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Strengthening long-term growth in Argentina D. Artana, E. Bour, J.L. Bour y N. Susmel

Strengthening long-term growth in Argentina D. Artana, E. Bour, J.L. Bour y N. Susmel. OECD Seminar “Beyond the crisis – Returning to sustainable growth in Latin America” Paris, November 24 th 2010. Labor regulation is also rigid in our estimate of the EPL3. More rigidity. Source: FIEL.

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Strengthening long-term growth in Argentina D. Artana, E. Bour, J.L. Bour y N. Susmel

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  1. Strengthening long-term growth in Argentina D. Artana, E. Bour, J.L. Bour y N. Susmel OECD Seminar “Beyond the crisis – Returning to sustainable growth in Latin America” Paris, November 24th 2010

  2. Labor regulation is also rigid in our estimate of the EPL3 More rigidity Source: FIEL

  3. And the tax burden is also high Source: Artana, D. & I. Templado “Is the Argentine Revenue Effort Too High?” 2010.

  4. New Exploration Contracts between 3.5 & 5 • Manufacturerspayonaverage US$ 3 per million BTU

  5. Price controls of energy products are one factor that explains a declining stock of reserves and production of natural gas

  6. Therewas a reduction in informality, but 2003-09 averageissimilar to 1993-2000 Informality rates

  7. Reallocation from low productivity to high productivity sectors was not very important • Within-sector more consistent with some external force that drives labor productivity up in all economic sectors

  8. And quality of education deteriorated in spite of some increase in public expenditures as % of GDP Quality improved Quality worsened

  9. We estimated determinants of growth in Argentina in the period 1981-2009 • Stock of capital adjusted by utilization • Labor adjusted by number of hours worked • We also opened for Formal and Informal Workers • Country risk as separate variable • Terms of trade (Kehoe and Ruhl, 2007; Becker and Mauro, 2003; Edwards, 2007; Cavalcanti Ferreira et al (2010) • Gain is similar to technological improvement

  10. We can estimate how much the gain in terms of trade contributed to growth in 2003-2009 • One third when informal employment is included • 73% in our best estimate that takes into account lagged effects.

  11. Conclusions • Good luck made a substantial contribution to Argentina’s growth since 2003 • Fiscal challenges that were a key factor behind Argentina’s dismal performance in the past are not such a big challenge (low debt, moderate deficit). But filling the gap with taxes will be costly given the already high tax rates on formal activities • Evidence points to the need to improve the quality of micro policies and the investment climate … or to bet for permanent luck

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