The Comparison of Economic Growth in Uruguay and Argentina - Term Paper Example

 Economic Analysis Name Instructor Task Date Economic Analysis Introduction Glidepath luggage handling centers on sophisticated luggage carrying and screening equipment in airports. The equipment comprises of “power roller modules, scissor lifts, check in conveyors” among other technological equipment that will facilitate the undertaking of efficient services and enhancement of safety standards in airports. These services are essential for airports in numerous countries that are optimistic about their economic growth levels and are insistent in safeguarding their existent and potential investors. This New Zealand Corporation has been successful in the Chilean Market and is optimistic about enlarging its presence in the South American region. The economic situations of some South American countries are improving as they are becoming self-sufficient. In addition, the installation of the Glidepath automation systems wills ensure the airport affirm the increasing progress of the countries. This paper examines the macroeconomic situations of two South American that is, Uruguay and Argentina that are contemporarily soaring in diverse economic segments. Economic Analysis Uruguay Uruguay is experiencing economical success as it is consolidating its fiscal policies that are tuning the country policies in a positive direction (Uruguay Country Outlook, 2011). Uruguay is gradually growing to be a favorite of the international investors. In the period that numerous countries were, experiencing recession in 2009, Uruguay grew by 3%. This supposition was one of the essential elements in developing confidence in the future of Uruguay. It is evident there are some other factors that are stalling advancement of the local market. According to Fitch ratings (2011), Uruguay is attempting to bolster up the economic growth through improving policies in its equity markets and securities. This is inclusive of the surfacing of treasury securities as an affirmative investment venture for its citizens. By mid 2008, Uruguay had posted an annual growth rate of 6.5% in the agricultural sector. This rate is improving highlighting the fiscal capabilities of Uruguay in the agricultural sector. This illustrates that the agricultural earnings handsomely reimburse the farmers expenses. The pricing of the farm implements of is reasonable to the farmers (Uruguay Country Outlook, 2011). Moreover, this exhibits that the country has ample food hence the productivity of Uruguayans is optimal. A big facilitator of this growth is the implementation of macroeconomic guidelines to advance the investment. The contemporary president of Uruguay Jose Mujica, is assertive that this trend will continue as their objective is to make Uruguay a competitive participant in the global trade. According to the article of Uruguay Country Outlook (2011), the country had an approximate of GDP of 8.3%, which was 0.3% greater than the estimate of the previous year (Crombie, 2011). The optimistic illustration of Uruguay as a developing civilization is motivating the county to progress in application of suitable fiscal procedures. These improvements necessitate the requirement of sufficient systems that will facilitate efficient transport of individuals and commodities. Since the Uruguayan economy is a potential market for numerous investors, the incorporation of facilities that Glidepath offers can develop its airport infrastructure. The influx of businesspersons and travelers at the airport terminals will increase with the advancement of the economic gains. The GDP of Uruguay grew to a quantity of 8.9% through the period of 2010 and is furthering upwards. This illustrates the economic returns of the southern American country to be increasing. Evidently, with such significant increases in the economic capabilities of the Uruguayan country it has to improve the infrastructure of the transport sector (Crombie, 2011). The economic success of is not restricted other fiscal improvements but also the transport segment. The roads are built to attain the contemporary standards of architecture. In addition, to the road networks the rail industry is improving, as there are private financiers who are enthusiastic to have a stake in the expansion of this business segment. In 2002, the Uruguayan economy was dependent on the external financiers, for example the IMF that did attribute $ 3.8 billon in loans to the government. In this phase, Uruguay was enduring economic turbulences that were not blowing in its favor. The Uruguay Country Outlook (2011) asserts the inflation rate of the country was increasing and the public confidence in the government intervention in the fiscal impediments was diminishing. It was a devastating moment to Uruguay since it did not encompass the financial muscle and the Central Bank was deficient of funds to finance other governmental developments. In the same year the country had public arrears of $ 10 billion and the peso, which is their currency was devalued by half (Uruguay Country Outlook 2011). The country was enduring an array of debts and numerous developmental projects, which were incomplete. This was a risky deviation from their economic objectives but the administration was unrelenting in their pursuance elevating the economic performance of Uruguay. The country did revise the spending budgets of the government institutions and had to enhance the tax levels to mitigate the soaring debt. As Fitch Ratings (2011) confirm, this is among the diverse initiatives that the government was implementing and it is currently experiencing strong growth rates since it and was promoted from a BB- to a BB status. This is advancement in status illustrates the foreign debt ranking of the Uruguayan administration was reducing from the enormous amounts that it was previously. This improvement did raise the currency valuation of the pesos and was demonstrating the governmental responsibility in settling the foreign debts (Fitch ratings 2011). Subsequently the improvement in the balance of payments of the Uruguayan pesos will indicate the commercial exports of the country would increase the earnings of exports. The monetary benefits will be injected to the financial system and this trend will continue as long as the favorable economical conditions prevail. This was reflective of the economic developments and flexibility of their administration on exploring the diverse economic alternatives in alleviating the monetary burdens of Uruguay. Crombie (2011) affirms financial analysts were predicting as development rate of 4% in 2009, however the rate did surpass their limit by 1.1%. This was evident of the development of the macroeconomic situations that would permit the country to advance in its economic endeavors. The Uruguayan president is enthusiastic on seeking the legislative approval and cooperation in embarking on a budget that will encourage private investment. Argentina Economic growth The economic advancement in the second quarter of 2011 did diminish slightly from the prior year. However, this is not illustrative of the supposition that the economic boom is curtailed (Valente 2010). The GDP had risen in the second six months to 9.1%, which was 2.5% larger than the initial six months. The GDP growth indicators of 2009 were suggesting the increase was merely 0.9% a showing there were faulty elements in their fiscal policies (Brown, 2010). This did not portray a strong and buoyant market that can induce potential investors to undertake attractive ventures in the economic activities. The Argentinean economy was on the upsurge in the initial months of 2010 and was experiencing bountiful harvest in the agricultural sector. According to Valente (2010), this was highlighting that the country was recovering financially and was increasing its requirement of automobiles. The country is gradually attempting to diminish its foreign arrears and introduce policies that can enhance the economic standpoint of the country. The steel industry of Argentina did increase their output to a mean of 47.6 percent in the initial quarter of the year 2010 (Brown, 2010). The private consumption of the Argentineans in April and June did enhance by 11.5%. This was conveying the improvement in consumer confidence in the domestic products (Valente 2010). This is the third economy in the Latin American countries but the contemporary economic deficiencies are proving troublesome to the Argentinean administration (Brown, 2010). It is resultant of the insufficient fiscal policies that the country utilized to exemplify high economic and an increment in job creation, which was not the case. The application of wrong fiscal policies injures the economic prospects of the administration of Argentina since it will be utilizing wrong figures and assumptions in determining the financial decisions and prospects. Valente (2010) suggests the financial experts were forecasting the growth rate could be at minimal 5% in 2012 due to the economic instability of the country. The level of investment in the domestic enterprises did advance o to 23.8 percent in 2010 indicating the investors were optimistic of the capacity of the economy escalating. This epitomizes the investors appreciations of the efforts in the Argentinean authorities are portraying (Valente 2010). The industrialization sector of Argentina is embracing the technological changes that are essential in determining will present favorable conditions for producing items. Unemployment standards in Argentina are still rife and present a challenging e to the economic prospects of the country. The country has been experiencing deficiencies in its financial endeavors and is low on the development funds that will propel the country’s growth. The unemployment rate can frustrate budding investors who are fervent about engaging in commercial affairs with this country (Valente 2010). The financial conditions are straining the employers of big corporations to cut off operational costs through lessening the quantity of the workforce. This unemployment rate was diminishing after the country was relieved of major debts and it began to initiate programs that will enable the establishment of job stations. This did ensure the per capita income to rise and there was an increase in the public consumption. This was instrumental in raising the aspirations of the Argentinean administration to include more initiatives that can ensure the financial system was stable. The exports on meat product fell drastically, after international alerts on impending diseases and complications that the meat can present. Therefore, this meant that the prospect of economically gaining from the exports of the meat product is not to be dependent on. This also would contribute to depreciating of finance for the individuals that were dependent on the exports. Moreover, there was speculation the GDP would reduce and this can have catastrophic impacts on the financial; prospects of the South American nation. The economists were insistent there were several factors that were restraining the escalation of the economies of Argentina. There was a high demand for energy, which is imperative to any civilization that is prospecting on expanding, its industrialization endeavors (Valente 2010). This is detrimental to Argentina since many of the industrial ventures require energy to be available to guarantee a successful enterprise. If the country is not having sustainable energy it can be expensive for the investors in trying to source for alternative energies in order to accomplish the production of their items. This will initiate disapproving sentiments since the financiers prefer self-sustaining countries that are vibrant mechanisms, which can power their ventures to the expected levels. In the fourth quarter of 2011, the GDP of Argentina expanded to 7.3 percent. This economy has abundant resources that it can utilize to surpass its neighbors in the South Americas. The financial constraint that the country is experiencing was instigated by the inappropriate use of the inappropriate financial assumptions, which were influencing the increase in financial faulting of the fiscal amounts. Argentina was in the topmost positions in the initial quarter of the preceding century but a sturdy decline from the 13th position to the 47th is evident (Valente, 2010). Application The Uruguayan fiscal statistics unlike the Argentinean one’s display the ability of it to grow. It is evident the Uruguayan administration is adamant in restoring the country into a stable position. The GDP rating of Uruguay is consistent in its inclination and it is nearing a double-digit increase. The GDP of Argentina is not demonstrating the potential of Uruguay (Valente, 2010). In addition, Argentina is currently enduring expanding deficits as some of its income earners are slowly exiting from the market. The meat production business that was bringing earnings to Argentina did suffer irreconcilable damage as in 2010, the beef production fell by 20.9 percent and the exports were double that amount. The poverty levels of Uruguay are insignificant in comparison to other South American civilizations and do epitomize that numerous citizens in that country can afford the fundamental necessities (Crombie, 2011). The Argentinean administration woes tend top emanate from the absence of clear and efficient guidelines that would be capable of increasing competitiveness in the region. Furthermore, the foreign debts of the Argentinean state were extensive unlike those of Uruguay. As such, this would enhance the inflation levels of the country since the uses of finances are stretched leading to the increase in pricing f items since the demand surpasses the monetary capacity. This can initiate the skyrocketing of inflationary rates and therefore depressing potential investors from undertaking commercial ventures since the cost of business can be high. The agricultural sector of Uruguay is peaking since a vast proportion of it does not entail meat production. Consequently, the Uruguayan authorities encompass sufficient policies that govern the production of the agricultural components to ensure they are of exceptional quality. Strategic Recommendations Glidepath requires embracing a market that exemplifies growth and progress to facilitate the utilization of the luggage technology in furthering their economic endeavors. These facilities will be beneficial to Uruguay since it is optimistic on enhancing the infrastructure to satisfy the contemporary standards. The Uruguayan market unlike the Argentinean one has a favorable business atmosphere that compels investors to input their finances into it (Valente, 2010). Uruguay has strong fiscal policies that cushion the market from incidences of instability hence Glidepath can acquire sufficient returns from this venture (Crombie, 2011). Subsequently Uruguay is not deficient of energy sources and provides a suitable investment location for Glidepath since the luggage services are dependent on efficient energy. Glidepath can diversify and incorporate its accessories in other avenues despite the airport alone. Since the transport infrastructure of Uruguay is advancing, Glidepath can incorporate their services into Transport terminals, for example, subways. In regards to the two South American states, Uruguay exhibits a greater potential of being the appropriate investment choice of Glidepath Corporation. References Brown, J. C. (2010). A brief history of Argentina. New York, NY: Facts On File. Crombie, J. (2011). Uruguay to reform local markets. LatinFinance, , n/a-64. Retrieved from http://search.proquest.com/docview/852599509?accountid=45049 Uruguay: Country outlook. (2011). New York, United States, New York: Retrieved from http://search.proquest.com/docview/848226384?accountid=45049 Fitch ratings; fitch rates uruguays UI bond BB+. (2011). Investment Weekly News, , 375. Retrieved from http://search.proquest.com/docview/912153027?accountid=45049 Valente,M. (2010). Limits to Economic Growth Loom. New York, NY: Inter Press Service. Read More