Perfil – “Not everything that shines is gold”, goes the popular saying. The phrase is relevant to the current phenomenon: a strongly surplus trade balance.
That there is a trade surplus can be considered a positive data. On the one hand, it certainly is. But, on the other, it shows a harsh reality. Because now a kind of regularity is ratified that is expressed in each year where the economy is in recession.
You have to see reality. The surplus is not the result of a virtuous situation; it arises from a reduction in imports and does not result from an increase in exports. Imports are in sharp decline, except for consumer goods. Strictly speaking, the surplus trade balance has been growing since September 2018. Therefore, the matter is not new or the total responsibility of the current government period. Although it is fair to say so, corporate populism, which characterizes this stage, accentuates the characteristics of the phenomenon. It is paradoxical but it is like this: more than 70% of what is imported goes to complete the national industry, even that of export.
Measures to reactivate and increase exports
Fortunately (or sadly) we are heading for a new record in the positive balance of the trade balance. The dark side of this balance is that it comes from one of the most severe recessions in local history. It would be no surprise if the drop in GDP for this year reaches 13%. Recessions often cause increases in the trade surplus. For example, a button suffices: three of the four highest surpluses of the century were in the hard years 2002, 2009 and 2019, with more than 16 billion dollars, each. But the thing does not end here. What do I mean? Well, to the application of an economic policy aimed at encouraging national buying. With a clear mercantilist influence, the official strategy would be to motivate national production, through a kind of import substitution of goods and services. They say that humans are the only animals that stumble twice on the same stone. I don’t know if this applies, exactly, to our country. It should be said: “The Argentine is a rare animal that trips over the same stone many times.”
Bulk wine exports grew
If Douglass C. North (Nobel laureate in economics) were still alive, he would analyze the Argentine case in the light of “path dependence”. The dependence of the trajectory explains the persistence of the sense in the paths traveled over time. And he wonders why there are behaviors that are perpetuated over decades.
Our trajectory would have started in the colonial era, reinforced with the beliefs of Latin American structuralism of the 1950s and 1960s and continued, with certain variations, to the present day. But there was a visible exception, which is expressed in the decades since the National Organization. There the dependence of the trajectory with the thought of the generation of 1837 is broken. The important thing is to increase the value of exports to increase the import capacity. Although the process is not completely decisive, the reality is that it is still in force, in a country with a high endowment of natural resources where society is more prone to suffer dislocations and, therefore, to be carried away by a populist commercialism. The dependence of the trajectory tends to promote the knowledge and behaviors that point to redistributive activities, with little innovation. Thus, pre-existing belief systems and perceptions are established that rationalize economic structures, justifying them with all kinds of arguments, largely linked to sectoral interests. The point is that the surplus is not in itself an objective. No way.
What matters is increasing the value of exports to increase import capacity.
Yes, gentlemen, it is about importing more, with the supreme aim of raising people’s living standards and increasing production. And such increased production should focus on competitive value chains to develop new links, upstream and downstream. The serious thing is that the decline is centered on the importation of capital goods that, precisely, make up the production process and, thus, the generation of wealth for society. To be clear. Imports should not be penalized. Exports must be encouraged to access a higher level of imports. It is necessary, then, to twist the path designed by ingrained beliefs that impede development.
*By Manuel Alvarado Ledesma Professor at the CEMA University. The opinions expressed are personal and do not necessarily represent the opinion of UCEMA. (Source www.perfil.com).