The main problem of the Argentine economy is not only the lack of investment, but also the lack of investment chronic inefficiency. An ambitious INDEC project funded by the World Bank and led by the economist Ariel Corembergwill release official figures on this historic crisis.
The result expected by experts is devastating: The Argentine economy would be settledFootball-wise, perhaps from the middle of the table downwards Fight for the relegation zone.
The The productivity of an economy is measured by evaluating efficiency with which an economy converts its resources (production factors such as labor and capital) into goods and services. It is the key to sustainable growth and the well-being of the population. Without improvements in this area, growth is based solely on the use of more resources (more people or more machines), a model that is quickly exhausted.
The X-ray image of decadence explains why we are worse off than we were in 1950. The new study takes up historical measurements that have already provided figures that explain the stagnation of the national economycomparing the two basic productivity metrics: labor and total factors.
Coremberg’s analysis conducted a few years ago shows that labor productivity (what a worker produces per hour) in 2023 was similar to 1973. That means Argentina has been stagnating in its ability to produce more for the same number of hours for half a century.
What is productivity?
Labor productivity is calculated by dividing real gross domestic product (GDP) by the total number of hours worked or by the number of employees. The fact that this indicator has not grown is an alarm signal. Countries that improve the living standards of their citizens do so because Every hour of work becomes more valuable thanks to investments in technology and training.
The Total factor productivity (TFP) It is considered an engine of prosperity. It measures the efficiency with which capital and labor are used together. It’s not just how many machines you have, but also how you use them.
TFP captures the impact of intangible factors such as:
- Innovation and technology: The use of software, patents and new production processes.
- Institutional quality: Legal certainty, predictability and stable public policy.
- Human capital: The education, training and experience of the workforce.
- Management efficiency: The ability of companies to organize and optimize resources.
According to Coremberg TFP in 2023 was estimated to be 10% lower than in 1950. This decline in efficiency is the most worrying finding because it implies that the country is fundamentally less capable of creating value today than it was in the middle of the last century. This structural decline explains the country’s continued economic divergence from the rest of developed countries.
The situation of the Argentine economy is of course not new. According to recent estimates Argentina would rank 62nd out of 69 nations analyzed regarding the conditions under which Argentine production can compete with the rest of the world. The Institute for Business Development said this last year.
The central goal of INDEC’s work, integrated into the 2026 work plan and with the support of World Bankis to resume and update the measurement of the capital stock. This is the crucial factor that was missing from the official statistics and prevented an accurate calculation of the TFP.
Argentina’s potential
Coremberg explained the urgency of the task: “It cannot be the case that there is no measurement of the Argentine capital. I myself started a measurement in 2002/03, but it was a job that was stopped. Now I’m coming back to it, but as an external consultant. Thanks to the project we will know how capitalized Argentina is after the K era, a period characterized by a very dysfunctional economy. We know what capital we have and how much we need. Somehow we will be able to calculate what that is potential product of Argentina.”
He Capital stock It is measured comprehensively and compares production statistics, capital and hours worked. The value to be determined is the value of all capital available in the country, including:
- Traditional assets: Machinery, equipment and tools used by companies.
- Public infrastructure: Routes, ports, transport and infrastructure works.
- Natural resources: The valuation of the country’s natural assets.
- Housing: It calculates the value of around 17 million Argentine homes, an asset that is typically ignored in productivity measurements.
Obtaining official and updated productivity data will have a direct impact on economic planning, investment and the crucial wage discussion.
Coremberg explains it this way: “Knowing the productivity of not only the economy as a whole but of each sector, the salary discussion can be organized on specific and measurable bases; the more productive a sector or activity is, the more salary it can pay without this salary improvement being passed on to prices.”
This information will be crucial to distinguish between sectors with high payment capacity (those with high TFP and labor productivity) and those with mediocre returns, thereby preventing agreements from distorting prices in the most productive sectors or causing inflation in the less productive sectors.
INDEC’s work will measure the performance of the different sectorsand an expected one very heterogeneous result. The economy is so disorganized, Coremberg said, that productivity is, on average, very low.
What are Argentina’s productivity islands?
The industry ranking is led by “Islands of Productivity”:
- Agriculture/Mining: Sectors linked to natural resources, highly technical and globally competitive.
- Knowledge industry: Software and services companies that achieve efficiency and scalability.
These sectors are in stark contrast to other sectors such as industry, logistics and services, which have been performing mediocre for some time.
The central problem is not that Argentines don’t know how to work, but that macroeconomic and structural conditions mean that the factors of production (labor and capital) perform less.
Coremberg warns that the economy is so disorganized that productivity levels are very low because the “islands of productivity” are “surrounded by a very poor macroeconomy.”
What needs to be solved to get out of stagnation?
The stagnation is attributed to a number of factors that have reduced efficiency and long-term investments:
Macroeconomic Instability: Chronic inflation and recurring crises destroy long-term planning, force companies to act in the short term and hinder investments in technologies that increase efficiency.
Low investments: A lack of legal certainty and volatility inhibits investment in fixed capital and technology, which prevents labor productivity growth.
Structural and logistical problems: High tax pressure on production, limited access to credit and poor infrastructure (poor condition of roads, energy and logistics) increase operating costs, reduce competitiveness and directly undermine efficiency (PTF).
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