Argentina: SMEs Development, Prospects, and Proposals

Abstract

In the Argentine Republic, the rise of the People’s Republic of China as the first- or second-largest trading, investment, and financial partner in Latin America has been welcomed by the main political forces in the country. During the two terms of Cristina Fernandez de Kirchner administration (2007–2011 and 2011–2015) and the succeeding Mauricio Macri administration (2015–2019), bilateral relations with PCR expanded on all issues of the bilateral agenda. However, this process led to heated debate in Argentina public media and academia about the difficulties and the mind and long-term dangers of adapting the economy towards a new Asian export strategy. The Belt and Road Initiative (BRI) is the core of China’s foreign and domestic policy. The Initiative was presented by President Xi Jinping in 2013, and since then, it has served to consolidate a network of infrastructure and connectivity that expands throughout a great part of Eurasia. This network has been symbolically and practically associated with the commercial routes of the Ancient Silk Road, as it is also reshaping the global trade routes, as did those developed more than 2000 years ago. Despite Argentina’s initial support of this initiative, it has not as of yet formally signed the BRI Memorandum because there is an understanding that the existing Comprehensive Strategic Partnership (CSP) approved by the parliaments of both countries in 2014 implies sufficient commitment to enhancing cooperation, and that the main points of the BRI are already applicable to bilateral exchanges within the framework of the CSP. In this regard, this chapter attempts to understand the potential impact for Argentina in case its government decides to embrace BRI in the context of current geopolitical tensions. The Argentine Republic’s export is concentrated in a small number of TNCs, with 1% of its companies selling three-quarters of the total volume and value. This phenomenon shows the limitation for Small and Medium-sized Enterprises (SMEs) access to international trade, due to increasing demands for technification, and the difficulties to access to financing and the lack of knowledge about the opportunities offered by foreign markets. This chapter focuses on the Argentine SMEs and their export capacities. We will begin with an ovarial assessment of the current situation of the Argentines SMEs sector, and the present analysis of binational relations between Argentina and China, with the goal of offering a series of recommendations for strengthening Argentina SMEs participation in binational projects.