Knowledge as an export good
Three specialists analyze the perspectives of knowledge-based services (KBS), a sector in constant growth in Argentina and the world. As an example, a consulting firm highlights the growing demand from abroad for Argentine professional services specialized in leadership, organizational transformation and cultural change, a subsector of SBCs.
By Claudio Pairoba *
According to the latest report from the Knowledge Economy Observatory (OEC), Argentine exports of knowledge-based services (KBS) experienced a year-on-year increase of 1,3% in the second quarter of 2023, reaching USD 4.000 billion during the first half of the year. Furthermore, total annualized KBS exports reached a record high of USD 8.100 billion, a year-on-year increase of 9,0%. This positioned KBS as the country's fourth largest export sector , behind soybeans and the automotive and oil/petrochemical sectors, and ahead of lithium and pharmaceuticals.
According to the latest report from the OEC, the total number of employees registered in activities related to SBC reached a total of 493.700 people during the first quarter of 2023, a figure that represented an increase of 3,5% year-on-year, with the creation of 16.800 positions. job. It should be noted that the business, professional and technical services subsector had an increase of 11.100 new employees compared to the same period of the previous year.
Considering the growing importance of SBCs, we consulted María Apolito, a specialist on the subject, about the outlook for the sector.
What is the current government's vision for this sector?
In principle, I believe that the government is very focused on macroeconomic variables and at the moment there are no definitions in specific policies for the production sectors. It is true that, at least for the moment, the main policy instrument of this sector, which is the Knowledge Economy Law, is not being modified in the Base Law. The Decree also does not modify the current promotion regime.
In your experience, what could be strengthened?
I understand that it is a sector that will get dollars and that having a smaller gap in the exchange rate favors the recruitment of human resources by companies, which was an issue of great concern. However, there is one leg of the policy for the knowledge economy sector that is not being addressed and that is the need to establish clear guidelines for the scientific and technological system. A policy not only translates into the resources that the state makes available, but the underlying institutional coordination and how practices adapt to contexts are also relevant.
Reflections on the Argentine science and technology system?
Argentine science and technology are fundamental to achieving a more robust and competitive sector of the knowledge economy, but this does not only have to do with more budget. The funds are necessary but they are not necessarily sufficient for us to have a science and technology (S&T) system looking into the 21st century. Having better equipment, more researchers, more infrastructure and more scholarship holders is not enough to modify our productive matrix. That is why I believe that we need to reflect deeply on the current system of science, technology and innovation and how it should be amalgamated with the knowledge economy sector.
Apolito highlights the need to reflect on the S&T system and its connection with the knowledge economy
Have specific measures been taken for this sector in the current administration?
In principle, I am not aware that concrete measures have been taken. As I explained, I think they are very focused on macroeconomics but we cannot wait much longer to have policies for all productive sectors.
Could any prediction be made for the evolution of this sector under the current management?
From what I have heard from the current undersecretary of the area, they have two clear axes to move forward. One is to deepen everything linked to the internationalization of companies and the other is to bet on talent through training and flexible schemes for first jobs in the sector. I think they are two very important lines and that, in some way, they continue with what was done in the previous government. It would be key for consensus to continue on the promotion of this sector beyond discussions about the benefits of Mercado Libre and other unicorns, which may be a topic to review. But the countries of the region are betting big on attracting investments in knowledge-based services and we can be left behind if we do not have the appropriate instruments.
Economic independence
Economist Eduardo Remolins considers that the export of knowledge-based services has represented a structural change for Argentina as well as a tool for the economic independence of a sector of its population.
What reflection does the OEC report deserve for you?
The rise in SBCs is a trend that has been going on for several years now and is not very surprising. The most interesting thing is that it does not depend on situations in which you have a more expensive or cheaper dollar. It does not occur because there is a certain value of the currency, of the peso, nor is it something that has to do exclusively with whether there are times of recession or boom in the economy.
It is a long-term trend that has to do with international demand. Yes, something that is mentioned a lot is true and it is the advantage that Argentina has in a segment of its population, not all, which has the level of qualification to offer that type of services. As the study says, SBCs have a fairly wide range of professional services in general to services that have to do with computing.
Do you think the trend in this sector will continue?
If Argentina goes towards a stage in which it has a strong peso for several years, that is, a dollar that is not very expensive, or without a peso but with prices so that we are not very cheap internationally, that trend would not be damaged too much because It is also likely that this will coexist with fewer obstacles to operating in international terms and with greater financial stability. Therefore, I think it would be an advantage.
What would be the other sectors that would contribute to economic development?
Every time Argentina advances towards an economic regime in which there are fewer obstacles or more freedoms in economic activity, it is seen that, naturally, it swings towards an economy in which you have a strong weight of energy due to natural conditions of resource provision, agriculture is a mixture of resource provision but it would tell you a lot, and probably more importantly, technology and management capacity of the producers. There is a lot of knowledge and a lot of technology in this sector that, in my opinion, develops a type of production with a lot of added value. Although the product is sometimes undifferentiated, it can be a commodity, the capacity they have for innovation in processes makes them a leading sector at an international level. And finally services. With that you can have a hyper successful country.
What about job creation?
There's always the complaint that this could negatively impact employment levels because, theoretically, the agricultural sector employs few workers, although that's not entirely true, and capital-intensive industries like energy and mining do as well. On the other hand, professional services, or SBCs (Service-Based Businesses), employ a lot of workers. The thing is, they employ people with a certain level of qualification. Nowadays, you can transfer the basic digital skills to people with relatively low levels of education so they can offer these kinds of services—the less complex ones, we could say. Cases like the people at Arbusta, where you teach them digital skills like testing , or skills related to digital marketing, with skills and services that can be sold in the international market. It's always better to have someone acting as an intermediary and helping you open up the market and acquire clients. It can also be done as a freelancer. These people could make up a very large part of the Argentine population. And we can't rule out the possibility of other sectors growing as well. If you only focused on those three sectors (energy, agriculture, and services), you would have a very prosperous economy with a very successful integration into the global economy and international trade flows.
SBS represent the connection of specialized work with international markets
How did the economic situation influence the development of SBCs?
It is still in recent years where there have been many regulations and limitations for operating internationally, for the movement of international money, etc., that has probably been one of the reasons, in an economy that was getting increasingly colder, why many people He turned to exporting these services. As the study says, this activity is completely tradable and a digital good is easier to move than a physical good. Even if you put obstacles in their way, it is very difficult to stop it and it is also very difficult to stop the payment mechanisms, whether they are companies or individuals.
That's why there was a kind of boom, since you had a price differential with the local market. People went out to seek to export these services and found the technological tools to be able to do so. This meant that the price of services, for example for people in IT, was not so far from what was paid internationally because it is the law of the single price. You have integration of the markets, it is arbitrated and it is difficult for there to be large price differences. Which made some companies, in some chambers, not all but some chambers, ask the government to block or further pursue the fact that professionals could sell their services abroad in order to maintain the price difference. To be able, to put it clearly, to pay them less because they would not have the possibility of selling their services abroad at a better price.
So SBCs are clearly a tool of independence.
Note that the fact that this industry is expanding, if we can call it that, gives people the possibility of becoming a little independent in some way, of freeing themselves from the ups and downs that you have in terms of level of activity, employment/ unemployment in the local market. Even price levels and remuneration, which are obviously closely associated with activity and unemployment levels. So, it gives you the possibility of becoming a little independent from the rhythm of the local economy. Which is great for the population, for all the people who can enter those markets. It even gives you a floor of activity, a level of well-being for society even when the local economy may not be having a good time. In other words, there is a percentage of the population that is hooked on a demand that has another logic, another dynamic, other prices and that can give them more than convenient income regardless of luck or the functioning, the level of activity of the local economy. . It is a structural change in Argentina and in the rest of the world.
The SBCs in Santa Fe
Paula Báscolo, director of the Economic Research Institute (Faculty of Economic Sciences and Statistics, Universidad Nacional de Rosario) provides his vision of the historical development of the service sector in general as well as its evolution in the province of Santa Fe.
What would a brief historical review of the services sector in Argentina be like?
The services sector, which has historically been considered to have low productivity and little innovation, has undergone profound transformations, within the framework of the consolidation of the new techno-economic paradigm based on information and communication technologies (ICTs). In this sense, the emergence and growth of the so-called “Knowledge-Intensive Services” or “Knowledge-Based Services” stands out, which group together segments as diverse as accounting and legal services, architecture, audiovisuals, engineering, software, advertising. , research and development (R&D), or health and education services, but that share the characteristic of intensively employing highly qualified human capital and of being users and producers of information and knowledge to provide services to their clients.
What characteristics and impacts do SBCs have?
Services not only began to have a growing participation in employment and added value, reversing the trend of their low relative productivity with respect to manufacturing, but they also have positive effects on the productivity and innovation of the entire economy, being responsible for greater efficiency and differentiation in the manufacturing industry. Particularly, SBCs, being one of the main sources of external innovation for companies, also allow producers, scientific bases and users to be interconnected by establishing knowledge bridges. These services are part of the National Innovation System and through its contacts with companies, public institutions, universities, research centers, etc. They contribute to the generation and dissemination of knowledge. That is, SBCs are considered fundamental agents to promote innovation in an economy.
Can SBCs only be analyzed as an export activity?
In general, there is consensus and broad agreement that SBCs are an opportunity to generate a process of transformation and productive diversification in Argentina. On the one hand, they are activities capable of generating employment and foreign exchange through exports (as they have done). Likewise, SBC sectors can help improve the competitiveness of other productive activities through the provision of complex services and the generation and transfer of knowledge. That is, SBC sectors are not only an export opportunity, but also a potentially very important source of productivity gains for the economy as a whole, due to their ability to generate, disseminate and transfer knowledge to all productive activities.
What is the situation of the SBCs in the province of Santa Fe?
The SBCs employed a total of 24.145 employees in the province of Santa Fe in the first quarter of 2023, according to data from the Employment and Business Dynamics Observatory (OEDE), representing 4,4% of the total employment registered in the province and 4,9 .XNUMX% of the total employees registered in SBC private sector companies in Argentina.
While for the entire country, private employment in SBC companies registered an interannual growth of 3,5% in the first quarter of 2023, in Santa Fe it remained at the same levels as in 2022.
What is the evolution like for the different sectors that make up the SBCs?
Of the total number of salaried workers registered in companies in the SBC sector in the province of Santa Fe in the first quarter of 2023, 71% (17.176) are generated in business, professional and technical services companies (SEPT) , and 28% (6.666) by Software and IT Services companies (SSI) , being marginal in Audiovisual Services (SAV).
What has been the historical evolution of the sector in Argentina and in Santa Fe?
When looking at the evolution of employment in SBC companies, it is observed that it registered a growth of 112% since the first quarter of 2002 in Santa Fe, with less dynamism than that which occurred in Argentina (156%), but greater growth in employment registered by the total number of companies in Santa Fe (83%) in the same period. As seen in the following graph, the employment generated by private knowledge-based services companies in Santa Fe grows until 2018 when it reaches the maximum value of the series with 25.424 employees, in the following two years it decreases and remains practically stable at from 2020.
Registered salaried employment in private companies of SBC in the Province of Santa Fe. 1996-2023 . Number of people (thousands) and share of total provincial registered private salaried employment (in % right axis), 1st quarter of each year. Source: Prepared by the author based on OEDE.
What is the most dynamic sector historically within the SBC?
SSI was the most dynamic sector within the SBC both in the province and in the country as a whole. Jobs in computer services have grown steadily throughout the period analyzed. In Santa Fe, salaried employment in private SSI companies between 2005 and 2023 registered a growth of 529% while in Argentina it was 304%.
Some reasons for this expansion in Santa Fe can be found in the existence of a quality university education offer both in the city of Rosario and its region, as well as in Santa Fe, unit labor costs below international levels and some labor policies. support to the sector at the national and provincial level.
The business vision in an example of SBC
In this context, Olivia , the global firm specializing in organizational transformation processes that operates in more than 10 countries promoting high cultural impact projects, reported that the demand for its consulting services from Argentina to other countries during 2023 continued the growth trend that has been observed year after year.
“Fiscal year 2023 gave us a clear indication of the need for our consulting services in other markets, with growth of around 30% compared to the previous year in terms of consultations and projects ,” explained Jorge Gatto, partner and Global COO of Olivia. He added: “Many organizations are currently experiencing a crisis or uncertainty and are looking to organizational transformation as a way to generate change, whether to survive or to accelerate their growth. This is happening in several Latin American countries as well as in Europe . ”
When living in crisis is an asset
The consulting firm points out that, in general, Argentine professionals specialized in facilitating and accompanying processes related to culture, leadership and change management are highly in demand for the training of leaders, accompanying cultural transformation processes and change management in different types of projects. .
“We are in a moment of profound business transformation, with companies facing great difficulty in developing scenarios and anticipating what is coming, and where technology is seen as a key ally for success. However, many organizations undertake technology projects that begin as a minor item on the agenda and become the catalyst for profound organizational changes ,” the executive explained.
Gatto emphasizes the growth of leadership-oriented services and cultural change within SBCs
In terms of employment, the knowledge industry provides jobs for approximately 50 million people worldwide, according to the World Intellectual Property Organization. In Argentina, the total number of salaried workers registered in knowledge-based services activities reached 493.700 during the first quarter of 2023 (a 3,5% year-on-year increase), according to data from the Knowledge Economy Observatory. “These types of professionals, who in Argentina are distinguished by their high level of expertise and specialization, supported by Olivia's proven methodologies that accelerate results-oriented transformation, make us a strategic partner when undertaking transformation processes for any industry ,” says Gatto.
These factors suggest that the sector will continue to grow and that knowledge industries will continue to consolidate their position as one of the country's high value-added export sectors. "It's reasonable to expect that 2024 will be another year of growth for us, and for the country as a whole. It would be fantastic to see more than 15 consecutive quarters of growth for the sector. At Olivia, we hope to contribute to making that happen ," the company concluded.
*Biochemist, pharmacist and doctor Universidad Nacional de Rosario. Master in Media Analysis and Specialist in Environmental Communication. Member of the Rosario School of Strategic Communication and Argentine Network of Scientific Journalism. Accredited with the American Association for the Advancement of Science (Science) and the magazine Nature.
related links
Knowledge Economy Observatory
https://www.argentina.gob.ar/produccion/datos-productivos/observatorio-de-la-economia-del-conocimiento
Technical reports / Vol. 8 No. 46
https://www.indec.gob.ar/uploads/informesdeprensa/complejos_03_24B0330413F2.pdf
Knowledge: the possibility of Argentina to integrate into a new industrial revolution
http://planetciencia.blogspot.com/2023/06/conocimiento-la-posibilidad-de-la.html
The first techie job, a tool for women from vulnerable neighborhoods to combat gender violence
https://www.infobae.com/america/soluciones/2022/02/02/el-primer-empleo-techie-una-herramienta-para-que-mujeres-de-barrios-vulnerables-combatan-la-violencia-de-genero/
“We are going to a world of total transparency with no place to hide”
https://www.rosario3.com/especiales/Vamos-a-un-mundo-de-transparencia-total-sin-lugar-donde-esconderse-20180612-0014.html
Managing uncertainty in times of crisis
http://planetciencia.blogspot.com/2023/12/gestionando-la-incertidumbre-en-tiempos.html
on May 19, 2024