Argentina’s Green Production Potential: Evidence and Proposals for a Development Policy

Can a green development strategy go hand-in-hand with the acceleration of economic growth in Argentina? Which sectors should public policy efforts target to achieve this? This paper uses and studies quantitative evidence to determine the areas in which Argentina has green competitive potential that could be a source of growth in the future. The so-called “green growth” agenda that it seeks to contribute to is currently key to keeping public policies aligned with the ongoing changes to the global economy.

Using a cutting-edge international methodology based on the concepts of economic and environmental complexity and product space, the empirical analysis presented in this paper begins by describing Argentina’s current green production capacities in comparison with those of other countries in the region and the world, then provides detailed descriptions of the sectors in which the country has development potential. It presents a set of 30 products that could increase the complexity of the export basket and estimates the contribution that producing and exporting them could make to the country’s medium-term economic development.

The study yields several findings. Our first observation was a “divine coincidence”: green products tend to have a higher complexity index than the average nongreen product, so developing them can in itself contribute to higher economic growth. Second, in Argentina, the green products that are closest to current productive capacities and that would be relatively easy to develop are not among the most complex, nor are they part of the strategic nodes that could drive new forms of development in the future. Our analysis of the situation shows that the strategy of preserving the status quo does not lead to significant productive diversification.

Finally, we point out that there are opportunities for Argentina to produce a set of green products that often remain off the radar during public discussion, which focuses largely on the wind-power, solar, and electromobility sectors. These alternative products mainly fall into two sectors: mechanical and electrical equipment and measurement and control instruments. Examples of these include different types of machinery for the recycling of organic and inorganic matter; equipment for controlling, handling, and transferring various types of waste and pollutants; and machinery for filtering and purifying water and gases. The country already has significant production capacity for these products, and there are linkages between them. These feedback loops could drive green development.

The paper’s findings underline how necessary it is for the country to adopt green production policies to counteract the inertia that has caused Argentina to lose green production capacity in recent years. Reversing this trend could pave the way to a virtuous circle of greater economic complexity and future growth.

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