neutral nearly until the war's end. Despite this, Perón took strong measures against Nazis within Argentina who attempted to subvert his government. Soon after his election, Perón deported several Nazi spies and soon nationalized roughly 60 German-owned businesses. When it became clear that the Allies would defeat the Axis powers, Argentina joined the war, bettering his standing with the United States. When Perón rewrote Argentina's constitution to enable himself to run for a second term, he attempted to run Evita as his Vice-President, but this move was blocked by the military.

Perón did not complete his second term. The opposition to the Perónistas grew markedly, especially within Argentina's business class and among its newspapers. In response, Perón censored the press and jailed many of his opponents. These ill-received moves were magnified when, in 1952, Eva Perón died, greatly weakening much of Perón's popularity base.

Perón's social welfare policies proved economically disastrous for Argentina, creating massive inflationary pressures. Finally, Perón ran into heavy opposition from the Roman Catholic Church leaders for, among other issues, his policies legalizing divorce and recognizing children born out of wedlock.

In 1955, Perón was overthrown in a coup d'état that left 4000 people dead in three days. Perón went into exile and Argentina remained dominated by the military, at times directly and at other times through weak and provisional presidents. The country remained economically and politically unstable for the next 18 years, torn by strikes, student protests, riots, and terrorism. Finally, in 1973 Perón returned to Argentina where he was elected to the presidency again by a large majority. His new wife, Isabel de Perón was elected as his Vice-President. Perón, however, soon died, and in June 1974, Isabel de Perón became the first Latin American female head of state. She was not able to hold on to her power, however, and faced with runaway inflation, political riots, and terrorist activities that left hundreds dead, she was overthrown by a military junta in 1976.

POST-PERÓN ARGENTINA

Military rule soon made Argentina a near pariah nation. The economy was in shambles. Military leaders replaced opposition terrorism with state-sponsored terrorism of its own. The military leaders were brutal, responsible for murdering over 2,300 political opponents. Additionally, an estimated 30,000 people simply vanished, collected by state police. These victims were imprisoned without trial and often tortured or never heard from again. The victims of this state-sponsored terrorism became known as the "desaparecidos" (the "disappeared ones"). Mass protests, often led by mothers of the victims, became commonplace.

In 1982, at least in part to divert attention from its domestic woes, Argentina's military leaders invaded the British-owned Falkland Islands. The war had a unifying effect on all elements within the population. Argentina had long laid claim to the Falklands, which the Argentines call the Malvinas, and the military leaders at first received widespread national support for their efforts to reclaim the nearby islands. Britain, however, defeated the Argentines, securing by military force the status of the islands as a British colony. Although the question of ownership remains a point of contention between the two nations, Argentina established full relations with Britain again in 1992.

THE RETURN OF DEMOCRACY AND
ECONOMIC RECOVERY

The loss of the war to Britain discredited the Argentine military leaders, bringing an end to Argentina's post-Perón military rule. Argentina again held free elections in 1983, and the Argentines elected Raúl Alfonsín. President Alfonsín did much to stabilize the nation's economy, restructuring Argentina's foreign debt. He also did much to restore international confidence in Argentina by going after the worst abusers of the military period, and sought to resolve the issue of the tens of thousands of desaparecidos. Alfonsín, however, could do nothing to stop Argentina's runaway inflation rate (at 900 percent annually by the time he took office). He did not finish his term, instead resigning and holding new election.

In 1989 Carlos Saúl Menem, a former university professor, was elected. Menem effectively overhauled Argentina's economy. By imposing austerity measures, he brought the inflation rate under control and balanced the national budget. His campaign of privatization soon attracted considerable attention. Additionally, Argentina joined with Brazil, Uruguay, and Paraguay to form Mercosur. Argentina became one of the major centers of foreign investment among emerging markets.

In 1995, after rewriting the constitution, Menem won a second term as President. Soon afterwards, Argentina's economy was rocked by the lack of foreign investor confidence following the Mexican Peso Crisis. Argentina turned to the IMF for assistance, but by 1996 it became clear that the nation would not reach its IMF-set targets. Menem then received emergency economic powers that allowed him to unilaterally raise taxes or create new taxes without legislative approval. The resultant emergency measures succeeded in stabilizing the Argentine economy again. Still, the measures left many concerned about the power of the Presidency until Menem announced that he would not seek a third term in 1999.

BUSINESS PRACTICES

With its large economy, major agricultural sector, and European orientation, Argentina has long attracted interest from abroad. Its rise in the post-military period as a major center for foreign investment has increased the need to understand the cultural aspects of doing business in Argentina.

LANGUAGE.

The official language of Argentina is Spanish; however, due to the strong ethnic ties of many Argentines, other languages are widely spoken, particularly in Buenos Aires. These include Italian, Portuguese, English, French, Yiddish, German, Arabic, and in recent years many languages from East Asia.

English is widespread not only as an ethnic language linked to the large-scale immigration of English, Irish, and Welsh, but also as the language of the educated and the middle class who constitute the majority of Argentina's business class. Many Argentines view the ability to conduct business in English as a sign of their education.

French was, until recent times, widely spoken as the predominant third business language (after Spanish and English) among the business class. With the rise of the importance of Mercosur in the 1990s, however, Portuguese has grown to rival French as the third language of the business class.

Finally, Lunfardo, the street patois used in Buenos Aires, mixes Spanish with phrases from a half dozen languages, forming a sort of subclass argot.

The Argentine accent is also somewhat separate from the rest of Spanish America. Residents of Buenos Aires, called porteños, in particular have audible Italian overtones to their accent. Additionally, Argentine Spanish uses many phrases and words borrowed from French and other European languages that may not be widely used elsewhere in Spanish America. On the other hand, Argentine Spanish lacks the Indian influence on the language so notable in the Spanish of Mexico and many other Latin American nations.

ATTITUDES TOWARD TECHNOLOGY.

A marked dichotomy exists between the technological infrastructure available in the major urban centers (notably Buenos Aires, Rosario, and Còrdoba) and that available in the countryside. Argentina's major urban areas tend to share with northern Europe, Canada, and the United States a view of technology as a controlling mechanism. The more one moves away from these urban areas, however, one arguably may notice a traditionally more ambivalent view toward the use of technology. At the very least, many rural areas are less likely to have state-of-the-art equipment and may prove somewhat resistant to technologically driven changes. Additionally, the road infrastructure in Argentina is inconsistent. While the road system between and within the major urban centers is well-developed, no major system of highways outside of the more developed urban regions. This makes it difficult to travel to many parts of the nation.

Considerable improvement to many aspects of the Argentine technological infrastructure have followed the privatization of state-run industries implemented throughout the 1990s. While these are evident in many areas, they may be most apparent in the telephone system, which has improved both in the overall quality of service and in the access to international calling. Nonetheless, Argentina has a considerably weaker telephone system than most nation's of its economic importance. Many households have no phones at all, while even in Buenos Aires, the phone system frequently cuts off during inclement weather.

SOCIAL ORGANIZATION

FAMILY TIES.

Family ties are considerably stronger in Argentina than they are in North America or in many northern European nations. Moreover, in Argentina as in most Latin American countries, family ties are notably broader than in North America and northern Europe. The North American and northern European family usually consists of one's spouse and children (and occasionally one's parents). In Argentina, family ties remain very close for most kinship relationships. Thus, in Argentina, cousins, in-laws, uncles and aunts, nephews, nieces, and godparent relationships are customarily considered part of one's immediate family.

Consequently, Argentine family ties furnish much stronger admission (than in North America or northern Europe) to business joint ventures, to amiable terms in negotiations, and to access to relatives in high positions. The result is that in some cases North American or north European business visitors to Argentina find themselves unable to contact those in authority because they may not realize the importance of such connections.

GENDER ROLES.

The genders are more clearly differentiated in Argentina than in the United States. To a large extent, the United States attempts both through legislation and social norms to ignore gender differences in the work place, while such differences are considerably more emphasized in Latin America as a whole, including Argentina. This has not, however, meant that Argentine women have stayed out of the work force. Currently, 41.3 percent of all Argentine women work, while well over 50 percent of Argentine women between the ages of 20 and 50 work This shows a dramatic increase from just 1970, when less than one Argentine woman in four was economically active.

This increase may have been facilitated by the advocacy of women's issues by Eva Perón, who helped to remove most formal obstacles facing women in the workplace. In this respect, Argentina may be viewed as one of the most progressive nations on the rights of women in the Americas, with initiatives predating, for example, the women's movement in the United States. Still, the open attitude toward differences between the sexes may make some U.S. business women suspect sexism where none was intended. Argentina generally lacks the Puritan attitude toward sex that has influenced U.S. views toward nonphysical sexual harassment. Argentines may comment on or look at members of the opposite sex in ways that make many U.S. business people uncomfortable. Additionally, many U.S. business people avoid gender-based etiquette (such as opening the door for a woman or offering to light her cigarette). Such gender-based etiquette in Argentina, on the other hand, does not indicate sexism but good business manners. Many Argentines, in turn, may misunderstand their North American counterparts' refusal to engage in such gender-based etiquette.

CLASS STRATIFICATION.

Argentina has a comparatively egalitarian distribution of wealth, especially among Latin American nations. At $9,700 per capita GDP , Argentina has the highest per capita income distribution in Latin America. In this regard, Argentina has very little of the economic class stratification that so characterizes Mexico, Brazil, and other major Latin American trade powers. Instead, the vast majority of Argentines belong to the middle class, as is the case in North America, Japan, and Europe.

EDUCATION.

With 96.2 percent able to read, Argentina has one of the highest literacy rates in the world, and the second highest (after Uruguay) in the Spanish-speaking world. The country also has among the highest primary school enrollment rates in the world, with just under 100 percent. Argentina has the highest percentage of university graduates in Latin America, with a rate of over three times the number of university students per 100,000 of Brazil or Mexico.

RELIGION.

Argentina is officially a Catholic country. By law, for example, the President of the nation must be a Roman Catholic. Nonetheless, Argentina has freedom of religion, and (due to its history of immigration) a wide variety of religions are practiced.

More than 2 percent of Argentines are Jewish (a percentage comparable to that in the United States), and Jews have played an active part in all parts of Argentine life, including the business world. Argentina is home to the largest Jewish community in South America. Indeed, Buenos Aires, with more than 250,000 Jewish residents, is the fourth largest Jewish community in the world, and (after Spanish and Italian) Argentines of Jewish background represent Buenos Aires' third largest ethnic group.

Argentina also has large populations of Protestants and Eastern Orthodox, particularly in the major urban centers. Notable Moslem and East Asian religious communities are also present and have in recent years been growing in number.

CONTEXTING

Argentina is what Edward Hall has called a "high context" culture. This means that Argentines rely more on the way in which a message is communicated than on the words employed. Consequently, for many Argentines, the manner in which a person makes a point becomes an integral part of the communication. Business people from more literal countries (those which Hall has called "low context" cultures) such as the United States, subsequently may misinterpret the way in which many Argentines express themselves as dishonest or deceptive.

As in other high context cultures, messages are also understood in terms of the full context of the communicators' relationship with one another. This particularly affects the importance of social etiquette and formality in official situations (including business meetings) and creates an emphasis on face-saving and respect.

To a much greater extent than in North America, for example, Argentine business behavior is directed by personal interpretation. Perhaps even more than in other Latin American nations, in Argentina it is important to win the respect of one's colleagues and counterparts. In both business as well as politics this has been called the "cult of personality." Argentina's greatest leaders—business or political—have relied on the personal relationships and powers of influence rather than exclusively on external rules and regulations. Because of this, in Argentina personal understandings and informal guarantees may well be as binding as contracts or formal agreements.

NONVERBAL COMMUNICATION

As with all nations, Argentina has distinctive nonverbal communication unique to itself. It contrasts markedly with the United States in the four areas described below.

PERSONAL SPACE.

Argentine concepts of personal distance are considerably closer than in North America. The average workplace distance while standing face-to-face between two people in North America is roughly arm's length. While Argentine personal space is subject to ethnic differences in a way less common in nations with weaker immigrant traditions, on the whole the average distance is approximately three to four inches closer than in the United States or Canada.

TOUCHING BEHAVIOR.

Argentines place a good deal of emphasis on touch. This contrasts markedly to the United States or Canada, where most workplace touching is limited to the handshake. Common Argentine workplace interactions would likely include handshakes of considerably longer duration than in North America, touching one's counterpart on the forearm or even shoulder, and greeting kisses between men and women as well as among women themselves.

MOVEMENT.

Argentines use their hands when speaking considerably more than most of their U.S. and Canadian counterparts. Moreover, the expansiveness of Argentine gestures are, in many cases, greater than that among North Americans. Both the greater frequency and size of the gestures may lead some North Americans to misinterpret their Argentine counterparts as more irritated or enthusiastic than the same gestures would be read by other Argentines.

DRESS.

Buenos Aires is one of the great fashion capitals of the world. In general, Argentines dress considerably more formally in business than their North American visitors. Considerable attention is also given to style and quality of material in dress.

Most Argentine women place considerable attention to make-up, jewelry, and nail polish. These are not considered as optional as in the United States and many other countries. Moreover, foreign businesswomen who fail to wear make-up and accessories are often misunderstood by both Argentine men and women as not understanding what appropriate business dress should entail.

For most Argentines, neatness in dress is also more greatly emphasized than in North America. For example, regarding shoes, many Argentines notice shoes that are not polished or heels that are worn down or nicked. Poor grooming, uncombed hair, and unpressed clothing also attract attention in the work place. By contrast, many North American business people may not customarily pay as much attention to such details.

TIME CONCEPTION

Argentina and the United States are extremely different in the way each conceives of time. Argentina is what Edward T. Hall termed a polychronic culture; the United States, a monochronic one. Argentina, like all polychronic cultures, ranks personal involvement and completion of existing transactions above the demands of preset schedules. The United States, like other monochronic cultures, adheres to preset schedules that take precedence over personal interaction or the completion of business at hand.

A considerable variance between city and countryside exists in Argentina regarding attitudes toward scheduling and time in general. The urban areas, especially Buenos Aires, are considerably more time-conscious than, for example, the customary pace of life in the provinces. Thus, the generalization of Argentine attitudes toward time that follows must be balanced against this city-country dichotomy. Nonetheless, even in the more monochronic urban areas, Argentines tend to be considerably more lax regarding time than their North American counterparts.

Because Argentine business people customarily emphasize the finishing of tasks over maintaining preset schedules, executives and managers often find themselves pressed for time. To mitigate the consequent overloading, higher level Argentines often count on subordinates to screen for them. Indeed, if an individual manages to circumvent such screening, the person in authority will often immediately take up that individual's request regardless of its relative importance. This is directly opposite what one might expect in the North America, where the appointment book (rather than a subordinate) dictates the schedule and acts as the screen. Additionally, unlike Argentina, if those involved cannot complete a given task within a predetermined time, they schedule another meeting.

This difference in how time is scheduled affects the overall nature of Argentine business. Because personal relationships can override pre-set schedules in Argentina, personal relationships are nurtured within work circles. In the North America, by contrast, it is customary in business to avoid developing deep personal ties at work or in any case to value maintaining preset schedules more highly than building personal relationships. This North American emphasis on schedule over personal interactions, in turn, may be misunderstood by Argentines as a lack of feeling or even lack of interest in the project.

SEE ALSO : Andean Pact Nations, Doing Business in the ; Brazil, Doing Business in

[ David A. Victor ]

FURTHER READING:

De la Baize, Felipe A. M. Remaking the Argentine Economy. New York: Council of Foreign Relations Press, 1995.

Foster, David William. Culture and Customs of Argentina. Westport, CT: Greenwood Press, 1998.

Hall, Edward T. The Dance of Life: The Other Dimension of Time. Garden City, NY: Anchor Press/Doubleday, 1984.

Sawers, Larry. The Other Argentina: The Interior and National Development. Boulder, CO: Westview Press, 1996.

Tedesco, Laura. Democracy in Argentina: Hope and Disillusion. London: Frank Cass, 1999.



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