Deregulation in Argentina: A policymaker's view

Abstract

Deregulation has been one of the economic policy components most relentlessly and forcefully tackled by the Argentine government over the last four years. From the outset of the Menem Administration in 1989, private sector prices were liberalized, ending a ten year old controls regime and a trade liberalization policy was initiated with the elimination of import bans and restrictions. In 1990, the fuels market was deregulated at all stages, and this process was rounded off and intensified through the concession to private firms of extensive oil field areas whose exploitation had been monopolized by the state-owned company, Yacimientos Petroliferos Fiscales (YP.F.). Deregulation was elevated from an ad hoc activity to a systematic economic policy in November 1991 with the omnibus Decree of Deregulation which liberalized a significant portion of the economy. Less than a month later, the Ministry of Economy created the Undersecretariat of Deregulation to implement this decree and to spearhead the government’s deregulatory efforts. A short list of activities undertaken by this office over the last two years would include deregulating ports and navigation; the postal system; bus, air, and cargo transport; shipping and customs; legal and other professional fees; procedures to export and import; foreign investment; the pharmaceutical and mining industries; and administrative procedures. This paper provides an empirical description of Argentina’s deregulatory experience from the viewpoint of this Undersecretariat. Its goal is to examine what deregulatory policy has and has not accomplished. The first part examines deregulation from an economic perspective, looking at the reasons why the government implemented a deregulatory program. The second section describes several specific deregulatory actions and the empirical results obtained to date. The third section examines the legal mechanisms by which the various deregulations have been implemented, and the last section briefly treats current and upcoming policies that build on the deregulatory program.