As international businesses look to emerging markets for growth opportunities and access to resources, they will evaluate the business environments of the countries under consideration. Argentina is the largest country in South America, and its terrain includes mountains, lakes, glaciers, and grasslands. It is resource rich—producing soybeans, wheat, wine, and beef. It has more arable land per person than all but five nations in the world. Argentina has the world’s third largest shale-oil and gas fields. With a population of more than 45 million and rich natural resources, Argentina might seem to be a desirable market for international businesses. Despite this, Argentina is known as a rich country made poor. Consider these points of interest about Argentina. In 1913, Argentina was the 10th wealthiest country in the world, ahead of Norway, France, Germany, and Japan. Today, it is in 85th place, behind Russia and China, with a per-capita income of $10,000. Demographically, Argentina feels familiar to Americans—most Argentines are descended from European immigrants who came during the late 19th and early 20th centuries. Still, in terms of time, Argentines operate with a slower pace of life. Overall its population is considered upper middle income. Argentines are avid when it comes to football (known as soccer to Americans). Its capital city, Buenos Aires, could easily be mistaken for Paris or Madrid. Wealthy Argentines live in opulent apartment buildings or in gated communities, wear designer clothes, and drink espresso out of tiny cups. Although Argentina talks and walks like a European country, its style of doing business is distinctly that of a developing country. Because businesses face taxes, prohibitions, exemptions, and delays, the country ranks 115th on the World Bank's Doing Business index and 149th on the Heritage Foundation's Index of Economic Freedom. Transparency International ranks Argentina 66 out of 179 countries ranked in terms of corruption. Argentina does not have a modern financial system. Only businesses with many years of operating history can qualify for things such as lines of credit or overdraft privileges. Credit cards are not a good option due to low limits and interest rates of up to 45%. The inflation rate is about 40%. Compare that to the inflation rate in the United States which hovers near zero. The unemployment rate is around 10%. Labor is inexpensive with even skilled workers earning relatively low wages. Compared to other markets in Latin America, its infrastructure is reasonably well-developed but is need of repairs and improvements. Its economic system makes room for private enterprise while using centralized economic planning and government regulation of business. Incentives are offered to encourage businesses to invest in production facilities either through joint ventures or direct investment. As part of Mercosur, Argentina has signed Free Trade Agreements with Bolivia, Chile, Colombia, Peru, Egypt, and Israel. Argentina continues to face political instability and property rights are insecure. For instance, YPF, an Argentine oil company, was nationalized in 2012. An ongoing government debt crisis and populist administrations create economic uncertainty. This could suggest a trend towards public ownership of manufacturing facilities. Despite the need for foreign capital, Argentina has largely closed itself from global trade. With so much to offer and yet so many challenges, Argentina’s future in the global economy remains unpredictable. If Argentina was concerned that the United States might impose higher tariffs or quotas on Argentine wines being exported into the United States, Argentina could agree to _____ , which would voluntarily limit the volume or value of the wine Argentina exports. a. a tax agreement b. an export restraint agreement c. an import restraint agreement d. a restricted trade agreement

As international businesses look to emerging markets for growth opportunities and access to resources, they will evaluate the business environments of the countries under consideration. Argentina is the largest country in South America, and its terrain includes mountains, lakes, glaciers, and grasslands. It is resource rich—producing soybeans, wheat, wine, and beef. It has more arable land per person than all but five nations in the world. Argentina has the world’s third largest shale-oil and gas fields. With a population of more than 45 million and rich natural resources, Argentina might seem to be a desirable market for international businesses. Despite this, Argentina is known as a rich country made poor. Consider these points of interest about Argentina. In 1913, Argentina was the 10th wealthiest country in the world, ahead of Norway, France, Germany, and Japan. Today, it is in 85th place, behind Russia and China, with a per-capita income of $10,000. Demographically, Argentina feels familiar to Americans—most Argentines are descended from European immigrants who came during the late 19th and early 20th centuries. Still, in terms of time, Argentines operate with a slower pace of life. Overall its population is considered upper middle income. Argentines are avid when it comes to football (known as soccer to Americans). Its capital city, Buenos Aires, could easily be mistaken for Paris or Madrid. Wealthy Argentines live in opulent apartment buildings or in gated communities, wear designer clothes, and drink espresso out of tiny cups. Although Argentina talks and walks like a European country, its style of doing business is distinctly that of a developing country. Because businesses face taxes, prohibitions, exemptions, and delays, the country ranks 115th on the World Bank's Doing Business index and 149th on the Heritage Foundation's Index of Economic Freedom. Transparency International ranks Argentina 66 out of 179 countries ranked in terms of corruption. Argentina does not have a modern financial system. Only businesses with many years of operating history can qualify for things such as lines of credit or overdraft privileges. Credit cards are not a good option due to low limits and interest rates of up to 45%. The inflation rate is about 40%. Compare that to the inflation rate in the United States which hovers near zero. The unemployment rate is around 10%. Labor is inexpensive with even skilled workers earning relatively low wages. Compared to other markets in Latin America, its infrastructure is reasonably well-developed but is need of repairs and improvements. Its economic system makes room for private enterprise while using centralized economic planning and government regulation of business. Incentives are offered to encourage businesses to invest in production facilities either through joint ventures or direct investment. As part of Mercosur, Argentina has signed Free Trade Agreements with Bolivia, Chile, Colombia, Peru, Egypt, and Israel. Argentina continues to face political instability and property rights are insecure. For instance, YPF, an Argentine oil company, was nationalized in 2012. An ongoing government debt crisis and populist administrations create economic uncertainty. This could suggest a trend towards public ownership of manufacturing facilities. Despite the need for foreign capital, Argentina has largely closed itself from global trade. With so much to offer and yet so many challenges, Argentina’s future in the global economy remains unpredictable. If Argentina was concerned that the United States might impose higher tariffs or quotas on Argentine wines being exported into the United States, Argentina could agree to _____ , which would voluntarily limit the volume or value of the wine Argentina exports. a. a tax agreement b. an export restraint agreement c. an import restraint agreement d. a restricted trade agreement

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

In 1913, Argentina was the 10th wealthiest country in the world, ahead of Norway, France, Germany, and Japan. Today, it is in 85th place, behind Russia and China, with a per-capita income of $10,000.

Demographically, Argentina feels familiar to Americans—most Argentines are descended from European immigrants who came during the late 19th and early 20th centuries. Still, in terms of time, Argentines operate with a slower pace of life. Overall its population is considered upper middle income. Argentines are avid when it comes to football (known as soccer to Americans). Its capital city, Buenos Aires, could easily be mistaken for Paris or Madrid. Wealthy Argentines live in opulent apartment buildings or in gated communities, wear designer clothes, and drink espresso out of tiny cups.

Although Argentina talks and walks like a European country, its style of doing business is distinctly that of a developing country. Because businesses face taxes, prohibitions, exemptions, and delays, the country ranks 115th on the World Bank's Doing Business index and 149th on the Heritage Foundation's Index of Economic Freedom. Transparency International ranks Argentina 66 out of 179 countries ranked in terms of corruption.

Argentina does not have a modern financial system. Only businesses with many years of operating history can qualify for things such as lines of credit or overdraft privileges. Credit cards are not a good option due to low limits and interest rates of up to 45%. The inflation rate is about 40%. Compare that to the inflation rate in the United States which hovers near zero. The unemployment rate is around 10%. Labor is inexpensive with even skilled workers earning relatively low wages.

Compared to other markets in Latin America, its infrastructure is reasonably well-developed but is need of repairs and improvements. Its economic system makes room for private enterprise while using centralized economic planning and government regulation of business. Incentives are offered to encourage businesses to invest in production facilities either through joint ventures or direct investment. As part of Mercosur, Argentina has signed Free Trade Agreements with Bolivia, Chile, Colombia, Peru, Egypt, and Israel. Argentina continues to face political instability and property rights are insecure. For instance, YPF, an Argentine oil company, was nationalized in 2012. An ongoing government debt crisis and populist administrations create economic uncertainty. This could suggest a trend towards public ownership of manufacturing facilities. Despite the need for foreign capital, Argentina has largely closed itself from global trade. With so much to offer and yet so many challenges, Argentina’s future in the global economy remains unpredictable.

If Argentina was concerned that the United States might impose higher tariffs or quotas on Argentine wines being exported into the United States, Argentina could agree to _____ , which would voluntarily limit the volume or value of the wine Argentina exports.

a. a tax agreement

b. an export restraint agreement

c. an import restraint agreement

d. a restricted trade agreement

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