Argentina gained ground in an OECD SME policy assessment

Argentina gained ground in an OECD SME policy assessment
Argentina gained ground in an OECD SME policy assessment

The second OECD evaluation in Argentina highlights the country’s wide range of programs and initiatives aimed at promoting the development of SMEs. (EFE/ Juan Ignacio Roncoroni/Archive)

The Organization for Economic Cooperation and Development (OECD) published its second evaluation of the SME Policy Index, in which Argentina presented progress regarding initiatives to support small and medium-sized enterprises but setbacks regarding the institutional framework.

“The second assessment in Argentina highlights the country’s wide range of programs and initiatives aimed at fostering SME development. These efforts encompass various support schemes for SMEs and entrepreneurs, offering a wide range of business development services and measures to improve access to public procurement opportunities,” the report notes.

The organization also highlighted the “solid” set of financial aid designed to enable and encourage SME innovation, as well as a plan that promotes the integration of SMEs into supply chains, with the aim of transforming the country’s productive and technological structure.

In the dimension of Innovation and technologyArgentina has an overall score of 3.58, which is a considerable improvement compared to the score of 3.21 recorded in 2019. “Argentina’s relatively good results in this dimension are due to its cohesive and well-coordinated policy framework and a robust provision of financial support to enable and encourage SME innovation,” the study explained.

Since the 2019 assessment, the OECD notes that Argentina has stepped up its efforts to facilitate international business by creating the Public-Private Council for the Promotion of Exports (CPPPE) in 2020.

Argentina has an overall score of 4.00 in the Access to Finance dimension, the highest in the region (REUTERS/Issei Kato)

As in the 2019 edition, Argentina continues to obtain good results in the area of ​​access to financing and the treatment of bankruptcy and insolvency of SMEs.

In this regard, it has an overall score of 4.00 in the dimension Access to financingthe highest in the region and 4.42 points in SME bankruptcy and insolvency management“The country has made significant progress in developing processes to manage SME bankruptcy and insolvency. It has also expanded alternative financing options for SMEs, including asset-based lending (ABL) schemes and equity investment instruments, supported by a specific regulatory framework,” the study said.

In addition, the country had a score of 3.87 in the subdimension of Legal, regulatory and institutional frameworkabove the regional average, mainly due to developments in securities market regulation and asset registration, and a relatively lower weighting in guarantees for SMEs.

Despite these advances, the country “faces continuous challenges in its institutional framework for SMEs, mainly due to the lack of clarity in strategic directions and the lack of continuity in policies,” they said.

In this sense, Argentina has an overall score of 3.28 in the dimension Institutional framework of the index, below the 2019 assessment (3.47). “This decline is attributed to persistent inconsistencies in the policy framework, unclear strategic directions and a lack of policy continuity, influenced by the COVID-19 pandemic and the progressive deterioration of the macroeconomic framework, together with methodological changes in the assessment,” the OECD indicated.

On the other hand, they claim that the country “has not yet formulated a specific strategy for the development of the SME sector”. However, they highlight the medium-term plan launched in 2023, during the government of Alberto FernandezProductive Argentina 2030.

“The nation is actively improving measures to increase productivity through its medium-term plan called Argentina Productiva 2030 (Productive, Industrial and Technological Development Plan), approved in 2023. This plan advocates for the integration of SMEs into supply chains, with the aim of reshaping the country’s productive and technological structure,” they say.

For this reason, the country achieves an overall score of 4.04 in the dimension of Productive transformationreflecting a significant positive change from the score of 3.78 in 2019.

However, they assured that “SME policy measures are introduced in response to requests from the sector or economic emergencies. The election of a new president in November 2023 who supports a laissez-faire The economic impact may lead to a significant review of the interventionist approach, which will impact the country’s SME policy. The score for the Strategic Planning, Policy Design and Coordination sub-dimension is 2.89.”

On the other hand, in the subdimension of Measures to address informalityArgentina recorded a marginal increase in the score, reaching 3.82 compared to 3.76 in 2019. “The government has concentrated its efforts on reducing informal work, mainly through the creation of the Public Registry of Employers sanctioned for breaching labour regulations. In addition, there has been a reduction in social contributions for individual entrepreneurs and micro-enterprises,” they said.

As regards the operational environment and simplification of procedures, they stated that the regulatory system is complex and the administrative burdens are high.

“During the 2019-2023 administration, legislative simplification and regulatory reform stalled. This is partly due to the impact of the COVID-19 pandemic on legislative activity and partly due to the deterioration of the macroeconomic framework, which forced the government to react to economic emergencies and limit its commitment to pursuing regulatory reforms. However, there was progress in the provision of e-government services, as reflected by the overall score of 2.57 in this dimension,” they said.

According to the legislative simplification and regulatory reform, the OECD stressed that as of October 2023, the government did not have a strategic plan to carry out legislative simplification and regulatory reform programs. That is why the score for the dimension Legislative simplification and regulatory impact analysis remains at the same level as in 2019, at 1.63.

“However, the new administration is actively engaged in efforts to streamline regulatory processes,” they said.

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