Volume 46 Number 182,
July-September 2015
The Regional Problem: Regional and Sectoral
Disengagement in Argentine Development

José Ignacio Vigil and Arturo Magri*

Date received: November 21, 2014. Date accepted: March 2, 2015

Abstract

This paper aims to contribute to the current debate on (regional) development. It suggests that regionalist analyses and policies have turned a blind eye to certain dynamics that influence the performance of regional spaces. Based on a case study of Argentina (2001-2014) in a region that produces agricultural machinery (AM), we propose to make progress in opening up a more introspective view of the regionalist approach, considering: a) the role of the region-building process in the broader national and macro-political project, b) a description of certain extra-local factors that stimulated technological change and improved the regional demand for AM and c) a description of actions taken by the national State to promote the regional economic regeneration of AM.

Keywords: Regional development, public policy, agriculture sector, state interventions, sectoral policies, regional economic space.

INTRODUCTION1

In the aftermath of the 2001 crisis, economic policy in Argentina underwent a heterodox shift towards an attempt at “reindustrialization,” complemented by specific sectoral and regional policies. One such sectoral policy targeted the metal-mechanics industry, which would become a strategic industrial sector representative of this heterodox conversion, while one such regional policy aimed to boost industrial agglomerations, which would come to receive tremendous support from national programs. These regional and sectoral policies converged in a region of Argentina that accounts for a good portion of Agricultural Machinery (AM) production.

These macroeconomic, sectoral, and regional policies, along with other aspects, have earned the region in question great notoriety and shaped its unique economic performance. It tends to be known as a “successful” case study for competitiveness and is referred to as the "industrial motor" of the new emerging economy, the “beating heart of an Argentina reborn.”2

Leaving aside this discourse of success, we would assert that the arguments used to explain the region’s performance are incomplete. These analyses (see BID, 2012; Naclerio, 2010; Narodowski, 2007) draw on isolated variables or tend to focus only on the advantages of cooperative partnerships between local economic actors to explain how the region became so competitive, or give undue causal weight to the local scale to justify how the region became inserted in international markets. They frequently fail to contemplate the complex set of elements at multiple levels that configure the regional economic space and determine much of its performance. We would maintain that this, in turn, is due to certain limitations in the regionalist view of development so frequently employed. On the one hand, this approach fails to articulate regional and sectoral analyses, while on the other, it ignores the true role state entities play in driving sectoral and regional policies. These issues—of disarticulation and disregard for reality—interfere with obtaining a full understanding of how the regional process functions. If these misconceived ideas are transferred to the political realm, it could lead to the stagnation of the proposed model of economic rejuvenation.

The arguments introduced here are analyzed in the framework of a case study on an AM production region in Argentina during the post-convertibility era (2001-2014). This paper aims to demystify bottom-up processes and describe the multi-level dynamics that influence regional performance, revisiting the role of the State—ignored for far too long—in regional policies, but also with a critical eye towards its "quasi-protectionist” stance. This case in Argentina is relevant because the State is involved in regional policies, even though, paradoxically, regionalist approaches fail to include its actions in their explanatory variables. Beyond the specific case presented here, the scheme could be used to review recent situations in many other Latin American countries with regard to bottom-up explanations.

This paper is structured as follows. The first section describes the characteristics of the AM region in Argentina. The second offers a critical analysis of the regional policies that have been implemented. The third reviews regional, sectoral, and national articulation and specific forms of (national) government intervention and their weaknesses. The fourth proposes some final reflections.



AN ECONOMIC CHARACTERIZATION OF THE AGRICULTURAL
MACHINERY PRODUCTION REGION IN ARGENTINA:
THE CORNERSTONE OF REGIONAL POLICY

The region under analysis is a priori located in the central zone of Argentina, in the province of Santa Fe, east of Córdoba and north of Buenos Aires (see Figure 1), given the verifiable concentration of specialized AM production firms in this area (Vigil and Fernández, 2011).3 We note that this zone has traditionally been one of the wealthiest in the country: it contributes two-thirds of the national Gross Domestic Product (GDP) and over 70% of the country’s exports. It is also home to a major industrial structure (accounting for more than 60% of productive units and labor) and represents the highest percentage of added value (60% of the total of Argentine industry). In this context, numerous official documents and analyses of AM production tend to locate a greater concentration of consumer-goods companies and greater institutional activity (business chambers, foundations, industrial centers, development agencies, etc.) around a strategic nucleus in the southeast of Santa Fe (see circle) that is frequently identified as the epicenter of the AM value production chain in Argentina (cf. C.E.C.M.A., 2006).

 

Chart 1. Location of Principal Agricultural Machinery Production Sites in Argentina and the Strategic Nucleus
Where Companies and Institutions are Concentrated (Circle)

Source: Created by the authors (various sources).

 

This macro region is home to a notable number of productive companies of the following types: i) planters/seeders, sprayers and ii) companies that produce agricultural implements (parts for agriculture). In these two subsectors, national production exceeds foreign production in meeting domestic demand and in the composition of the productive structure. Meanwhile, there are far fewer companies working to manufacture iii) harvesters/pickers and iv) tractors (more complex sub-groups). In the latter two subsectors, foreign companies have a better foothold. For example, up until 1995, a total of 18 Argentine producers met nearly 95% of the domestic demand for harvesters, but by 2006, there were only three national companies left, able to supply a mere 18% of the national market (the remaining 82% was supplied by multinational enterprises). Looking at tractors, only four national companies remain, contributing around 15% of production, while foreign companies cover the other 85% of demand (Donoso, 2007; Hybel, 2006).4

The AM production process (see Figure 2) generally spans two stages: first, the cutting, tamping and bending of iron and steel raw materials, followed by the assembly of pieces and components. The AM region is known for being home to both phases. It houses the largest consumer-goods companies (production and/or assembly of final goods: planters, sprayers, and other machinery to spread pesticides and fertilizers) and the biggest agricultural parts suppliers. There are also quite a few workshops, machine shops and other companies related to the casting process. However, the supply of standard components, parts, and sub-components is spatially diffuse and a good percentage (for example, iron and steel) is located outside of the AM region where provision is highly concentrated. The final step in the production chain then consists of marketing, purchase (agriculture and livestock producers, contractors and/or owners), and post-sale activities (replacement or repairs). Agriculture and livestock producers supply around 31 agrifood value chains, which represent approximately 15% of the GDP of Argentina and account for 48% of total exports, as well as nearly 11% of national jobs (Anlló, Bisang and Salvatierra, 2010). The three principal agrifood chains include soy (26%), beef (14%), and milk (12%), which account for half of everything produced by all of the chains together.

 

Chart 2. Value Chain of Agricultural Machinery and Parts and Territorial Distribution

Source: Created by the authors.

 



REGIONAL POLICIES AND THEIR WEAKNESSES IN THE ARGENTINE
AGRICULTURAL MACHINERY REGION

This depiction of the region helps to elucidate how a series of key regional programs and policies to boost the AM industry converged there in the 2000s. One of the most important was known as the "CIDETER Agricultural Machinery Business Cluster,"5 implemented in the areas of Las Parejas, Armstrong, Las Rosas, and Marcos Juárez, with funding from the national government and the Inter-American Development Bank (IDB). Along the same conceptual lines, the national government (C.E.C.M.A., 2006) devised the "Promotion of Industrial Clusters and Productive Networks" program6 in conjunction with the United Nations Development Program (UNDP). In turn, in the northern zone of the province of Buenos Aires (Chivilcoy, Carlos Casares, and 9 de Julio), an AM industrial "district" was set up with support from the province-level government (see Moltoni and Gorenstein, 2010). Finally, and more recently, the national government financed another project with the support of the IDB, referred to as the "Center for the Transfer of Results, Development and Innovation in the Metal-Mechanics Industry of Santa Fe" (AProMeCAS),7 headquartered in Las Parejas. Beyond the specific measures in this region, the government in Argentina has launched 111 other programs to support regional partnership initiatives, 11 of which have taken the name "cluster" (Naclerio, 2010).

In other words, the regional economic revival effort has been marked by a clear tendency towards agglomeration initiatives. The official document backing these measures adopted the idea of "local productive systems" as the foundation for improving regional competitiveness, and defined them as "systems that link productive units—in particular, micro, small, and medium-sized enterprises (SMEs) located in a territory—to develop joint strategies or actions"(Naclerio, 2010: 26). The central argument (with strong roots in the new regionalist movement) was that local companies should act collectively to gain competitiveness in a more or less local and defined territorial space, and that official programs should encourage the formation of these business agglomerations, promoting corporate/institutional partnerships at the local level. Local institutions constituted another central aspect of the strategy, as their function would be to promote innovative business activities, the spread and transfer of knowledge, and the provision of business services (such as training), while simultaneously generating the democratic coordination of local decision-making with regard to the development objectives of these programs.

Now, this paper will contend that these policies and theories have some weaknesses, which we will address in this case study. To summarize, we highlight the following:8

First, the policies derived from the new regionalism movement have exhibited a strong tendency towards the homogenization of regional spaces, typically suggesting that any type of agglomeration and territorial proximity will be beneficial thanks to the cooperation of and interaction between local economic and institutional actors, on occasion reducing the problem of regional development to a quasi-technical issue (a matter of introducing certain variables, such as articulation between companies, or creating local institutions to bolster company activities, R&D, etc.). In other words, this school of thought believes improving the local economic "supply," will increase the potential for development, because the institutional network will be denser in the territory.

Although these regionalist ideas are indeed pertinent, scholars have also come to understand that sometimes, the actors participating in regional construction are more distant from each other, and as such, the advantages of regions can be simultaneously constructed through supranational and national links (economic and institutional) that penetrate these regional realities in a permanent fashion. This would suggest that topographical proximity alone is not the only indicator of the potentially coherent articulations that lead to competitiveness. What is certain is that this criticism has sparked interest in exploring trans-local production networks as triggers for competitiveness, rather than assuming that the only solution is agglomeration (Amin and Cohendet, 2004; Amin and Roberts, 2008).

Second, many of the regionalist theories have inspired policies that put their faith in a development process based on local, parochial, and endogenous forces, the result of the "closeness" between companies and institutions. However, the institutional mediations contained within the various regions and bodies that interact in production (local, regional, national, and international players) complicate the potential for cooperation and consensus. Regions tend rather to be the result of variable ensembles and connections that eventually are consolidated into a determined space, but that deal with a variety of interests, with actors of heterogeneous sizes with different political projects, and a local elite that may coopt development programs for its own benefit (Allen and Cochrane, 2007). As such, the creation of territorial networks of SMEs should only take place in the framework of a frank appraisal (accountability) to understand the logic and interests tied up in the regional development initiatives, rather than supposing that the capacity for cooperation and parochial harmony will automatically exist.

Finally, the excessive focus on what is happening within the region, an idea that has emerged from regionalist approaches, has prevented scholars from taking into account the influence of sectoral and national macro-dynamics on regional behavior. The regionalists have worked primarily with a horizontal governance scheme that tends to explain the articulation between regional productive or economic and institutional (public and private) actors, on occasion relegating the way in which the dynamics of the economic sector and the (national) State are articulated in the regional production system. In fact, these economic comeback initiatives in the region under study were initiated with actions implemented by the national State and even international financial institutions, neither of which is typically included in the regionalist conceptual framework.

In Argentina, the regional has been further disarticulated from the sectoral by “sectoral” analyses and policies themselves, which present contradictory proposals regarding the linkage with the regional space. For example, the AM sectoral bodies failed to introduce a "regional" vision for the development strategy, and even showed "certain concern" for the existing regional policies, indicating that: "the high concentration of factories and suppliers in the province of Santa Fe does not contribute to the territorial development we are looking for in this sector, which is why the State should formulate a plan to promote AM industries in Formosa, Santiago del Estero, Entre Ríos, San Luis, Salta, and Tucumán, to name a few" (Bragachini, 2008: 37) (emphasis added).

In turn, and paradoxically, while the sectoral policy signaled concern for regional concentration, the national State (through the Ministry of Agriculture) published an editorial about the advantages of agglomeration processes in the zones of Santa Fe, Córdoba, and Buenos Aires (see Moltoni, 2014), precisely in the region under study.

As a result, this disarticulation generated a diffuse and contradictory regional policy proposal, which did not support an understanding of the regional problem in its full complexity. This points to a causal explanation and explains how the multiple processes involved in the configuration and performance of the region have functioned.



REVISITING EXPLANATIONS ABOUT THE REGIONAL PROBLEM:
TOWARDS MACROECONOMIC, SECTORAL, AND REGIONAL REARTICULATION

Now, how can we extend our understanding of the regional problem beyond the explanation offered by regionalist approaches? Beginning with the region mentioned in this paper, we propose an exercise that will situate our analysis in a more complex and realistic scenario. We will highlight three factors that we believe have played an important role in regional performance: a) the location of the construction process of the AM region in the framework of recent macroeconomic transformations in Argentina (that is, understanding the region in the framework of the broader political project), b) the description of what we will call the window of opportunity to include certain factors that stimulated technology changes and improved the regional demand for AM, and c) a series of actions taken by the national State and linked directly to sparking regional economic renewal for AM.



The Region and Recent Economic Transformations:
Post-Convertibility and a New Reindustrialization?
Model Based on Productive Regions?

We will mention one element first that is useful in rethinking the regional problem in the framework of Argentina's recent political and economic transformations to highlight the course chosen for policies, as well as some of the resulting weaknesses.

It is known that Argentina reached a turning point in 2001 with its political and economic crisis. Before this year, the Argentine economy was known for having inherited the consequences of the profound structural adjustment program implemented at the end of the 1980s and the early 1990s, inspired by the neoliberal growth model based on the Washington Consensus, whose detrimental effects for industry have been widely analyzed (Basualdo, 2000). After 2001, the post-crisis economic policy was characterized by a perhaps heterodox package of items, including a new macroeconomic regime with a different exchange rate (working with devaluation) that redefined the internal and external relationships of the industrial sector once naturally constrained by the exchange rate, and produced a trend (although not without its challenges) towards the reindustrialization of the economy by import substitution, with attempts to prioritize the productive sector over the financial sector (Kulfas and Schorr, 2003), and incentives for the reutilization of idle capacity, as well as better stimuli for domestic demand and the recomposition of the population's purchasing power (at least until 2013).

This policy shift was expressed in various official documents and programs (MEyFP, 2011; MI, 2011; MPFIPS, 2004). Just to give an example of the course chosen for the economy, a variety of financial support measures emerged, as well as tax benefits and special regimes, to promote companies in various sectors (for example: car parts, biotechnology, metal-mechanics, etc.); the government also enacted a new Law for the Promotion of Investment, offering SMEs tax benefits to reinvest their profits in capital goods (Moro and Gentili, 2006). In addition, the government devised a series of measures and programs to promote local industry, interest rate discounts for SMEs, within-company training programs, an export promotion program, etc. (see Alfini, 2013, for a summary of industrial policies for SMEs).

In turn, throughout the post-crisis period following 2001, there were indeed signs of economic recovery: aggregate demand grew, followed by export growth for both commodities and manufactures, the latter of which grew from 60% to 72% from 2003 to 2009, and of these products, those of industrial origin grew the most, from 27% to 35%. The economy, in general, and the industrial sector, in particular, witnessed significant recovery. In fact, according to the Economic Commission for Latin America and the Caribbean (ECLAC), the annual growth rate in Argentina rose faster and at a higher number than the rest of Latin American countries (around 7.5%) and by the mid-2000s, the share of industry in the GDP had grown more than it had during the previous neoliberal phase. For example, looking only at select years (1998-2003/04), the share of the "goods" sector in GDP rose from 33.9% to 52.0%, and that of industry grew from 17.8% to 29.7%, while the services sector fell from 66.1% to 48.0% and financial intermediation activities declined from 13.8% to 7.2% of GDP.

However, more than a few voices have pointed out that there have yet to be significant structural changes between the two periods, especially in the regional economies (Azpiazu and Schorr, 2010; Gorenstein, 2012). For example, it has been found that during the post-convertibility era, inter and intraregional development became increasingly imbalanced in many of the regional production circuits in the north of Argentina (examples: cotton, sugar, soy, tobacco, yerba mate), with a marked disconnect between the profits earned by transnational capital and the degree of engagement that this capital had with the productive networks. Moreover, the regional profile of productive specialization and external insertion continue to be based on the exploitation of natural resources with low added value, high technology dependence (which leads to incomplete substitution, a trade deficit, and later on, problems in obtaining foreign currency), and the entrenchment of economic concentration and foreignization.

This brief description helps portray the growth of productive agglomerations not as an isolated incident, but rather as part of the framework of transformation in Argentina, which, although facing its own challenges and unresolved issues, tends to focus on the triad of industry, SMEs, and regions. This argument that views the region through the lens of transformations helps explain, as we will see later, the series of specific actions taken by the State to intervene in the AM region.



The Window of Opportunity for AM: Technology Transformations and Commodities Prices
as the Drivers of Demand in the Post-2001 Era

In the context of the aforementioned transformations, and perhaps even facilitated by these transformations, another factor that explains the performance of the AM region is what we have called the "window of opportunity" (Pérez, 1996), which refers to the ways in which an environment for action directly favorable to AM production was constituted, which opened the door for companies to restructure their productive systems towards niches with high added value. We propose to explore two of the dynamics that contributed to this environment: the first is the fact that the agro industry demanded that the majority of the AM industrial system alter the technology profile, while the second refers to the international commodities prices market, which behaved favorably, boosting the profits of the agriculture and livestock sector, which in turn revived the demand for AM. In both cases, the power of these factors gained strength throughout 2001, precisely in the framework of the post-convertibility era transformations.

With respect to the first dynamic, it should be mentioned that AM production in Argentina was experiencing a period of transition and adjustment, moving towards a technological and economic paradigm shift that would allow companies to make a qualitative leap (through the window)towards more advanced schemes with added value. This paradigm shift was derived from a series of factors: one of them was the introduction of direct planting as an agricultural production strategy, which improved productivity while still maintaining reasonable levels of soil conservation. This practice became much more widespread starting in 2001 (see Figure 1). Another factor was the "progress" made in agrochemical experiments (fertilizers, herbicides, insecticides, and fungicides), especially the herbicide glyphosate and "advances" in biological innovations for the use of genetically modified organisms (for example: development and commercialization of seeds resistant to the herbicide glyphosate), which permitted an increase in crop yields and harvest times. For example, the release of the glyphosate-resistant soy seed (a key crop in Argentina) in the 1990s exponentially multiplied the surface area on which the crop was planted in subsequent years: it went from 1,800,000 hectares in the 97/98 season to 15,859,058 hectares in 2005/2006 (Trigo and Cap, 2006), as the use of the herbicide simultaneously took off.9

Finally, precision agriculture completed the package of transformative elements, constituting an advance that included the development of global positioning systems (GPS) to locate machinery with geo-references, so as to record agronomic parameters within the same lot and achieve the best precision possible, and then improve the application of inputs with variable doses. In the wake of the 2001 crisis, these innovations were incorporated into the Argentine market with notable speed and vigor (see Figure 2).

In 2001, AM in Argentina found itself at a crossroads, with the potential for improvement in light of enhanced agricultural productivity, heightened yields for some crops (such as soy), and the rising demand for agricultural tools related to precision farming that sought to improve added value and demanded that the sector adapt to the technology paradigm. This "opportunity" was well-received by the actors in the region under study. A recent report on the state of affairs remarked that "[...] AM is fiercely altering its design and development concept; it is no longer a metal-mechanics manufacturing sector, and is now incorporating new materials and new technologies, thereby achieving specialized AM for direct precision planting. Entrepreneurs have moved towards a new paradigm: they no longer manufacture ‘iron’ products and have begun to produce ‘agroindustrial technology’" (Municipalidad de Las Parejas, 2014: 30).

 

Figure 1. Argentina: Evolution of the Percentage of Surface Area Cultivated with Direct Planting, 1993-2006

Note: By 2010, the surface area cultivated with direct planting amounted to 81% (Bragachini, 2011).
Source: Created by the authors based on data from MAGyP and Derpsch and Friedrich, 2009.

 

 

Figure 2. Argentina: Evolution of Sales of Agro Components Linked to Precision Agriculture, 1997-2010

Source: Created by the authors based on data from INTA Manfredi and Bragachini (2011).

 

Together with these factors "external" to the territorial dynamics of companies, the second dynamic that contributed to consolidating this window of opportunity was the favorable post-2000 behavior of the international price market for certain commodities, as this contributed to sustaining the demand for AM by boosting the profitability of the agricultural productive sector. This aspect is so influential in Argentina that it has been said agro prices and AM sector sales exhibit perfectly parallel correlation (Bragachini, 2008: 2). Moreover, in status reports that provide estimates for the sector, AM regional analysts have declared: "The expansion forecast for agriculture will generate a domestic market that is quite relevant to the value chain, estimated at around 7,500 planters (as compared to the current 3,700), 3,500 harvesters (1,400 today), and 10,500 tractors (currently at 6,700), which together with the demand estimated for the rest of AM, means that we predict a market volume of close to USD 2.1 billion" (Municipalidad de Las Parejas, 2014: 31).

There is relative consensus surrounding the fact that much of the change in price levels in the (global) food market since 2000 would seem to be structural in nature (Kosacoff and Campanario, 2007). To look at an example, the Food Price Index calculated by the International Monetary Fund showed sustained growth over the past decade (with relative stagnation in the first half of the 1990s and a decline in the second half of the 1990s) (see Figure 3). In post-2001 Argentina, the demand for AM was especially invigorated as the price of certain commodities, such as soy (see Figure 4), climbed. As mentioned, soy holds an important share of cultivated surface area and participation in the value chain and GDP of Argentina.10 The price cycles of this commodity coincide in part not only with the behavior of the global food prices index, but also with the stages of technology configuration in Argentine agro: technology modernization and abrupt capitalization based on credit in conjunction with the business climate of the first half of the 1990s with sustained increases in commodities prices, the incorporation of cost-saving technologies in light of declining international prices, and precarious macroeconomic conditions in the second half of the 1990s, as well as the consolidation of the technology package and the new organizational makeup of the agricultural and AM sector in Argentina in the post-2000 era, as soy prices rose (Bisang, 2007).

 

Figure 3. Food Price Index of the IMF (Includes Index for Grains, Vegetable Oils,
Meat, Seafood, Sugar, Bananas, and Oranges) (2005=100)

Source: Created by the authors based on data from the International Monetary Fund.
Prices in 2005 USD.

 

 

Figure 4. Argentina: Evolution of International Prices ($/mt) of Four Select Macro-Crops, 1990-2012

Source: Created by the author based on data from the World Bank Commodity Price Data (PinkSheet).
Prices in 2005 USD.

 

These two factors, which we have described as the components of the window of opportunity in the framework of the post-2001 transformation, have not always been taken into account in the explanatory framework of regionalist approaches. However, they are extremely crucial in analyzing and depicting the regional process.



The National State, Sectoral AM Policy, and Regional Behavior

Up until this point, we have noted that regionalist analyses have turned a blind eye to certain dynamics that could have significant implications for regional performance, and that this is true of the conceptual foundation of regionalist thought, which has tended to prioritize local horizontal relationships. We also pointed out that this blind eye, in turn, has inhibited a full understanding (at least in the realm of public policy) of the complexity of the regional system (and problem). We will now advance by describing a series of elements to help us parse the drivers of behavior in the AM production region. For example, we mentioned that in the post-2001 period, the macroeconomic development strategy tended to prioritize (re)industrialization, support for SMEs, and regional economies, and that these elements, in our argument, help elucidate the behavior of the AM region with greater complexity than a simple bottom-up perspective of cooperative actors. We then briefly described the idea of the window of opportunity to explain how, starting in the post-2001 era, the agricultural sector grew out of an environment favorable to the AM production sector, allowing for greater added technology value for a portion of the productive network, while also ensuring sustained growth in demand. Now, as the third factor to help explain regional behavior, we will describe how state intervention (especially the national government) can contribute to describing the complexity of the regional problem and its dynamics, which, we reiterate, tend to be ignored in regionalist approaches.

To better interpret national intervention, we should perhaps mention that at the end of the 1990s, the behavior of the AM sector was showing signs of difficulties. By 2001, total sector sales had declined 44% (from USD 1.130 billion to USD 630 million), with a similar drop (-44%) in domestic production sales (from USD 945 million to USD 530 million). All of the AM subsectors maintained a negative trade balance, especially harvesters and tractors, two of the subsectors where production is concentrated in transnational companies, as we have seen. Sector imports amounted to around USD 120 million, seven times the amount of exports (also see Zilli, 2002). Since 2002, quarterly reports published by the National Statistics Information Office (INDEC)11 have revealed that despite the fact that AM sales (in all subsectors) have grown significantly (see Figure 5), domestic production was still unable to meet internal demand, and the gap has widened even further, in fact, particularly during the first three years of measurements (see Figure 6).

In this sectoral context, the national government undertook significant actions. For example, starting in 2001, and perhaps one of the most important strategic moves, the Ministry of Economy launched the so-called National Forum for the Competitiveness of Agricultural Machinery, the point of departure for the conformation of the arena of articulation among sector interests, which tended to include a varied range of public and private institutions from different institutional levels. Their objective, as laid out in a document signed by all of the participating entities, was to develop joint action strategies to improve the performance of the sector and the region, encompassing such aspects as: i) boost the share of national production in domestic demand; ii) enhance the technology capacities of companies, iii) increase the number of value-added products, iv) strengthen linkages between companies and technology institutions, and v) improve external insertion (Foro Nacional de Competitividad de la Maquinaria Agrícola, 2004: 8). The Forum was the first multidisciplinary body to promote engagement and coordination among institutions of different levels. It also defined the basic guidelines for the sector, which then permeated the regional agenda.

At the same time that the national government’s Forum was coming up with its objectives, the Ministry of Science, Technology and Productive Innovation was playing a dual role in strengthening both the sector and the AM region. On the one hand, it fostered R&D linked to the metal-mechanics/AM sector, marking this sector as a priority for financing research projects through the Fund for Science and Technology Research (FONCYT) run by the National Agency for the Promotion of Science and Technology (ANPCyT). On the other, it offered credit lines with subsidies to individual or agglomeration companies working in AM through the Argentine Technology Fund (FONTAR/ANPCyT).12

 

Figure 5. Argentina: Evolution of AM Sales (Units and Millions of $), 2002-2010

Source: Created by the authors based on INDEC data.

 

 

Figure 6. Argentina: Percentage Share of Production (Sales) of Machinery
in the Domestic Demand By Production Origin, 2002-2010

Source: Created by the authors based on INDEC data.

 

In line with the objectives of the Forum, the national government worked, in turn, after 2002, to promote the exportable supply of domestic production of AM. As such, through the Ministry of Industry, the national government financed the formation of an Export Consortium (known as Con-Sur), operating out of the city of Las Parejas, whose objective was to prepare "by way of example" (so as to encourage the rest) a group of companies to send their products abroad, selecting foreign markets where it would be both possible and desirable to enter. Similarly, the national government devised and financed, with support from the Ministry of Foreign Relations, a reverse trade fair called AgroShowRoom, mainly in Las Parejas, Armstrong, and Marcos Juárez, to familiarize buyers with the potential of Argentine AM. This soon became one of the most important fairs in the country (CIDETER, 2009),13 and would be revived in successive years under the title “National Exhibition of Agroindustrial SMEs.”14

Also aiming to promote the exportable supply, the national government—through the Ministry of Agriculture—drafted reports on the state of affairs of the local supply and global demand for AM, suggesting potential export niches for domestic production. For example, the website of the agency in charge of its execution (INTA) published a list of 21 reports describing and analyzing potential markets, current demand and the prospects for the local industrial network.15 Alongside this, another national governmental body (the Ministry of Foreign Relations and Worship) came up with the Sectoral Promotion Program (PPS, in Spanish) to boost and diversify Argentine exports. The body detailed the profiles of potential markets for AM (for example: Russia, South Africa, Australia, Brazil, etc.) with information about export logistics (sequences, required documents, distributors, useful agencies, etc.) and provided technical assistance to further penetrate these markets (see Fundación ExportAR, 2008).

Besides promoting the exportable supply, the national government also made progress in securing concrete markets for AM; for example, the government signed bilateral export agreements with the Venezuelan government (Solanas, Campisi and Risso, 2009) through the National Industrial Technology Institute (INTI). The agreements stipulated that Argentina would supply technical assistance to implement a technology package (precision agriculture and direct planting) to help Venezuela achieve food security and sovereignty. In return, Venezuela committed to purchasing USD 500 million of Argentine AM between 2006 and 2011. In 2006, with a nearly 81% increase in exports of Argentine AM, Venezuela accounted for up to 60% of the destination of all exports (Bragachini, 2008, 2014), a sign of how important the agreement was.

Other national government actions might also be worthy of mention (such as the national intervention of the Ministry of Labor with the Productive Recovery Program (RePro), which offered financing for AM companies to prevent layoffs during the sales stagnation in 2008/9), although perhaps not in the limited space of this paper. What we are trying to show is that there was indeed a series of direct interventions made in the sector and region, which complicate the typical regionalist analyses.



The Paradox of Intervention in Regional Policy

It should be clear by now that the intention of this paper is not to provide a propagandistic portrayal of state (or government) intervention in Argentina, but rather to suggest that the behavior of the regional case chosen in this paper can be viewed through a different lens in light of the various extra-local dynamics that have affected it. In fact, to conclude our argument, we will note that the tools described as forms of intervention can even be problematic, because they have prioritized only one side of the coin: they have worked principally on the side of promoting and empowering economic actors and spaces. Although this is a controversial aspect that goes beyond the scope of this work (because it would entail a critical review of the regionalist conquest by autonomy and transfer of competencies regarding statist centralism, especially in Latin America), suffice it to say that more than a few analysts have found that the accumulation of empowerment and promotion actions—such as those mentioned here—can lead to "inaction" from the very economic actors and spaces they intend to empower and promote, which can create a "protectionist" (dependent) situation with the over-involvement of the State ( cf.Chibber, 2008; Wade, 2008).

For example, empowerment-type subsidies to rejuvenate the regional economy in many cases entail monetary transfers to economic actors who could actually make these investments themselves, increasing their profit rates and diverting public funds away from other areas and other actors not located in the promoted region ( cf.García and Rofman, 2012) (also see Aronskind, 2014: 5). They can also prompt innovative lethargy among the local business cluster, which may take haven in the advantages and opportunities offered by state actions oriented towards jumpstarting reindustrialization. If these subsidies are not accompanied by a stick, the economic actors could, for example, opt to delay investments, efficiency, and innovation. In the case of the region under analysis, this symptom would seem to be reflected in such factors as the high percentage that the Venezuelan market represents in AM exports (60%, a market with low entry barriers as a result of the bilateral agreements), and the fact that companies have scarcely taken out any loans at all to finance innovation (nearly 80% of companies in the 2003-2008 time period financed their investments almost exclusively with earnings, avoiding the financial system altogether), as well as low demand for adopting quality standards among companies, to name a few examples.

It is therefore necessary for the State to devise tools for coordination and/or control, and eventually, redirection, for economic actors and regional forms, beyond the soft strategies of promotion and empowerment. Argentina could make progress by, for example, establishing (and monitoring) performance indicators for the regional economic actors who benefit from state programs (for example: exports, investment, innovative dynamics, quality standard certifications, environmental standards, etc.). However, the tension between regional autonomy and centralist directives will eventually require a new conversation about the regional problem.



FINAL REFLECTIONS

The intention of this paper was to describe, analyze, and explore how regional analysis could be expanded with factors not typically taken into account by the regionalist approach. In that sense, the argument made in this text has sought to counteract the weaknesses we have identified in the regionalist approach and the policies derived therein, especially in their insistence (mainly in certain institutionalist schools of thought) on fostering agglomeration economies and bolstering the regional supply with cooperative institutions that act in the service of local economic actors (to improve scalability and externalities) as the dynamic to obtain competitiveness and galvanize the economy.

In this framework, we examined a significant case study in Argentina to delve into a series of variables and better understand the AM production region, so as to resituate its dynamics in a broader context. We thus place the region in the framework of the transformations that took place in post-2001 Argentina and describe how this space benefitted from a series of programs in line with the macroeconomic proposal to boost reindustrialization by driving SMEs and strengthening productive regions. The national State undertook and imposed on the AM region specific actions, such as exploring export markets pursuant to the potentialities of domestic production, holding international and reverse trade fairs, and signing and promoting multilateral trade agreements to take better advantage of the window of opportunity for AM.

A variety of proposals emerge from this portrayal of the region. However, we are interested primarily in remarking upon the following. First, as mentioned in the beginning, it is necessary to undertake a methodological review of the regionalist analytical strategies to make progress in research that looks beyond the description of bottom-up processes. Although it cannot be said with absolute certainty that the three factors suggested here have alone determined the better or worse performance of the region in the period analyzed, it can be concluded that the behavior of the region was strongly influenced "from outside" of the region by a series of scenarios (political, macroeconomic, technology, and international food market) that converged over time to strengthen the "internal" dynamics.

Second, the proposal introduced here—and perhaps more importantly—indicates that it is time to revisit the debate about the importance of reinstating (national) State intervention strategies as an active part of region-building processes (Vigil, 2015). This (explicit) recognition of State action helps us come to terms with the role of an actor that is often sidelined in regionalist approaches, despite playing a crucial part not only in reviving the internal economies of regions, but also in intervening to correct interregional imbalances in the framework of the national economy.

Third, acknowledging the role of “external” dynamics and even extra-local institutional actors (example: national State) could serve to change the dialogue about the ways in which regional spaces are promoted (policies and programs), besides the agglomeration approach, to attain competitiveness. There is a pressing need to recognize the variety of regional forms for which tailored policies and programs best suited to their (changing) realities need to be developed; for example, these policies and programs may look quite different depending a region’s level of development, proximity to the technology frontier, path dependencies, the existence of internal heterogeneities in the size of economic actors, presence/absence of a local business elite, the degree of local institutional development, territorial forms, etc. It may well be that by virtue of the (variable) composition of economic regions, agglomerations (frequently delimited territorially) are not always the best option for regional policy. Now that we have recognized the role of state intervention, we must demand, accordingly, that the state be innovative in its intervention strategies.



BIBLIOGRAPHY

Alfini, Fabrizio (ed.) (2013) Programas y Beneficios para la Industria Argentina. Guía 2013, Buenos Aires, PNUD.

Allen, John and Allan Cochrane (2007), “Beyond the Territorial Fix: Regional Assemblages, Politics and Power”, Regional Studies, 41(9), pp. 1161-1175.

Amin, Ash and Patrik Cohendet (2004), Architectures of Knowledge: Firms, Capabilities, and Communities, Oxford, Oxford University Press.

Amin, Ash and Joanne Roberts (2008), “The Resurgence of Community in Economic Thought and Practice”, in A. Amin and J. Roberts (eds.), Community, Economic Creativity, and Organization, Oxford, Oxford University Press.

Anlló, Guillermo, Roberto Bisang and Guillermo Salvatierra (eds.) (2010), Cambios estructurales en las actividades agropecuarias, Santiago de Chile, CEPAL.

Aronskind, Ricardo (2014), “Crisis coyuntural: entre la profundización y el retroceso”, Documentos de coyuntura del área de política (vol. 2), Buenos Aires, Universidad Nacional de General Sarmiento.

Azpiazu, Daniel Martín Schorr (2010), “La industria argentina en la posconvertibilidad: reactivación y legados del neoliberalismo”, Problemas del Desarrollo, 41(161), pp. 111-139.

Banco Interamericano de Desarrollo (BID) (2013), El distrito productivo de la maquinaria agrícola en Las Parejas: un estudio desde las perspectiva del Desarrollo Económico Local, Banco Interamericano de Desarrollo.

Basualdo, Eduardo (2000), Concentración y centralización del capital en la Argentina durante la década del 90, Buenos Aires, Universidad de Quilmes and FLACSO.

Bisang, Roberto (2007), “El desarrollo agropecuario en las últimas décadas: ¿volver a creer?” in R. Bisang and B. Kosacoff (eds.), Crisis, recuperación y nuevos dilemas. La economía argentina, Buenos Aires, CEPAL, pp. 187-260.

Bragachini, Mario (2008), Crecimiento sostenido de la Maquinaria Agrícola Argentina. Mercado interno y exportaciones, Córdoba, Instituto Nacional de Tecnología Agropecuaria.

______ (2011), Desarrollo Industrial de la Maquinaria Industrial y Agropartes en Argentina. Impacto Económico y Social, Instituto Nacional de Tecnología Agropecuaria, Centro Regional Córdoba.

______ (2014), Exportaciones de Maquinaria Agrícola a nivel global y Mercado Interno de Argentina, Córdoba, Instituto Nacional de Tecnología Agropecuaria.

C.E.C.M.A. (2006). Proyecto integrado cluster de maquinaria agrícola y agropartes de la región centro de Argentina - Nº NA 002/06. Las Parejas.

Chibber, Vivek (2008), “¿Revivir el estado desarrollista? El mito de la ‘burguesía nacional’”, Documentos y Aportes en Administración Pública y Gestión Estatal, 8(11), pp. 7-34.

Donoso, Jorge (2007), Situación del sector de maquinaria agrícola en América Latina, STRAT Consulting & Propyme.

Foro Nacional de Competitividad MA (2004), Plan de Acción 2005-2007: Foros Nacionales de Competitividad Industrial.

Fundación CIDETER (2009), Reporte de actividades: Agro Show Room 2009 de la Maquinaria Agrícola Argentina, Las Parejas, CIDETER.

Fundación ExportAR (2008), Plan de Promoción Sectorial. Maquinaria Agrícola, Buenos Aires, Fundación ExportAR.

García, Ariel and Alejandro Rofman (2013), “Poder y espacio. Hacia una revisión teórica de la cuestión regional en Argentina”, Revista Problemas del Desarrollo, vol. 44, no. 175 (October-December), IIEC, UNAM, Mexico.

Gorenstein, Silvia (ed.) (2012), ¿Crecimiento o desarrollo? El ciclo reciente en el norte argentino, Buenos Aires, Miño y Dávila.

Hybel, Diego (2006), Cambios en el complejo productivo de maquinarias agrícolas 1992-2004, Buenos Aires, Instituto Nacional de Tecnología Industrial.

International Organization for Migration (2013), World Migration Report 2013, Geneva: International Organization for Migration, consulted October 2014, available at: http://publications.iom.int/bookstore/free/ WMR2013_EN.pdf

Kosacoff, Bernardo y Sebastián Campanario (2007), La revalorización de las materias primas y sus efectos en América Latina, Santiago de Chile, CEPAL.

Kulfas, Matías and Martín Schorr (2003), “Deuda externa y valorización financiera en la argentina actual”, Documento de trabajo 242 AEYT, Buenos Aires, FLACSO.

MEyFP. (2011), Instrumentos para el desarrollo productivo en la Argentina: análisis de las políticas de incentivo a la producción, Buenos Aires, Ministerio de Economía de Argentina.

Ministerio de Industrias (2011), Plan Estratégico Industrial 2020, Buenos Aires, Ministerio de Industria de la Nación Argentina.

Moltoni, Luciana (2014), “Herramientas de diagnóstico de clusters y aportes para su reorganización”, Economía y Desarrollo Agroindustrial (vol. 2), Córdoba, Instituto Nacional de Tecnología Agropecuaria.

______ and Silvia Gorenstein (2010), Territorios de la industria de maquinaria agrícola argentina: conocimiento, aprendizaje y redes locales de cooperación, XI Seminario Red Iberoamericana sobre Globalización y Territorio, Mendoza, Argentina.

Moro, Joaquín and Marco Gentili (2006), Régimen especial de capitalización de las PyME, Fundación Observatorio PyME.

MPFIPS (2004), Argentina 2016. Política y Estrategia Nacional de Desarrollo y Ordenamiento Territorial, Buenos Aires, Ministerio de Planificación Federal.

Municipalidad de Las Parejas (2014), Desarrollo del Centro de Transferencia de Resultados de Investigación, Programa de Competitividad para MiPyMEs BID 2923/OC-AR.

Naclerio, Alejandro (2010), Sistemas productivos locales: políticas públicas y desarrollo económico, Buenos Aires, Programa Naciones Unidas para el Desarrollo.

Narodowski, Patricio (2007), “La escala local, desde la periferia. Análisis de la industria de maquinaria agrícola en Las Parejas (Argentina)”, Geograficando, 3(3), pp. 67-88.

Pellegrini, Pablo (2013), Transgénicos: Ciencia, agricultura y controversias en la Argentina, Buenos Aires, Universidad Nacional de Quilmes.

Pérez, Carlota (1996), “La modernización industrial en América Latina y la herencia de la sustitución de importaciones”, Comercio Exterior, 46(5), pp. 347-363.

Solanas, Cristina, Silvina Campisi and Eduardo Risso (2009), “El inti y su participación en el acuerdo de cooperación para el desarrollo tecnológico de Venezuela”, Estudio de caso de políticas públicas, Buenos Aires, Cuerpo de Administradores Gubernamentales.

Trigo, Eduardo and Eugenio Cap (2006), Diez años de cultivos genéticamente modificados en la agricultura argentina, Buenos Aires, Consejo Argentino para el Desarrollo de la Biotecnología.

Vigil, José Ignacio (2013), “Problemas y desafíos de las teorías y políticas del desarrollo regional en Argentina”, Revista de Extensión +E, 3(1).

_____ (2015), “El Estado en movimiento. Una revisión de la relación entre conceptos regionalistas y la política regional”, Revista de Estudios Regionales (going to print).

______ and Víctor Fernández (2011), Gobernanza y Dinámicas Productivas de Desarrollo Regional: evaluando enfoques en el escenario argentino, Santa Fe, Ediciones UNL.

_______ and Víctor Fernández (2012), “Gobernanza y regiones en perspectiva crítica: un abordaje para la construcción de políticas públicas”, Reforma y Democracia, 53, pp. 21-60.

Wade, Robert (2008) “Reubicando al Estado: lecciones de la experiencia de desarrollo del este asiático”, Documentos y Aportes en Administración Pública y Gestión Estatal, 8(10), pp. 7-28.

Zilli, Julio (2002), Informe Sintético del Sector en la Provincia, Santa Fe, Consejo Federal de Inversiones.

* Universidad Nacional del Litoral, Argentina. E-mail addresses: jvigil@fce.unl.edu.ar and arturo.magri@gmail.com, respectively.

1 This paper is the result of the PAPIT IN300815 project, "Regional Dimensions of Food Security in Mexico."

2 Speech made by former President Kirchner in Las Parejas, Santa Fe, 2007 (available at: www.presidencia.gov.ar). Also see a speech by President Fernández, 08/02/2011 (available at: http://www.casarosada.gov.ar/la-casa-rosada/palacio/4071).

3 The approximate distribution of AM companies is: 5% in Entre Ríos (34), 24% in Córdoba (160), 20% in Buenos Aires (132), and 47% in Santa Fe (307).

4 By 2005, John Deere was the market leader in Argentina with 37% of total sales, while AGCO/Allis had a 22% market share, Case New Holland weighed in at 22%, and Claas at 1%.

5 Project NA 002/06 (Res. ANPCyT 27/12/2006).

6 UNDP Project ARG/05/024.

7 Project BID 2923/OC-AR (PAC II).

8 A more detailed critique of new regionalism can be found in Vigil (2013) and Vigil and Fernández (2012).

9 For more information on the "progress" made in the consumption of transgene products and the monopolization of seed production, see Pellegrini, (2013).

10 Soy cultivation in Argentina went from 0.20% of the total planted surface in 1969/70 to 31% and then 59% in the 1991/92 and 2011/12 seasons, respectively.

11 See www.indec.mecon.gov.ar (agricultural machinery).

12 The CECMA 2006 project mentioned in Section 2 in the AM region was one of the first agglomeration projects financed by the national government through FONTAR.

13 In 2007, 923 business contacts were made, and in 2009, more than 1,500.

14 See www.lasparejas.gov.ar.

15 See Project PRECOP II (INTA) www.cosechaypostcosecha.org and the National Added Value Program (INTA).

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 192, January-March is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Alicia Girón González. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: Feb 23th, 2018.
The opinions expressed by authors do not necessarily reflect those of the editor of the publication.
Permission to reproduce all or part of the published texts is granted provided the source is cited in full including the web address.
Credits | Contact

The online journal Problemas del Desarrollo. Revista Latinoamericana de Economía corresponds to the printed edition of the same title with ISSN 0301-7036