PESTLE Analysis of Argentina
Before doing PESTLE Analysis of Argentina, we would like to have a brief introduction of this country. Argentina is a South American country. It touches the border with Uruguay, Paraguay, the South Atlantic Ocean, Bolivia, and Brazil. The capital of Argentina is Buenos Aires. Its total area is 2.78 million km2 and its total population is 45.38 million (2020). In terms of area and size, it is the 8th largest country in the world. In terms of population, it is the 31st most populated country in the world. During the 16th century, it was invaded by the western Spanish colonist. The country got independence on July 9, 1816.
In the late 19th century, the country was considered the wealthiest country in terms of per capita income and high GDP in the world. After this, the country faced economic recession, depression, and political instability. Now, it is an underdeveloped country because of these challenges.
Right now, we are going to highlight its political, economic, social, technological, legal, and environmental factors by conducting its PESTLE analysis. It will help us to focus on its macro-environmental factors. The country is facing several political, social, and economic challenges currently. With the help of this PESTLE analysis, the country can identify its weaknesses and opportunities. So, let’s begin!
Political Factors | PESTLE Analysis of Argentina
- Stable Government System:
As compared to other South American countries, the government system is quite stable in Argentina. Its stable political environment allows the country to attract multinationals and businesses. The government is developing a strong political infrastructure in the country to get the attention of foreign investors. On the other hand, they are also introducing new strategies and policies to enhance regional business.
- Dependence on International Policies:
According to some competent critics, the country is depending heavily on international institutions and policies like International Monetary Funds (IMF) to address economic growth problems, inflation, and corruption. Due to this reason, the government’s popularity is declining in the eyes of people.
- Foreign Policy:
The country has been managing very good diplomatic relations with several international organizations like the UN. The country is focusing on improving relations with the US government. They are planning to adopt their tech and science infrastructure. There is some conflict between the country and the UK over the Falkland Islands issue.
Economic Factors | PESTLE Analysis of Argentina
- Gross Domestic Product (GDP):
In 2020, the annual gross domestic product (GDP) of the country was 444.458 billion dollars. It was the 25th highest in the world at that time. Its per capita income was 9890. It shows the country’s stable economic condition.
- Economic Growth:
The government of Argentina is establishing effective trade relations with China. They are convincing the Chinese government to invest in the country. It will help the country to improve its economic growth further. On the other hand, the country is experiencing severe economic challenges in the form of a high inflation rate and recession. The economic freedom in the country is very low due to the recent economic regulations from the government.
The country has recently nationalized the YPF Spanish Oil Company Respol and private pension funds. It was really a confusing move for both local and international investors. According to economic experts, the country is in a deep economic recession. That’s why it decided on nationalization.
- Automobile Industry:
The Argentinean automobile industry is growing consistently. In order to lure investors, the country is giving easy licensing and attractive incentives. The government is planning to catch the attention of international investments.
- Imports and Exports:
Iron, steel, organic chemicals, machinery, vehicles, electrical equipment, chemical goods, pharmaceuticals, medical equipment, and plastics are some of the country’s main imports. The country imports these products from the USA, Brazil, China, Mexico, and Germany. Meat, soybeans, soybean meal, soybean oil, corn, delivery trucks, and mineral fuel are some important exports of the country. Argentina exports these things to the USA, Vietnam, Brazil, China, and Chile.
Social Factors | PESTLE Analysis of Argentina
The total population of Argentina is 45.38 million (2020). It holds more than 96 percent European descendants. The country’s official religion is Christianity, and over 80 percent of people follow this religion. The remaining 19 percent of people don’t believe in any faith or religion.
The overall living standard of the country is really high. The overall infrastructure of healthcare and education is way better than in other South American countries. Their official language is Spanish, but they also speak English. It is worth noting it here that Argentina is the largest Spanish-speaking country in the world.
- Social Challenges:
Indeed, the country has been facing several major social challenges over the past few decades. Moreover, a high urbanization level and an increasingly aging population are some important challenges in this regard. The rate of school dropout is high and it is gradually climbing. There is a dearth of skilled workforce in the country. In 2020, the unemployment rate in the country was 12.3 percent and it has increased because of the recent pandemic of covid-19.
Technological Factors | PESTLE Analysis of Argentina
- Technological Advancement:
The country has made major progress in the telecom and IT sectors. It is because of the tech development and government investment. Moreover, the government is also attracting tech giants like Google, Microsoft, and more in order to become a tech country.
- Technological Challenges:
Like other South American countries, Argentina is facing different tech issues and a severe energy crisis. Its net energy import rate is climbing day by day. Due to this reason, the country is taking aggressive steps to improve its technology and science departments. Moreover, the country does not have resources and investments in the science and technology sector. So, why the tech advancement and penetration are very limited in Argentina.
Legal Factors: PESTLE Analysis of Argentina
The country’s legal and government system is quite comprehensive as compared to neighboring countries. Every province of Argentina has its constitution. Moreover, the relationship between worker unions and the government is quite good. However, the personal and corporate income tax rate was 32 percent in 2021. Due to this, the climbing tax rate is preventing foreign investors from investing in the country.
Environmental Factors | PESTLE Analysis of Argentina
- Environmental Issues:
The country has so many when it comes to biodiversity and natural resources. These resources are really crucial for the country’s economic development. The country has the potential to exploit its natural resources to improve its economy. Like every other country in the world, Argentina is also facing some major environmental challenges in the form of water pollution, air pollution, deforestation, industrial waste, waste management, and destruction of resources.
- Government Initiatives:
The national companies and government have realized the potential of the country’s natural resources. They know they are wasting their natural resources due to environmental change and global warming. Due to this reason, the country is working closely with international companies to produce clean energy and biofuel. The government of Argentina is also collaborating with the Chinese government to develop the biggest wind power project. It will allow the country to fulfill 4 percent of its energy requirement of the country.
Final Thoughts | PESTLE Analysis of Argentina
This PESTLE analysis of Argentina shows that it is one of the leading under-developing countries. However, it has been facing various major issues like unemployment, climate change, tech problems, and tax rate. They should address the inflation and tax problems in order to gain the attention of foreign investors and companies. It would allow the country to regain its past brilliance.
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