Santiago: Sustained vertical drive.

By Dan Berthiaume

Latin American nations make up about one-quarter of the 2012 list of Top 100 outsourcing locations compiled by global outsourcing research/advisory firm Tholons, and that is no accident. As Manuel Ravago, president for research at Tholons, explains, Latin America is an up-and-comer in the world of BPO. And more agile smaller countries might make the most of that.

“We view Latin America as the next important outsourcing destination globally,” says Ravago. “The world will soon realize Latin America can do more than speak Spanish.”

Latin America possesses several factors that give it an edge over more traditional BPO locations such as China and India, according to Ravago. “First of all, Latin America has Nearshore value due to things like time zone and general proximity, which India and China can’t compete with,” he says. “From an operational perspective those things can make a huge difference.”

Ravago also cites Latin America’s linguistic advantages, but not just in terms of Spanish. “There are a lot of other languages in Latin America,” he says. “There are pockets of many other populations, like Italian and German speakers.”

Furthermore, Ravago says outsourcing certain business processes to Latin America can help US firms better serve the rapidly expanding domestic Hispanic market, which represents the country’s fastest-growing minority group. “If a company is looking to offer Hispanic consumers customer support, can India provide it?” asks Ravago. “No. Can Latin America provide it? Yes.”

In addition, Ravago says China is still relatively focused on serving its domestic BPO market, with “nearshore” for China meaning other Asian nations such as South Korea and Japan. “Those are not markets Latin America has to compete with,” he states.

Latin American BPO Attracts India

According to Ravago, the BPO potential of Latin America is bright enough to attract the interest of many major Indian BPO providers. “A lot of Indian companies want to break into the US Hispanic market, and Latin America is a stepping stone,” he says.

There have already been a number of Indian BPO delivery centers established in Latin America, says Ravago. “They will see the wealth of skills available and move into higher-value services. The number of delivery centers and investments is set to expand in the near term.”

Costa Rica, Colombia: Strong Potential

Tholons’ report on the top Latin American global outsouring locations cites Costa Rica and Colombia in particular as showing strong growth potential. According to Tholons, Costa Rica will benefit from its skilled labor force as the global BPO market moves toward vertical-specific, high value services. Costa Rica is also trying to attract more investments in its creative services outsourcing industry.

Meanwhile, Colombia has enacted a program known as “Transformacion Productivia” which acknowledges IT-BPO as a key growth activity. This effort includes a widescale focus on more effective training and capacity-building programs for its KPO and ITO segments.

Tholons also calls out Santiago, Chile, in particular for a sustained drive to hone expertise in vertical-specific processes.

Brazil, Mexico, Argentina: Internal Risks

According to the Tholons report, three of the most established Latin American BPO provider nations – Brazil, Mexico, and Argentina, need to address internal social, economic and political risks, including inflation, to “regain lost momentum.” If these countries do not counteract internal risks, Tholons warns smaller “upstart” Latin American destinations such as Peru may capitalize on their lost market opportunity.

Ravago added further commentary on Brazil, noting that as an emerging market it offers economic opportunities on par with India and China, but saying Brazilian BPO providers must adopt a less provincial outlook. “A lot of Brazilian BPO providers are ‘eccentric in their outlook; they are not looking for Nearshore or offshore opportunities,” said Ravago.

By Bill Huber, Partner, ISG, and Kristen Elvinger, Research Associate

Concerns exist over the capacity of Latin American service providers to absorb rapid growth. Several global providers currently have a presence in Latin America, and tax and other trade incentives will help attract more outsourcers to the region. And, many Latin American countries are positioned to further develop emerging areas of specialization. Indeed, lessons learned from India, China, and some Eastern European countries suggest that specialization and quality-focused differentiation will be the keys to success, especially for countries with small populations.

Following is a review of major outsourcing destinations in Latin America, including assessments of strengths and business environments.

Mexico’s Head Start

Mexico benefits from a ten-year or so head start in the outsourcing business (primarily in call centers), proximity to the United States, membership in NAFTA, and a large pool of English speakers. Additional pluses: high-quality telecom infrastructure, good quality road and railway networks, and many airports. Mexico’s growing IT and BPO offerings are expected to increase 10% year-on-year, according to a study by HfS. Several cities offer a variety of trade incentives, including cash grants of up to 50% of total investments, and tax credits up to 30% of R&D expenses. Indeed, competition between states and cities to attract clients is helping to drive Mexico’s outsourcing maturity. While some have expressed concern about Mexico’s ability to develop higher value offerings, a number of initiatives – such as the Programa para el Desarrollo de la Industria del Software (PROSOFT) – are in place to develop skills for the workplace. On the downside, myriad security risks, both real and perceived, have hurt Mexico’s reputation.

Brazil Is Bigger

With the largest IT market in Latin America and the world’s second largest pool of COBOL programmers, Brazil boasts formidable outsourcing resources, characterized by a the presence of several global providers, well-established call center business, many R&D development centers, and a strong global services industry. While English fluency rates are low at 5%, that figure still represents approximately 10 million people, meaning Brazil has the ability to scale. Brazil also has very good telecommunications infrastructure, wide use of broadband, and the second highest number of airports in the world.

With a history as a quick adopter of new technology and methods, Brazil anticipates significant growth in high-value BPO and ITO in the next two years. Labor and export regulations, however, are a negative. And while incentives such as reduction in social security contributions and tax deductions for technology transfers are attractive to IT companies, exports of services are taxed heavily. Moreover, unfavorable labor laws and associated employment costs can be a concern. This paired with their large potential talent base gives them the opportunity to become a large nearshore destination if the government can create better trade incentives and bureaucracy.

Argentina’s Infrastructure and Bilingualism

Argentina boasts the best telecommunications infrastructure, the second-largest IT market, and the largest pool of bilingual employees in Latin America. Following the devaluation of the peso in 2001, Argentina took an economic hit that drove down wages and office real estate, which in turn attracted outsourcers. Responding to the opportunity, the government implemented a plan to develop the IT industry, focusing on software development and technical call centers. The initiative was characterized by a range of incentives for IT companies, including a 60% income tax exemption for software companies, 70% reduction on social contributions, and no restrictions on wiring foreign currencies for imports.

Argentina’s more progressive standards and data protection laws, moreover, are attractive. While Argentina is well-positioned to attract further outsourcing activity, bureaucratic hurdles are an obstacle, as with many other Latin American countries. Also, Argentina is implementing new trade restrictions . To address the challenges, many foreign companies are initially partnering with local providers when entering Argentina’s market.

Chile Seeks Higher Value

Chile’s stable government and currency, well-developed telecommunications infrastructure, and easy immigration policies make for an attractive destination for outsourcers. Recognizing that its small size requires a quality-rather-than-quantity-focused approach, Chile has created longer, more extensive IT education programs geared to high-value KPO, ITO, and shared services. The Chilean Economic Development Agency (CORFO) created InvestChile to provide investment incentives in more high-tech fields. Free trade agreements with the US, Canada, Australia, and China, as well as agreements to avoid double taxation on exports, are also attractive. Although approximately a ten-hour flight from the US, Chile shares time zones with the US. ChileiT is also actively working to promote its members to the international market.

Other Nations on the Rise

Other Latin American countries growing their outsourcing offerings include Costa Rica, Panama, Uruguay, El Salvador, Colombia, and Nicaragua. Most offer a few tax incentives and relatively good language skills. Key requirements will be to improve telecommunications infrastructure, grow English speaking populations, and develop IT skills. At present, most activity is in call centers, with a focus on specialization as a differentiating factor. Costa Rica, for example, touts its expertise in financial services.

Latin American countries are working hard to gain market share and raise their profiles as outsourcing destinations. Years of developing workforces, improving trade incentives, and building political stability are paying off. Concerns over scale are being addressed through pooling across multiple locations. Providers who are pursuing this strategy include Accenture, Capgemini, IBM, TCS, HCL, Cognizant, and Wipro.

Specialization can help Latin countries gain further advantage aside from being a nearshore destination. Although this strategy includes some risk, as outsourcing trends can change, many large destinations got their start using this approach. So far, Latin America has taken great steps in developing better skilled workforces and better business environments to support their Nearshore advantages of shared time zones, cultural affinity with the US, and more accent-neutral English skills. With proper identification of processes to outsource and the appropriate matchup of location and company, US companies can benefit greatly from Nearshoring to Latin America.

Bill Huber is Partner with ISG, a leading technology insights, market intelligence, and advisory services company. Kristen Elvinger is a research associate.

Source: MercoPress

President Cristina Fernandez has more power than Juan Domingo Peron “ever had” and Peronism in Argentina is guarantee of governance, according to Carlos Corach a former Interior minister from the former President Carlos Menem administration and a respected solicitor and political analyst.

“Cristina Fernandez is probably the president which has enjoyed more power in the history of Argentina. I’d say even more, she has more power than what Peron had. Peron had to deal and negotiate with very strong corporations, and economic and political sectors”, said the former minister.

Corach added that Peron (the Army Colonel who was president from 1946/1952, re-elected in 1952 but ousted by a military coup in 1955, to return triumphantly in 1973) had to learn to live with the Armed Forces, a very powerful Catholic Church and an opposition that also had strong and charismatic leaders”.

“Currently the majority of those players don’t hold such positions. So the conclusion then is that CFK is the most powerful (elected) president in Argentine history”. However “a democratic and political system need of counter balances for a political equilibrium and that today is non existent”.

Corach admitted that the evolution of policy in recent years has led to this situation and recalled a famous Peronism party congress back in 2001, which he identified as “the beginning of the very strong institutional deterioration process” suffered by Argentina.

Asked specifically about Kirchnerism and its quest for power concentration, Corach said that political science shows “that power leads to the concentration of power” and admitted that Peronism “has in its DNA a strong tendency to concentrate power”.

“All of us Peronists have committed mistakes, in the government of Peron, in Menem’s and under the current administration. We all committed mistakes but nevertheless the Argentine electorate continues to vote for Peronism and this is because it has internally engraved that Peronism is the guarantee for governance” in Argentina.

Likewise Corach said that there are “great similarities” between Menemism and Kirchnerism, and Carlos Menem and Nestor Kirchner “had much in common”.

“They both implemented socio-economic plans that were prevalent in the economic thinking at the global stage of their time. Likewise and I said so on leaving office in 1999, ‘Menemism’ does not exist because they are political currents which nurture on the charismatic personality of a leader or the political boss at the time. What remains is the essence of Peronism and it’s very close link with the trade unions’ movement”, added Corach.

Finally he recalled that when former president Nestor Kirchner was governor of the province of Santa Cruz “we had regular and standing contacts, he would come regularly to my office, many times with (Federal Planning Minister Julio) De Vido, and I have travelled many times to the province and Rio Gallegos. We shared lunch quite often at the Governor’s residence, with his wife and my wife”.

Source: The Next Web

Telefonica‘s startup accelerator Wayra and the Massachusetts Institute of Technology (MIT) signed a global partnership, the two entities announced. The agreement was signed during the launch of Mexico’s Wayra Academy.

As we reported, Wayra is an initiative promoted by Telefonica Digital to foster entrepreneurship and innovation in the ICT sector. Wayra works as a startup accelerator, selecting ten projects in each country in which it operates, which then receive mentoring and other resources at one of the newly opened Wayra spaces.

Initially launched in seven Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela), Wayra is now expanding to Europe, starting with the imminent launch of a Wayra Academy in Madrid.

Following Wayra’s agreement with MIT, the two entities will collaborate on a series of initiatives in Latin America. Wayra academies in Mexico, Colombia, Peru, Venezuela and Argentina are the first to join the partnership, which in 2012 will be extended to Chile and Brazil. Going forward, the upcoming academies in Europe may be added to the agreement, Telefonica said.

The main result of this partnership is called “Wayra Entrepreneurship Lab at MIT” (Wayra@MIT). Thanks to this joint venture, Wayra’s accelerated startups will get access to MIT’s training and mentoring ecosystem.

However, acceleration is only one side of the project. Says Wayra’s global manager Gonzalo Martín-Villa:

“We want this partnership to last and we want to explore ways of creating and promoting a quality entrepreneurial ecosystem in Latin America, where there is a wealth of talent, and generating wealth in the home countries.”

According to its website, “Wayra@MIT’s core activities within the Institute consist of an action-learning seminar at the Engineering Systems Division, a series of joint-events both in Latin America and the US, and resources that enable MIT students to learn about the challenges of new enterprise creation in emerging markets while ensuring that their engagement provides substantial value to Wayra portfolio companies.”

This is not the first time MIT has been developing initiatives in Latin America. As we reported, its Technology Review has recently launched a competition in Mexico. A local edition of MIT’s global TR35 awards, it will identify ten Mexican innovators under 35. With this new partnership, the institution is expanding its reach across the region:

“This agreement expands MIT’s technological innovation and entrepreneurial mission to Latin America alongside a partner that has proved its commitment to the region’s development,” said MIT’s Jhonatan Rotberg, responsible for overseeing the initiative.

As a matter of fact, the MIT’s partnership with Wayra is led by MIT NextLab, which focuses on how information and communication technologies can improve the lives of people in emerging countries. One thing is for sure: bringing expert knowledge to a growing accelerator like Wayra is a good start.

By Reshaad Durgahee

Lima, Peru: Surprisingly emerging.

In the period 2003 through 2010, Europe and Asia were the largest recipient regions of foreign investment projects in shared services and BPO activities, accounting for 46% and 29% respectively. Meanwhile, interest in Latin America has clearly been growing. The number of shared services and BPO foreign investment projects in Latin America rose year on year until 2010, when the total number of projects entering the region decreased by 15%.

However, in terms of jobs created by these investment projects in shared services and BPO, 2010 saw the highest number in the Nearshore region since 2006, increasing by almost 10% over 2009.

After the Asia-Pacific region, Latin America is now seeing the largest-size centers being set up, and indeed, the region continues to be characterized by a number of labor-intensive shared-services projects, with on average 350 announced jobs per center in 2010.

General trends in announced shared services jobs by world region, 2003-2010

Typical destinations for shared-services establishments in Latin America, such as Colombia and Costa Rica, continued to lead the rankings in 2010, representing 22% and 14% of regional shared-services job announcements. Brazil and Argentina – as dominant markets in the region – also continue to attract their share of investments.

Top ranking SSC/BPO destinations in Latin America & the Caribbean by estimated jobs, 2003-2010

However, it is the emergence of newcomers in the rankings, such as Nicaragua and Peru, that piques the interest of the observer of the outsourcing industry. These two countries attracted large-scale investments in shared services, demonstrating the widening of investor confidence across the region. Companies are now seeing the potential of previously untapped labor markets. Countries such as Nicaragua and Peru offer companies that are willing to take risks a first-mover advantage in terms of potentially lower labor costs, lower levels of competition from similar operations, and the opportunity to become the major player in a new market.

This would be in contrast to already well established shared-services locations in the region, which offer a more experienced labor pool and potentially higher-quality level of infrastructure, but are also starting to experience side effects such as increased levels of competition and elevated attrition rates.

The Rise of the Second Tier

In 2010, leading agglomerations in Latin America in terms of job creation through foreign investment in shared services and BPO included Bogota, Lima, San José, Guadalajara, Managua, and Medellin, the first four of which make the Global Top 20 ranking. Examples of new investments include Sitel, which announced 450 jobs at its new contact center in Managua; National Instruments, which has announced the establishment of a shared service center in San José creating 200 jobs in CRM, finance, IT, and sales; and Convergys, which has established a bilingual contact center and back-office support site in Bogota, creating up to 1,000 jobs.

The appearance of Bogota and San José, as now-seasoned shared services destinations comes perhaps as no surprise. The Mexican city of Guadalajara and Colombia’s second city Medellin highlight the potential of such second-tier cities in the region to operate shared services at lower cost than their capital cities, whilst still maintaining suitable operating environments desired by investing companies. Recent investments include West Customer Management’s bilingual contact center in Guadalajara and HP in Medellin.

Function-wise, investment in this sector into Latin America has been focused on contact centers (primarily to serve the local market and Spain, but also increasingly bilingual centers to serve the United States). In addition, in recent years, more and more companies have seen the potential for more value-added shared services operations in the region’s more mature locations, where there are now multiple finance and IT shared services, for example.

Sources of Investment

By far and away the largest source country of foreign investment in shared services operations in Latin America is the United States, which between 2003 and 2010 accounted for more than half of the jobs created in the region in this activity, generating almost 70,000 positions. Although Europe and Asia remain the most popular regions for US companies setting up shared services and BPO operations, Latin America remains a key market, in particular for nearshoring activities due to factors including timezone advantages and natural availability of Spanish language skills.

Between 2003 and 2009 Spanish companies (such as Telefonica and Banco Santander) accounted for about 20% of jobs created in shared services and BPO in the region, solidifying Spain’s position as the second largest investing country in this sector in Latin America.

Top source countries for SSC/BPO foreign investment into Latin America & the Caribbean, 2003-2010

Much has been written on the rise and dominance of India as a destination for shared services and BPO, but it is also interesting to note the rise of India as a source of such activities. Globally, Indian companies created over 15,000 jobs in this sector in 2010, continuing the year-on-year growth witnessed since 2005, accounting for 12% of all jobs created worldwide by foreign investors in this sector. From a Latin American perspective, in 2010, Indian companies such as Wipro, Genpact, and 24/7 Customer created just over 10% of shared services and BPO-related jobs announced by foreign investors in the region – a 60% increase from the previous year. It all represents a move to get closer to customers in a new market, highlighting the rise of India as an outward investor in shared services and BPO activities.

Profusion of Possibilities

Latin America continues to succeed at offering attractive options for companies wishing to establish shared services and BPO activities, as demonstrated by the increasing number of jobs created in the sector from foreign companies in recent years. These options come not only in the form of mature, well-established destinations, but also up-and-coming locations that companies are now finding worth investigating for outsourcing activities.

That is not to say that the mature shared services locations of the region are in decline. On the contrary, mature locations such as Costa Rica, Colombia, Argentina, and Brazil continue to attract their fair share of investment. In today’s economic climate, many companies have become increasingly risk-averse, and are content with opting for tried-and-tested options in the region, where costs may be slightly higher but where there is an availability of highly experienced shared-services profiles to recruit from. On the other hand, emerging Nearshore destinations offer those companies willing to be pioneers the opportunity to tap into new sources of talent and at a lower cost base, resulting in these locations now appearing next to traditional shared services locations in our global rankings.

Latin America’s profusion of location possibilities – both mature and emerging – means that it continues to develop as a strategic region that companies are considering for their shared services and BPO operations. Be it North American firms using the region as a nearshoring solution, Spanish companies cementing their presence in countries with similar linguistic and cultural affinities, or companies from emerging countries such as India wishing to extend their global footprint and gain a foothold in a new market, Latin America is sure to remain “on radar” for companies for the foreseeable future.

Reshaad Durgahee is a Senior Consultant at IBM Global Business Services’ Plant Location International (PLI) division. More analysis of location trends is available by download here.

Source: Merco Press

Brazil’s government is ready to respond to Argentine trade restrictions introduced this week but will evaluate the impact of the measures before making any retaliatory moves, trade officials said Friday.

Argentina this week said that beginning in February it will require all importers to file an online affidavit with its tax agency, Afip, before importing goods, providing the Argentine government an instrument to delay imports or determine what goods enter the country.

In response to the measure, Brazil’s Trade ministry issued a statement expressing worry over the effects of the move on trade with its largest regional partner.

“The trade ministry received notice of the measure with concern and established contact with the Argentine government to better evaluate the possible impact on Brazilian exporters,” the ministry said in a statement.

According to a trade ministry official, discussion of the new Argentine measure has already been introduced into the agenda of regularly scheduled talks between the two countries. Argentine trade negotiators sought to give assurances that the measure won’t slow imports of Brazilian goods to Argentina or adversely affect trade, though Brazil remains wary of the move.

“There is no way to evaluate the impact of the measure until it takes effect,” the official said.

Earlier in the week Brazil’s Industry National Confederation (CNI) harshly criticized the new regime of imports and warned that it could contribute to a plunge of sales to that country. The CNI qualified the measure as a “backward moment for the Mercosur trade”.

“The new measure applied by the Argentine government, which is aimed to control the trade balance, will have a negative impact in Brazil,” the CNI stated in a communiqué. The statement adds that the measure increase the judicial insecurity of Argentina’s trade policies and “it’s a threat” to the Brazilian companies that have subsidiaries in the neighbouring country.

Private-sector analysts, meanwhile, have said the measure signals the creation of a non-tariff trade barrier that could further cool already chilly trade relations between the largest Mercosur region partners.

The latest measure comes after Argentina last year stirred up relations with its main trade partner by suspending automatic import licensing on a number of products, including automobiles and parts. Bilateral trade last year was over 40 billion dollars with Brazil exporting 23 billion to Argentina and importing 17 billion.

Source: Merco Press

Inflation in Uruguay was not only far above target domestically but also figures among the ten highest in the world, and in Latam only behind Argentina and Venezuela

Uruguay ended 2011 with 6.8% inflation, above the target range of 4% to 6%, which nevertheless completes a seven year period below two digits, the longest since stats started back in 1939.

However Uruguayan economists are divided as to the future approach: some believe it’s not so important the actual percentage increase but the fact that the acceleration of prices is under control. They argue that in a global volatile environment it’s not necessarily advantageous to strictly implement “monetary policy”.

Although monetary policy helps contain prices it also slows the economy and job creation, and helps an increase in imported goods and services because a stronger currency (and cheaper dollar) means Uruguayan goods (particularly with a high component of local costs) can loose competitiveness.

The other school believes it’s time to begin cutting government expenses, containing the budget deficit and salaries’ agreements so as to give monetary policy more flexibility. Anyhow they consider the current monetary policy “too expansive” and President Jose Mujica in his daily radio chats has warned families about over spending, “plastic credit” and increased indebtedness.

But in spite of the debate in Uruguay the fact is that before the rest of the world and even in Latam, Uruguay with 6.8% inflation ranked poorly out of 71 countries: eighth highest inflation at world level and third in Latam.

Venezuela leads (for the sixth year running) with an inflation of 27.6% (mainly food and textiles) followed by Argentina and including Bolivia. However Argentina’s data is questioned because the official index is 8.8%, but the so called Congressional index signals 22%, and is the reference for salaries, the private sector and judicial rulings.

Panama and Brazil (6.5%) missed the first ten, but figure in positions 11 and 12. Other rankings in Latam include Guatemala with 6.1%; Ecuador, 5.41%; Paraguay, 4.9%; Chile, 4.4% and Colombia, 3.73%.

Source: Merco Press

Latin America trade with India could go up to 50 billion dollars by 2014 on the back of projected high economic growth in both the regions, said R. Viswanathan, India’s ambassador to Argentina, Uruguay and Paraguay.

”The region (Latin America) is going to be a regular source of imports of crude oil, edible oil, minerals, timber and other products which India needs to sustain its high growth. Agribusiness, food processing, energy and mining are the growth areas of Latin America and the Indian companies should target them for trade and investment“ said the top Indian official.

At present, the Latin American region accounts for 4% of India’s trade. Two-way trade between India and Latin America was recorded at 23 billion dollars in 2010. It included 9 billion of India’s exports to Latin America and imports of 14 billion.

India targets to increase its exports to Latin America to 20 billion by 2014.

Viswanathan said the region would also offer in the coming years great investment opportunities to Indian companies. ”The 2014 World Cup, 2016 Olympics and the 270 billion dollars investment in hydrocarbons by Brazil are the big ticket projects offering unmissable opportunities for Indian companies“.

India is diversifying its product basket and foreign trade market to shield its economy from uncertainties in Europe and the US. It has increased economic engagement with Africa, Latin America and the Caribbean.

As part of its market diversification program, the Indian government is offering various incentives to boost exports to Latin America and the Caribbean.

”There is a unique opening for India at this time. The Latin Americans are disillusioned with Europe and US who are facing crisis after crisis. They are reassessing the China euphoria after their industries and jobs have been hit hard by the flood of cheap imports,” said Viswanathan.

India has entered into preferential trade agreements (PTAs) with Chile and the Mercosur bloc, comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela.

Viswanathan said Latin Americans were attracted by the large, growing, democratic and non-threatening India which faces political and developmental circumstances similar to theirs.

“They see the value addition of Indian investment to their economies, industries and especially human resource development by the Indian IT and BPO companies who employ 20,000 Latin American youth,” he said.

Minister of Education Alberto Sileoni says changes, like a longer school day, are being considered.

By Patrick Haller

Argentina‘s students didn’t take to the streets recently like students in Chile and Colombia did, but that doesn’t mean they wouldn’t like to see some changes to the country’s education system. While literacy rates and primary school completion are high for the region, access to university to study IT or other advanced subjects essential for a thriving technology sourcing environment is often limited. Low income, and the system for granting higher-level degrees, are usually the culprits.

According to a 2009 report issued by the Society for the Study of Economic Inequality, between the 1960s and 1990s the gap between Argentina‘s rich and poor trended toward increased disparity, with a sharp uptick seen between the 1990s and early 2000s. However, this started turning around when “state intervention in the economy became more pervasive, labor market institutions were stronger and social protection schemes redistributed income to unskilled and semi-skilled workers,” the report says.

The legacy of income disparity, however, left some Argentines mired in a persistent tradition of sub-par educational facilities with little hope or ability to attend institutes of higher learning.

In The State of Education in Latin American and the Caribbean: Guaranteeing Quality Education for All, published in 2007, UNESCO researchers determined that “the proportions of people 20 to 24 years of age (15 to 19 years in the case of primary education) who have completed the different levels of education show systematic disparities disfavoring the populations with lower income levels.”

Still, the relatively encouraging statistic is that, according to the World Bank, Argentina‘s literacy rate among men and women in 2010 was 98%, indicating that in the least, the vast majority of Argentines obtain basic levels of education. Getting a higher-level degree is a different story.

High Costs for Higher Ed

While Argentina has approximately 80% tuition-free public and 20% expensive private universities, including the University of Buenos Aires (public) and the Technological Institute of Buenos Aires (private), doctorates and masters degrees can only be obtained from private institutions, making it difficult for lower-income students to achieve that level of education.

“Students in Buenos Aires, the area around it, and Cordoba are best prepared, because they are in the most important intellectual centers,” says Elena Luchetti, an education scientist, professor, and author of several books about education. This is one reason those two locations attract IT and other technology companies. “The oldest university is in Cordoba and that helps to improve education in general.” The level of overall education is directly affected wherever there are universities of national importance, and that is true all the way to Patagonia, according to Luchetti.

But for many Argentinians, they have low financial resources, so they cannot afford for their kids to go to university, and the child is limited to studying at a local vocational school, which might not have been their first choice. Scholarships do exist but there are not enough for all the students who want to get a better education. The University of Buenos Aires is considered one of the top schools in the country, so much so that some students who could afford private education choose to attend there. Other top public colleges include the National University of Cordoba, National University of Tucuman, and the University of Salta.

The Technological Institute of Buenos Aires leads the private institutions, along with the Business University of Argentina, a stand-out for business administration, and the University of Palermo, well-known for graphic design, public relations, and architecture.

While the public elementary and primary schools are free, families still need to pay for uniforms, supplies, and books, which can be burdensome, especially for those with several children. Even if parents manage to meet the costs, and comply with the compulsory education law, societal factors encroach upon the child’s ability to concentrate on learning. For example, as in many other countries, when a student can find work that requires little or no skills or training, they will most likely sacrifice school in favor of employment.

Fortunately the Argentine education system allows for students to re-enroll for either day or night classes, which some choose to do into their adulthood. High unemployment and teen pregnancy are two key factors in class repetition; however, boys are more likely to drop-out than pregnant girls.

High Rate of Primary Grads

According to the UNESCO report, in 2004 nearly 100% of Argentines completed primary education, which is also the case in Bolivia, Cuba, Ecuador, and Paraguay. Comparatively, Chileans, Peruvians, and Panamanians come in at 95%, whereas Colombians and Dominicans show 90% and students in Nicaragua and Guatemala report less than 80% completion rates.

These figures decrease when looking at secondary primary education levels, with Argentina at 80%. (Nearshore neighbors Bolivia, Mexico, Peru, Colombia, Uruguay, Brazil, and Panama registered completion rates between 70% and 80%.)

The government has indicated it will support some initiatives to improve elementary and high schools, such as teacher evaluations (which will be designed in partnership with the teachers’ unions), standardized student assessments, additional classroom days, and longer school hours. Minister of Education Alberto Sileoni mentioned these options at the 39th Federal Council of Education Assembly in mid-December.

Learning Consciously and Creatively

One observer says a fundamental problem for the education system is the Argentine approach to teaching.

“In Argentina when the child goes to school at three to five years old, everything is creative. When they begin with primary school things change and the child must learn in a different way and forget their creativity,” says Alejandra Becco, Founder and Editorial Director of Kids News. “Many schools in Argentina have different programs and try to use creativity for learning,” but these are usually private schools.

Teachers in Argentina need to modernize their methods, Becco says. “If you give the child the capacity to think you can change the way they learn. Teach so they understand the knowledge. The teachers are not prepared for this challenge.”

Modernization Approaching?

“The Ministry of Education has begun to take measures to modernize the system and make it closer to the level in developed countries,” says Elena Luchetti. “This was resisted by some who were tied to tradition. But others thought that we could improve it.”

Luchetti says she is very optimistic that the new Minister of Education for the Buenos Aires province, Dr. Silvina Gvirtz, who took over at the end of December, is going to oversee modernization and efforts to make the highest levels of education accessible to all.

“One of the main challenges ahead is to improve learning and educational quality,” said Minister Sileoni during his recent remarks. Argentina also needs to “continue to generate digital inclusion policies through the Conectar Igualdad (Equality Connect) program . . . consolidate actions to ensure that children who start secondary finish it, and promote measures to attract families to the school, promoting a commitment to education.”

Source: Hispanic Business

President Obama said the U.S. will strengthen relations with Argentina, after Cristina Fernandez began her second term as Argentine president last week.

In an interview with Argentine newspaper La Nacion published Monday, Obama said closer bilateral ties will help the two countries “to achieve even more.”

The U.S. and Argentina will openly discuss new challenges of the bilateral relations in a responsible way to be sure that any disagreement can be effectively resolved, the report cited Obama as saying.

Obama also said he hopes Argentina will deepen cooperation with the international community in countering terrorism, curbing drug smuggling and tackling the Iranian nuclear issue.

Obama and Fernandez met at a G20 summit in Cannes, France, in November when they discussed cooperation in science, technology and energy.

During the meeting, the two leaders promised to expand cooperation in the peaceful use of the space and joint research on global climate change, the report said.

The countries will also work to promote the use of clean and safe energy, especially nuclear energy, shale gas and wind power, the report said.

Obama also urged Argentina to normalize its relations with international creditors and pay its debt in order to attract more investment, according to the report.

It will be beneficial for both countries if Argentina honors its obligations with its creditors, Obama said.

Argentina’s foreign debt totalled 132.5 billion U.S. dollars at the end of June this year, equivalent to 32.2 percent of the South American country’s gross domestic product, according to the Argentine central bank.