Argentina has been experiencing social and economic difficulties for decades. Compared to many democratic countries with open and transparent market economies, we suffer from a low growth rate, high financial costs, low foreign and local investment rates, macroeconomic instability, low international economic credibility, and high inequality, in addition to a weak institutional framework.
A path to improve this situation is to become a member of the Organisation for Economic Co-operation and Development (OECD), a forum of thirty-eight like-minded democratic countries committed to the preservation of individual liberty, the values of democracy, the rule of law, and the defense of human rights, and that believe in open and transparent market economy principles.
The OECD discusses and establishes standards and practices for economic development and has an effective monitoring and review mechanism that encourages behavioral changes through reputational incentives. Argentina has been a candidate for OECD accession since 2022. In March of this year, the OECD Council adopted Argentina’s roadmap to become a member.
The OECD is nothing more and nothing less than an organization that sets standards. Unlike other more familiar organizations, the OECD does not provide financing. Nor is it a forum for negotiating market access, like the World Trade Organization. Nor does it negotiate free trade agreements. Nevertheless, the OECD roadmap offers Argentina a path to economic reforms and reputational benefits that can restore investor confidence in the country. That is why my country is working to join the institution.
Effects of Argentina’s accession process to the OECD
A most welcome effect of this process is institutional strengthening. The Argentine state is preparing an initial memorandum self-assessing the degree of compliance with OECD standards and practices. We must know where we stand.
There is a modest initial positive effect that comes from subjecting public policies to scrutiny based on results. Subsequently, in the process of negotiating accession, which may take a few years, the legislation, practices, and policies of our country will be aligned with the standards and practices of the OECD.
In this way, we seek to anchor the institutional, economic, and political reforms necessary to improve our access to credit, reduce interest rates, attract investments, boost growth, and reduce poverty, among other benefits.
Some will make a predictable criticism regarding the limits that this puts on the policy space by committing ourselves to a more rigid scheme of standards. However, developing countries that have embraced the model of stable market economies, such as Mexico in 1994, South Korea in 1996, Chile in 2010, Colombia in 2020, and Costa Rica in 2021, benefited from this process as part of their path of structural reforms.
After Argentina achieves the status of OECD member, the institutional strengthening will continue through the periodic monitoring of public policies. To achieve this, the OECD has tools such as benchmarking on various topics and peer reviews, to evaluate the performance of members vis-à-vis the organization’s standards and practices.
The world’s most developed nations have no qualms about subjecting themselves to such scrutiny. Why should we have them? We are not alone. The OECD recently invited three European (Bulgaria, Croatia, and Romania) and three Latin American countries (Brazil, Peru, and Argentina) to pursue membership, as well as Indonesia and Thailand, preserving the organization’s wide geographic representation.
Joining the OECD is part of a medium- and long-term vision, which is unusual in our country. It means thinking beyond the current situation, proposing a direction to follow, and maintaining it over time.
Improvements in the quality of life of our population will be the consequence of adopting appropriate measures and carrying out structural reforms that advance the business climate and legal framework.
For decades and for several reasons—including defaults, high deficits, and inflation—foreign investors have distanced themselves from our country. Building a good reputation will take several years. The challenge lies in moving from a position of outsider to one of prestige. It will depend on taking appropriate economic measures and maintaining reforms over time.
Today’s efforts create tomorrow’s benefits
I am confident that Argentina will continue on the path to full membership in the OECD. Once membership has been achieved, the OECD’s peer reviews and reports will allow progress to be certified. If the appropriate measures are adopted and maintained, our country will obtain the quality seal that OECD membership entails.
The OECD rates the risk in most countries annually, granting a grade that ranges from one to seven, the latter being the worst one. This is the rating Argentina has repeatedly received. It is not a source of pride and has direct costs: The low rating raises the cost of investment insurance and the overall financial cost that our society must face.
Other countries have made and maintained reforms that improved their ratings, significantly fostering confidence in their economies. We can and must do it, too. With today’s efforts, we will reach the level of development and freedom that Argentina’s people once had and, without a doubt, aspire to recover. The OECD has clear, predictable, and responsible standards that will aid us on this path.
Diana Mondino is the minister of foreign affairs of Argentina.
Further reading
Fri, Jun 21, 2024
Milei’s biggest challenge is to foster the societal consensus that Argentina needs to thrive
New Atlanticist By Martin Mühleisen
Despite President Javier Milei’s popularity with a large part of the Argentinian public, failure to array Congress behind his movement could again leave the country with a half-completed reform agenda.
Mon, Feb 26, 2024
Redefining US strategy with Latin America and the Caribbean for a new era
Report By Jason Marczak, María Fernanda Bozmoski, Matthew Kroenig
The strategic interest of the United States and the countries of Latin America and Caribbean (LAC) lies in strengthening their western hemisphere partnership. However, the perception of waning US interest and the rise of external influences necessitate the rejuvenation of and renewed focus on this partnership.
Thu, Aug 8, 2024
The future of digital transformation and workforce development in Latin America and the Caribbean
Report By Isabel Chiriboga, Maite Gonzalez Latorre, Diego Area
During an off-the-record private roundtable, thought leaders and practitioners from across the Americas evaluated progress made in the implementation of the Regional Agenda for Digital Transformation.
Image: The Secretary-General of the Organization for Economic Cooperation and Development (OECD), Mathias Cormann, meets with the Argentine Foreign Minister, Diana Mondino during a two-day visit to Buenos Aires, on August 29, 2024. Argentina began the process to obtain full membership in the OECD based on the acceptance note sent by Milei, on December 11, 2023, in response to the invitation that the organization sent on January 25, 2022.