What will be the impact of Sunday’s election on the software industry in Argentina?

Well, in my opinion, not much. Throughout its recent history, Argentina has been characterized for big swings

Well, in my opinion, not much.

Throughout its recent history, Argentina has been characterized for big swings in economic policies which in turn have affected -positively or negatively- many sectors in the economy. Changing political parties, or even leadership within the major party in the country -the PJ-, have changed the “rules of the game” over and over again.

In the 90’s local manufacturing suffered extensively from an artificially overvalued currency. With the new millennium, and a cheaper currency, Argentina became competitive in many sectors once again. One of these sectors was the software industry.

Every time there is the feeling a major political change might be around the corner, both local business people and international stakeholders get concerned about a possible destruction of the “status quo”. Investment stops. Hiring stops. Everybody braces for a possible disaster.

One of those turning points might have been this past Sunday, when the current Administration lost its Congress majority for the first time. This Administration has supported the industry extensively, not only through a relatively benign currency policy, but also through a more specific Software Promotion Law. Does this mean our embrionary software industry might be at stake?

My opinion is that the industry will continue its growth, only somewhat tampered by the global crisis:

  • all parties seem to agree on the importance of this industry; it rests to be seen if a new Congress will pass the much needed changes to the Software Promotion Law, but in any case, the industry should be able to live without those changes
  • other parties have expressed strong support for the industry; one of the winners of last Sunday, the PRO party has even launched an initiative to create a new technology cluster in the City of Buenos Aires
  • the deteriorating fiscal situation in Argentina will most like make the peso suffer devaluatory pressures against the dollar; that might make the industry even more competitive more than put it at risk
  • inflation -though still high- seems to be under control thanks to the global crisis

Eventually, in the medium term, inflation might kick in once again, and produce the undesired effects we suffered last year, but that’s another issue… but as for the changing political winds, we’ll be ok.

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