The Argentine Productivity Slowdown

It would have been expected that the different macroeconomic regimes occurring in Argentina in past decades should have caused important productivity gains across the whole economy. These gains should have resulted from positive spillovers from special inputs and complementary effects in dynamic industries thanks to the incentives provided by economic policy, especially through the real exchange rate. This paper measures the sustainable TFP (productivity gains independent of short run cyclical behaviour and quality change of inputs), taking into account special inputs contribution from ICT, Human Capital and Natural Resource. The paper also undertakes a shift-share sectoral analysis of TFP. The estimations undertaken show a slowdown in TFP which casts doubts about sustainable productivity performance in both recent macroeconomic regimes (Promarket 90´s decade and “Competitive Exchange Rate Regime Post 2002 Crises†). As a result the Argentine economy could not take advantage in the long run of positive spillovers from special inputs and structural change despite a short run correlation between the real exchange rate and some sector productivity gains. The paper presents a discussion about the challenge for Argentina’s future strategy to achieve sustainable growth following the global financial collapse.