The challenge of increasing productive complexity in Argentina: the case of the automotive industry (2002–2015)

International Congress on Political Economy (CEIP) · National University of Moreno
Gudiño, J. & Quiroga Lombard, N.

Executive summary

The paper analyses the process of industrial recomposition in Argentina during the post-convertibility period through a study of the automotive sector between 2003 and 2015. Its central objective is to assess whether the strong economic and industrial growth that followed the 2001 crisis implied a structural transformation of the national productive fabric or whether, instead, it consolidated forms of dependent insertion within the world economy.

The study argues that the industrial recovery after 2002 did not lead to a sustained process of productive complexification. Although automotive production grew exceptionally during the first phase of post-convertibility, this growth increasingly relied on imported auto parts, trade concentration with Brazil and productive structures with low technological content. As a result, the sector’s expansion consolidated the assembly profile of Argentina’s automotive industry rather than a dynamic of local industrial integration.

The report distinguishes two clearly differentiated phases within post-convertibility. Between 2003 and 2008, the Argentine economy experienced accelerated growth, driven mainly by manufacturing industry and favorable international conditions associated with the upward commodity cycle. During this period, automotive production showed extraordinary expansion rates, far exceeding total GDP and industrial GDP growth. Between 2003 and 2008, automotive production accumulated growth of more than 147%, with average annual rates close to 24.5%.

From 2008 onward, however, a process of structural slowdown began that cannot be explained exclusively by the international financial crisis. The paper shows that the limits to growth appeared earlier and stemmed from internal constraints associated with Argentina’s economic structure, particularly import dependency, the weakness of the auto-parts network and the absence of industrial policies aimed at import substitution and the development of local technological capabilities.

The analysis of the sector’s trade dynamics is central to understanding these limitations. Unlike the second stage of import-substitution industrialization (ISI), when the growth of automotive production was accompanied by the development of local suppliers and increasing industrial integration, post-convertibility consolidated an assembly model dependent on imported components. The increase in production and exports was accompanied by a sustained increase in auto-parts imports, generating structural deficits in the sectoral trade balance.

The paper identifies a strong geographic concentration of Argentine automotive trade around Brazil. From the mid-2000s onward, Brazil came to account for more than three quarters of the sector’s exports and imports. This configuration increased the external vulnerability of Argentina’s automotive industry and deepened a bilateral relationship characterized by productive and technological asymmetries. Regional integration within MERCOSUR did not lead to balanced industrial complementarity, but rather to growing dependence on inputs and components from the Brazilian market.

In this context, the study introduces the idea of “reverse substitution” or “negative substitution”. Whereas during ISI industrial growth promoted the expansion of domestic productive capacities and the development of local suppliers, during post-convertibility each increase in automotive production deepened dependence on imported auto parts. Growth in final production did not generate a denser technological industrial fabric or strengthen local value chains.

The historical comparison with the second ISI plays an important role in the analysis. During the 1950s and 1960s, automotive development functioned as a vector of industrial expansion, articulating investment, employment and the growth of supplier industries linked to steel, metallurgy, chemicals and intermediate goods. The automotive productive structure then rested on a broad network of domestic auto-parts firms that contributed to increasing the local content of production.

By contrast, the international reorganization of the automotive industry after the global crisis of the 1970s profoundly altered this logic. Processes of capital internationalization, productive relocation and corporate concentration reconfigured the global organization of automotive production. Argentina progressively moved from a model of industrial integration toward a subordinate structure within international assembly chains.

The employment analysis reinforces this conclusion. Whereas during the second ISI production growth was accompanied by a strong expansion of industrial and auto-parts employment, during post-convertibility automotive production grew much faster than employment. Between 2003 and 2014, production increased by more than 200%, while sectoral employment grew at approximately half that pace. This reflects both increasing automation and capital concentration, as well as the disappearance of much of the national SME auto-parts fabric.

The paper concludes that post-convertibility enabled a partial recovery of industrial activity but did not modify the structural problems associated with external constraint, low technological complexity and the dependent insertion of the Argentine economy. Automotive expansion was conditioned by the permanent need to import higher value-added components, reproducing sectoral trade deficits and limiting the capacity for autonomous industrial development.

In terms of economic policy, the study argues that the absence of a long-term strategy aimed at import substitution, strengthening local suppliers and developing technological capabilities prevented industrial growth from becoming a sustained process of productive complexification. The consolidation of an export-oriented assembly profile reinforced technological dependency and reproduced the external vulnerability of Argentina’s economic structure.

Finally, the report argues that Argentina’s central industrial challenge remains the construction of dynamic comparative advantages based on innovation, research and technological development. The automotive experience of post-convertibility shows that industrial growth alone does not guarantee a structural transformation of the productive apparatus or a less dependent form of international insertion.