2023-10-11 11:09:07
The Provincial Directorate of Statistics and Censuses recently published the latest measurement of the Gross Geographic Product of Neuquén, which allows analyzing the participation of the different branches of productive activities, belonging to the primary, secondary or transformation and tertiary or services sector.
The graph shows a malformation in the Neuquén economic structure. The sector of Mines and Quarries (includes oil and gas) is the largest and represents 55.4%. The second largest is the Public administration with 7.1%, followed by the Real Estate Services with 6.6%. While the Manufacturing industry it only reaches 2.9%; and the sector Agricultural just 0.6% of the total.
This x-ray exposes the failure of the different governments to change the model of the productive matrix, where raw materials that are extracted from the province are added industrial value outside of it.
It was never fulfilled
The Provincial Constitution (since 1957) establishes that Royalty profits from the exploitation of subsoil mineral resources must be used to replace the wealth-generating capacity on the surface. However, this has never been fulfilled. The oversized size of the State (as evidenced in the graph) consumes these large resources, which explains the lack of productive development of the private sector.
The Real Estate sector has been encouraged by spending on the Rentals budget item by the State. The province of Neuquén has public land where it can build buildings and premises for its departments to operate, such as the Police. However, public management does not seem to care regarding this ‘sunk cost’ that might be avoided, or allocated to critical supplies for hospitals or schools.
As The province is sitting on large hydrocarbon depositss -whose production is settled in dollars-, these large incomes, together with inflation, cover up the inefficiencies of the State.
Ceramic crisis
It is inconceivable that ceramic industries fail in Neuquén, where clay (direct raw material), gas and electrical energy (intensively used in the cooking process) are available local resources. They should be a natural competitive advantage.
In the ’80s and mid-’90s, COPADE (Council of Planning and Action for Development) had an industrial parks division. There were fiscal cost files (exemptions), which some ceramics had as a benefit in exchange for incorporating modern kiln lines to improve the quality and performance of production. It is worth asking: why in Italy the production of ceramic tiles reports annual sales of billions of euros, and here first Zanon and then Cerámica Neuquén failed. Perhaps the answer lies in what the State did in both cases.
Too many agencies
Over time, organizations such as the SME Center and the IADEP (Autárquico Institute for Productive Development) have been created, whose purpose was to finance investment projects to reconvert the economic matrix, but as evidenced by the GDP measurement, nothing that has happened. The granting of credits – by itself – is not enough. In many cases, they have financed projects that failed (e.g. wineries).
The ADI NQN Investment Development Agency (Provincial State Company) has the mission of exploring the capital market, both nationally and internationally, to achieve the competition for risk investments in ventures in accordance with the priorities established in the planning of Neuquén provincial development.
They should all be part of a investment and development banking (within the BPN), to design a business plan linking the market from providers with the customer market (internal and external), to guarantee its economic continuity and growth. There, they might have specialized tools such as derivative financial instruments, foreign trade, etc.
Reforms or more of the same
The next government has the opportunity to present a draft law “General Framework for Productive Development” to select initiatives that contemplate: a) Greater occupation of manpower in relation to the capital invested; b) Use of local raw materials; c) Location of main market off limits of the province; d) Location in the interior of the province d) Lower percentage of financing required in relation to the total investment.
To do this, an important institutional reorganization of the State must be carried out. Otherwise, noada will change.
* Academic Director of ASAP Comahue Branch. Former Provincial Budget Director and Fiscal Auditor.
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