Argentina’s industry is experiencing a long-term decline, which is clearly reflected in one key fact: Between 1970 and 2024, industrial production per capita fell by 17.6 percent. The indicator summarizes half a century of economic transformations, changes in the international context and high local macroeconomic instability that had a lasting impact on the manufacturing sector. At the same time, the industry lost weight within the economy: rose from just under 30% of gross domestic product (GDP) to around 18%.
The diagnosis comes from a report by Foundwhich analyzes the development of Argentina’s industry in recent decades and compares it with the experiences of other countries. Unlike most Western economies, where the industry lost its relative share of GDP due to faster growth in services but continued to expand in absolute terms, the industry in Argentina also contracted. That means, Fewer industrial goods are produced per capita than five decades ago.
The report points out that changes in the organization of production at the global level, with a greater role for Asia and new forms of fragmentation of production chains, coincided with a in Argentina macroeconomic context characterized by strong fluctuations and changing industrial policies. “When ups and downs are so severe, companies invest less; with less investment, it is more difficult to modernize assets; and without modernization, industrial competitiveness deteriorates,” the document says.
According to Fundar, the Argentine economy has been in crisis since the 1970s Deindustrialization process which is reflected both in production per capita and in the weight of the sector within GDP. During this period, the industry not only lost relative relevance, but also decreased in absolute numbersa phenomenon that distinguishes it from what has happened in other countries.
Osvaldo GiordanoEconomist and President of the Ieral of the Mediterranean Foundation, explained that the decline in per capita industrial production is due to a combination of macroeconomic and economic policy factors. “A macroeconomic context of very high instability, resulting from more than half a century of chronic budget deficitscreates very unfavorable conditions for all productive activities, but especially for the most complex and demanding such as many industries,” he noted.
Giordano added that another key element is the approach to industrial policy. “An industrial policy based on isolation from the rest of the world. The counterpart to the protection of national production through tariff and para-tariff barriers.” deprive the most competitive and dynamic industries of protectionas they involve more expensive inputs and capital goods,” he explained.
From an economic perspective it is Daniel RosatoPresident of Industriales Pymes Argentinos (IPA), located the beginning of the de-industrialization process at the end of the 1970s. “From 1976 to 1981 the decline began. There were foreign debts, an indiscriminate opening of imports and the closure of large and important factories. “Many industries have not recovered,” he said.
Rosato recalled the closure of industrial plants and the exodus of companies from the country during this period. “The policy has been changed There was no industrial policyand then we went back. That was the first big loss when we talk about deindustrialization,” he said.
Fundar’s report shows that Argentina’s industry has also changed internally. Between 1914 and the early 1980s, the most capital-intensive and technologically complex industries, such as machinery, vehicles, chemicals and metals, gained importance. These activities came from the representation of the 20% of industrial GDP in 1914 to 61% in 1984.
Since then, however, this process has been partially reversed. Today these branches explain that 54% of industrial GDP. In parallel, traditional activities or activities with low technological complexity, such as food, beverages and tobacco, recovered: They make up about a third of the industrial productafter declaring only 20% in 1984.
Fundar connects the loss of importance of the most demanding sectors with the development model adopted since the 1970s, which is characterized by Termination of industrialization due to import substitution, trade openness and high macroeconomic instability. Only a few industries managed to consolidate competitive advantages, such as aluminum, certain chemical segments, steel and parts of the automotive industry.
Giordano emphasized that macroeconomic volatility is key. “The very high exchange rate volatility led to recurring incentive changes for the production of industrial goods. Once competitive conditions prevail and soon change drastically, strategic planning and investments in equipment and technologies that require a medium-term recovery period become impossible,” he explained.
Daniel GarroEconomist and director of the Value International Group, offered a different interpretation of the causes of industrial decline. For Garro the central problem was this longer protection of the internal market. “The Argentine industry has been reduced to the domestic market. Since it does not compete, it ends up selling only to the domestic market and that explains the decline,” he said.
According to Garro, the outcome would have been similar even in a more stable macroeconomic context. “The macroeconomic context increases production costs, but I would have fallen anyway. If an industry is protected and can only sell on the domestic market, it will shrink inexorably,” he explained.
Giordano, on the other hand, emphasized the general environment in which the companies operated. “Beyond our own problems, The environment was crucial. Companies adapt to the conditions in which they operate. “Given recurring cycles of exchange rate lags and depreciation jumps and very low credit development, industrial progress under these conditions is an exception rather than a rule,” he explained.
Both the Fundar report and economists agree to point out the implications macroeconomic instability about the investment. The document highlights that the high volatility slowed overall economic growth and particularly hit industry, a sector that requires long-term investments in machinery, technology and infrastructure.
Rosato recalled that after the 2001-2002 crisis, the sector experienced a recovery linked to the change in relative prices. “The devaluation creates very low production costs in dollars and that allowed companies to start exporting. “The country recovered quickly because there was a competitive exchange rate,” he explained.
However, he noted that this situation would not last. “When the dollar flattened and inflation could not be controlled, Export was no longer a business. Exports fell and problems returned,” he explained.
Giordano listed other factors that have influenced the industry in recent decades: “Creation of distortive taxesInstability and exchange rate lag, international isolation, lack of credit and infrastructure, deterioration of education, excessive bureaucracy and poor regulations, especially labor regulations.
The decline in per capita industrial production had an impact on employment. According to Giordano, manufacturing’s share of total private employment declined 26% in the mid-90s to 18% in 2025with a gradual decline over the last three decades.
Nevertheless, Fundar’s report underlines that the industry remains one of the most relevant sectors of the economy. Today represents the 18.1% of GDP and generates around 2.5 million jobs10.9% of the total. Its contribution to the product is higher than that of sectors such as agriculture, oil, mining or tourism.
In addition, it is a sector of high productivity. On average, each industrial worker produces more value than in most other activities. In 2024, formal industrial workers’ salaries were 17% higher than average of formal workers in the private sector, although with strong differences between sectors.
Giordano claimed that comparison with other countries shows that the decline is not inevitable. “Although the global context is characterized by technological change and greater capital intensity, Other factors were active in Argentina which made the development of the manufacturing industry even more difficult,” he explained.
Garro agreed that the global trend was impacting the industry but insisted it could have been mitigated with greater competition. “On a global level, the industry is losing weight and the classification between industry and services is no longer so clear. But.” Lockdown and protection prevented change in the industry“, he remarked.
The Fundar report concludes that despite the loss of ground, the industry remains a central part of Argentina’s productive structure, both in terms of its contribution to GDP and in terms of its productivity and quality of employment. At the same time, the journey of the last 50 years clearly shows how the combination of macroeconomic instabilityChanges in economic policies and global changes influenced the decline in per capita industrial production, one of the synthetic indicators of the sector’s performance.
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