Argentina has conducted one of the most intensive privatization programs in the world. The telephone company, airlines, most railroads, electric power production companies (including hydroelectric power plants), the Argentine oil company YPF (bought by the Spanish company Repsol) steel mills, ports, TV stations and most public services were transferred recently to the private sector. Consistent with Fundacion Invertir the combined value of privatized firms amounts more to more than US$ 30 billions. Many foreign firms have participated in this large-scale privatization program. Foreign investors d

It is hard to state the type of trade that exists between Argentina and Brazil in the automobile industry because both countries import and export cars of the same brand and very similar models. Volkswagen produces some of its model of cars in Argentina and some others model in Brazil. The reason for this is to achieve economies of scale; each country specializes in a certain model of car, by doing so they reduce the cost of each additional unit. Another reason for specialization of production in each country is that it might be cheaper to produce a certain model in either Argentina or Brazil.

Argentine has experienced a trade balance deficit for the past 30 years. In 1991 with the presidency of Menem the country opened its trade barriers and the Mercosur was put into action. In 1995, in reversal of a four year trend, Argentina had a trade surplus of US$ 2.177 million with its Mercosur partners, a similar trade surplus was reached in 1996 (US$2.093 millions), and in 1997 (US$1.888 million). Nevertheless there was a trade deficit for 1998 and it is expected to follow the same trend during 1999 due to the devaluation of the Real. The crisis in Brazil spread into Argentina because Argentine exports decreased and import from Brazil increase. Goods were more affordable in Brazil than in Argentina.

In the period of July 1997-June 1998 Argentina exported wheat to the following countries: Brazil, Turkey, Egypt, Iran, Peru, Indonesia, Sir Lanka, Jordan, Tunisia and Kenya. Argentina experiences "inter" trade with these countries because it has the comparative advantage of producing wheat at a cheap cost. Soils in Argentina are fertile and farmers do not need to use as much fertilizers as in the case of European farms. European farms have been harvested for years. As a consequence of this farms need to be fertilized or remain unused for a period of four years to produce crops.

Several companies as Volkswagen have invested in production facilities in Mercosur. Additionally, joint ventures between local and foreign parts manufacturers have improved quality. A report on Argentina auto parts/services announced that local production in Argentina was estimated at $1.9 billion in 1997. From 1996 to 1997 the import market for automobile parts and accessories grew by 30 percent to $2.2 billion. Imports from Brazil represent 35 percent of the local import market. The gains in imports with exports from Brazil boost employment in Argentina by a 30 percent and bilateral trade with Brazil as well as nine fold growth in investments. (States-USA). See AUTO PARTS/SERVECE table in appendix.

Argentina's dominant trade partner is its largest neighbor, Brazil. Brazil achieved this standing in 1992 and so far has retained it in every year since then. In 1994 Brazil accounted for US $ 7.98 billion (21.3) percent of Argentina's total trade, in 1995 this grew to $9.658 billion (23.5 percent), by 1996 total foreign trade with Brazil grew 25 percent. The nation's second largest partner was the US, with $ 6.110 billion (16.3 percent) of total trade in 1994, $ 6.011 billion (14.6 percent) in 1995, $ 6.72 billion or (14.2 percent) in 1996, and $ 8.285 (or 14.6 percent) in 1997. Argentina conducts almost 42 percent of its trade with these two countries. (World Bank)

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Approximate Pages = 9 (250 words per page double spaced)