Name: Md.
zubayer Faiaz
ID: 2011074630
Legal Risk
Strong employment laws favoring the employees rather than employers.
International investors facing legal business risks having little knowledge of the country's
stringent labor laws.
Complex tax regime
Faulty recruitment process.
Political Risk
High degree of bureaucracy
Higher levels of corruption
Economic Risk
Economic instability makes investing in Argentina a risky proposition. Argentina has history of
monetary emergencies. Therefore, given previous monetary crises, it's reasonable to conclude
that the presence of uncertainty can arise at any time, posing economic risks to investors. As a
result, foreign investors are hesitant to invest in Argentina, even though it has one of the
strongest economies in South America.
Foreign Direct Inflow
Although there is economic insecurity and other recurring issues, the Argentine government
continuously looks for foreign direct investment. Currently the openness for foreign investment
is in the developing phase. But Argentina possesses strong assets e.g., considerable natural
resources like gas, copper and oil and highly skilled and actively competitive workforce.
Investments have been mainly oriented towards manufacturing, mine and oil extraction, trade,
banking and other financial entities, information and communication and agriculture. Some of
the main Invested Sectors are
Manufacturing-35.0%
Mine and oil extraction-22.3%
Retail and wholesale-10.9%
Other financial entities-9.1%
Banking-6.0%
Information and communication-5.0%
Agriculture-2.4%
The main representatives for Argentina’s FDI inflows are:
US,
Spain and the
Netherlands
Brazil
Chile
Switzerland
Uruguay
France,
Germany
Canada
For several years the Argentine economy have witnessed instable FDI inflows. From an online
article ‘Argentina: Foreign investment’, it attracted the attention regarding the fact that
UNCTAD's 2020 World Investment Report, FDI inflows to Argentina fell by half to USD 6,2
billion in 2019 (from USD 11,8 billion in 2018), owing to the country's worsening economic
crisis. Similarly, the stock of FDI fell in 2019, to USD 69,2 billion (a drop of USD 15 billion
when compared to 2010).
Argentina's net FDI inflows (as a percentage of GDP) were 1.37 percent in 2019. The percentage
of 3.56 was in the year of 2015 and 2016 then in 2017, 2.68 percent refers to the decrease of the
percentage and then sudden fall of the percentage was faced in 2018 and it was 1.22 percent and
then it increased in the year of 2019 slightly.
Foreign Direct Outflow
In collaboration with the National Investment and Trade Promotion Agency, the National
Directorate for Investment Promotion, under the Under Secretary for Trade and Investment
Promotion at the MFA, helps the Argentine companies to extend their business internationally.
Though Argentina has no limitations on domestic companies investing abroad but it does not
encourage outward investment.
Argentina's net FDI outflows (as a percentage of GDP) were 1.36 percent in 2019. While in
2015, it had the percentage of 2.86 and it decreased and it was 2.80 and 2.56 in the years of 2016
and 2017 but it had a great fall in the percentage and it became 0.79 percent in 2018 and then it
rose to 1.36 percent in 2019.
CPI (Corruption Perceptions Index)
Corruption is still a major issue in Argentina. Argentina has long been plagued by pervasive and
endemic corruption. Despite Argentina's strong legislative and institutional structure for fighting
corruption, corruption remains a serious problem in both the public and private sectors.
Argentina’s Position in the CPI (Last 10 Years)
From what we can see from the bar graph given above Argentina’s position in the CPI can be
described as an interesting one. It is evident that in the past few years the corruption rate was
higher specially in the year 2012 to 2015 when the country had consecutively lower positions.
Then from 2016 to 2019 it can be assumed that the corruption declined a bit. The lowest position
Argentina achieved on the CPI was 66 which was in the year 2019. It could suggest that in that
particular year the rate of corruption was lesser compared to the previous years. But
unfortunately, that did not last for long and in the following year Argentina fell from 66 to 78 th
position denoting a rise of corruption. In the year 2020 the Argentina’s CPI score was 42.
Argentina has ranked 78th among 180 countries whole over the world in 2020.
