Driving economic growth in Argentina through digital transformation

Small and medium-sized enterprises (SMEs) are the backbone of Argentina’s economy, accounting for 99% of all businesses and generating 64% of formal jobs. Using digital tools can help them tackle top trade concerns – such as high logistics costs – that make it difficult to deliver goods and services on time.

A new report from the International Trade Centre (ITC), called Promoting SME Competitiveness in Argentina: Developing with digital technologies, finds that almost two-thirds of firms that used digital technologies for transport and logistics reported improved timeliness of delivery, compared to about a third of those not using digital technologies for this purpose.

The high cost of logistics in Argentina is a problem that worries 85% of survey participants, according to the report.

Addressing such key challenges to competitiveness can enable SMEs to grow and contribute to strengthening the broader economy.

‘Argentine SMEs need to be resilient in the face of myriad risks,’ the report says. “Boosting their competitiveness is a first step. To kick-start this process, it is necessary to assess the strengths and weaknesses of firms and examine the barriers they face.’ To inform this work, ITC partnered with the Argentine Chamber of Commerce and Services and the Productivity and Competitiveness Observatory of CAECE University to examine the competitiveness of Argentine SMEs. They surveyed 614 firms across all sectors, sizes and provinces between May 2023 and January 2024.

How can SMEs become more competitive?

Survey data revealed that integrating digital technologies, optimizing financial management and investing in certification can greatly enhance firms’ competitiveness. These improvements empower businesses to operate more efficiently, adapt to market changes and meet global standards, positioning them for sustained growth.

Many SMEs face higher financial risks, including tight cash flows and operational challenges. Adopting new technologies can improve their operations by streamlining financial management processes. Businesses using digital technologies for payments and banking were more than twice as likely to benefit from access to easier payment methods than those using digital tools for other purposes (66% versus 29%). And this matters, because companies with a strong grasp of their financial activities find it easier to obtain formal financing and to invest in certification, the report says.

Certifications can open doors to new markets, both domestically and internationally, as survey data show. However, 84% of surveyed firms consider the costs of testing, certification and inspection services to be high. Without adequate funding, smaller and women-led businesses struggle to obtain certification. Survey data show that good financial management, a skilled workforce and access to essential certification information are key to boosting certification.

One of the most valuable things Argentine policymakers can do for small companies is to create a clear, transparent and consistent business environment that encourages competition, infrastructure investment and the alignment of business needs with education curricula. A combination of short-term and long-term interventions can facilitate the uptake of digital technologies, access to finance and investments in certification among those who need it the most.