Argentina Must Think Hard About Technological Change

In "The unfinished revolution" (Cover Story, Aug. 16), reporters Ian Katz and Beth Rubinstein Keaveny conclude that Argentina needs a second wave of structural changes (labor reform, tax overhaul, anticorruption campaign).

Can we be sure that these measures will make the economies of Argentina (and other Latin American countries) more competitive? I do not think so.

There is a causal relationship between industrial structure and R&D intensity. Technological process innovation is labor-saving, so it assures cumulative and irreversible unemployment. In contrast, product innovation (nanorobots, hard- and software, microelectronics, pharmaceuticals, etc.) go hand in hand with growth and more jobs. This difference is extremely important for macroeconomics consequences. Our "emergent" countries are trapped in technological trajectories with strong job-destroying effects, and this tendency is not corrected by markets. In other words, we do not have "market failures," we have "knowledge failures."

Julio C. Barandiaran


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