Buenos Aires may get a lot of recognition for being the hometown of Pope Francis, but it’s also receiving praise as a growing startup community. Argentina as a whole is vying for the top spot as South America’s startup capital, despite an uphill battle with its economic conditions.
In this week’s edition of PYMNTS’ Weekly Tech Center Roundup, we take a trip south to check out how Buenos Aires is defying the economic odds and emerging as a top destination for startups and tech companies.
Before we jump into the post, here are a few quick facts about Buenos Aires and its tech scene:
- Buenos Aires has a population of approximately 13 million people.
- The city is known for its high-skilled-labor-to-low-cost ratio and highly educated workforce.
- Roughly two-fifths of Buenos Aires’ workforce is in the service industry, with about 8 percent in eCommerce, 8 percent in industrial products and 7 percent in IT.
- The city is regarded as Argentina’s banking hub, with financial institutions in Buenos Aires holding the largest share of the country’s bank deposits, most of which are held by foreign investors.
- As of last year, the paid-in minimum capital requirement to start a business in the country was 2,500 Argentine pesos (fewer than $170).
In the race to become the startup and technology capital of Latin America, Buenos Aires is looking to give other cities a run for their money.
Though Argentina has suffered its fair share of economic setbacks — a $3 billion trade deficit in 2015, years of heavy state control and exchange rate fluctuations, just to name a few — the country is continuing to hold its own as a global tech hub.
Latin America’s fourth-largest economy may actually be one to watch.
Just this week, U.S. Secretary of State John Kerry encouraged the country to remain patient with the pace of its economic recovery, as citizens wait for newly appointed President Mauricio Macri’s market-friendly policies to materialize an influx of investment.
“It’s not all going to change overnight,” Kerry stated while visiting Argentina for the first time as America’s chief diplomat.
“Getting rid of bad habits takes a little bit of time, and investment takes a little bit of time to take hold and begin to create momentum. But I am 100 percent confident, as is President Obama, that Argentina is on the right course. People need to be patient,” he continued.
Though it’s yet to be seen if the promises from the government of an economic turnaround in Argentina will happen as soon as this year, the outlook for startups and the tech community in Buenos Aires remains positive.
The lively metropolis is well-known for its public education system, as well as nearly 40 universities and more than 30 research centers — all of which have contributed to a workforce that is regarded as diverse, highly skilled and quite talented.
Buenos Aires also boasts a collaborative entrepreneurial community, where startups are supported and encouraged in their endeavors.
In 2015, the City of Buenos Aires was recognized as the winner of the Global Entrepreneurship Congress Cities Challenge for its innovative policies and rapidly expanding startup ecosystem.
The city’s approach to moving away from traditional economic development and fostering innovation includes pursuing social inclusion and empowering the startup ecosystem with maximized human capital.
“We envision our city as being the center of innovation and creativity, as well as a benchmark for Latin America and the world, and working closely with the local entrepreneurial ecosystem is critical in this path,” Mauricio Macri, then-mayor of Buenos Aires, said last year. “The recognition we are receiving from the Global Entrepreneurship Network is an honor, and above all, it is an impetus to continue growing.”
Last month, the World Bank gave a financial boost to the country’s efforts to spur innovation through its innovation and technological improvement framework. The World Bank’s Board of Executive Directors announced its approval of a $45 million additional loan to help Argentina attract and maintain new technology companies, applied research consortiums and innovation projects.
“By way of this contribution, we will be able to strengthen the development of policies for the scientific-technological sector, with a direct impact on the country’s socioeconomic profile. The additional resources will serve to broaden efforts aimed at promoting initiatives to strengthen human capital, with an eye on training, innovation and support for young entrepreneurs. Activities will be evaluated to monitor the progress and impact of these investments,” Lino Barañao, national minister of science, technology and productive innovation, explained in a statement.
As a sign of its support for new economic change in Argentina, the German-Argentinian Chamber of Commerce also announced plans to invest nearly $3 million into the country over the next four years. The investment is expected to create about 3,000 jobs and help the economy to increase competitiveness in the industry.
The chamber said it surveyed executives at major German companies — those generating more than $9 billion in annual sales in Argentina — and found that they remained optimistic about their plans going into 2020 and welcomed the economic transition.