ESF/N-AERUS International Workshop Geneva, Palais des Nations - May 3-6, 2000 CITIES OF THE SOUTH: SUSTAINABLE FOR WHOM? WORKSHOP PAPERS

Adriana Allen
Lecturer and research associate, Development Planning Unit, University College London.

THE POLITICAL ECONOMY OF INDUSTRIAL RESTRUCTURING AND ENVIRONMENTAL MANAGEMENT IN ARGENTINA. THE CASE STUDY OF THE FISH INDUSTRY IN THE CITY OF MAR DEL PLATA.

The concept of Sustainable Development poses critical questions to the environmental and social outcomes of contemporary capitalism. In other words, it presents the problems of an economic rationale, driven inevitably towards growth but unable to stop the entropic degradation that it generates. However, its critical power has been undermined by two factors:

• The misleading use and abuse of the concept by international agencies, governments and the corporate sector has turned the critical issue of environmental sustainability into a contradictory discourse, in which neoliberal policies are advocated as the path to a balanced achievement of the goals of ecological sustainability and social justice through the most effective way: a market-led economic growth. In this way, when sustainable development is advocated as a conflict solving strategy, encompassing the process of economic globalisation, it dissolves the contradictions of modern capitalism, presenting the world as the expression of capital.
• The imperatives of structural adjustment and economic growth through export-oriented production have been extensively adopted in the developing world, while the consideration of their impacts on the sustainability of the adjusting countries has been largely ignored. Macro-economic policies are usually evaluated according to their impact on the main economic aggregates, regardless of the indirect social, technological and environmental effects felt at certain levels that are outside the institutional frameworks of those who originally designed and applied the policies. Those effects, unrelated to the original objectives of the policies when acknowledged, are conceptualised as 'externalities'. The impact of economic policies on the environment and natural resources is neither symmetrical nor neutral. Such policies have primary and secondary effects and 'externalities', which must be duly recognised and evaluated. While the origin of these effects is varied, they all influence the behaviour of the socio-economic agents involved in the use of natural resources.

Today, the imperative of 'economic growth at any price' dominates the development process of most countries in the Latin American region, including Argentina. The environmental and social implications of economic growth are secondary concerns in national, regional and local government agendas. The relaxation of environmental legal enforcement and the deregulation of labour conditions are two key features of the government's approach to the economic development path pursued. At the same time, as a result of the internal and external reforms introduced, most economic sectors are undergoing a fast process of restructuring, facing new conflicts and constraints to survive in open markets and improve their competitiveness.

In a context where short-term adjustment policies are resulting in long term restructuring of traditional patterns of production, transforming the view of nature and environmental resources, the assessment of the sustainability of current development processes offers a broad scope for research. This issue is at the centre of this paper, under the understanding that development progress should be assessed, not in the light of economic growth, but in the light of its social and environmental outcomes in the short and long term. In doing so, the paper focuses upon the fish industry of the city of Mar del Plata in Argentina.

Over the last two decades, development trends in Argentina have been shaped by political changes, economic instability, heavy debt servicing and dramatic reduction of public investment in social expenditure and new and existing infrastructure. Since the end of the last decade (accompanying general trends in Latin America), Argentina has undergone a process of economic adjustment and restructuring, in which the opening to global trade has been a central element. This process has been led by several factors: the increasing inability of import-substitution industrialisation to sustain economic growth and macroeconomic stability; and the large negative external shocks of the early 1980s; the structural transformation of the international economy, brought about by the globalisation of markets and production and rapid technological change; and the uniform generalisation of trade policies throughout the Latin American region led by the increasing regional leverage of international financial institutions.

Two periods have to be differentiated in the process of Argentina's national economic reform: a stagnation and instability period between 1975 and 1990, and the implementation of the Convertibility Plan since 1991, characterised by the recovery of the country's macro-economic performance.

During the first period, the main socio-economic trends were: increased underutilisation, sizeable reductions in productivity and real wages, and increasing inequality in income distribution. Towards the beginning of the 1990s, Argentina started to move into the so called 'New Economic Model' (NEM), which consists of internal and external reforms dealing with macro-economic stability, economic openness, fiscal reform, privatisation and financial liberalisation, technological modernisation and the redefinition of the role of the State. These reforms stabilised and expanded the economy at a fast rate, resulting in a deep restructuring of the country's patterns of consumption and production, bringing dramatic social and environmental changes, particularly at the urban level.

In this context, manufacturing industries (particularly alimentary industries) have been the most dynamic sector since 1991, shifting from domestic markets to exportation [1]. However their higher growth has not been transferred to the incomes, due to the lack of growth of formal employment and lack of capital growth per worker in the informal sector. In order to face the difficulties posed by the opening-up of the economy, some industrial sectors have based their international competitiveness on the informalisation of processing activities, unsustainable practices of exploitation of the natural resources on which they depend, and the externalisation of environmental costs through the lack of compliance of the existing regulatory frameworks. Argentina is regarding current environmental problems as a post facto effect of economic growth, which might have to be tackled in the future through investments to clean up the environment. But even the prospects for such a narrow environmental policy are strongly constrained by the country's current low rate of national savings.

The fish industry sector (including both the fishing activity and manufacturing processes), follows the process described above. The national fish industry has traditionally been concentrated in Mar del Plata city which, despite loosing its hegemony in the 1980s, remains home to the majority of enterprises operating in this economic sector.

Within the local economy, the fish industry has traditionally been the most important economic sector. In 1989, the contribution of this sector accounted for 33% of the GDP, while only the fish manufacturing sector accounted for 42.2% of the total industrial employment, 11% of the total number of industrial units, and 28.4% of the total industrial output of the city (Industrial Census 1989).

Economic indicators show that since 1991, the only economic sector which has experienced an increase in terms of output has been the fish industry (13.5% between 1993-94) [2], which consists of processing fresh sea products into frozen, packed and fish meal products. However, this has been accompanied by a dramatic decrease in the number of firms operating under formal conditions (50% of these firms disappeared between 1990 and 1994) and the number of workers employed by them (from 7000 workers in 1990 to 3000 workers in 1994) [3]. Nevertheless, at least half of the workers expelled from the larger industrial plants are now gathered in small co-operatives, which operate under informal conditions and lack the basic infrastructure required to perform their tasks.

The fish industry was traditionally oriented to both the domestic and export markets, but since 1991 it became almost exclusively export-oriented. This resulted in a higher vulnerability of the firms operating in the sector to the fluctuations of the international market, where they have a marginal position in the definition of prices and introduction of products. Their competitiveness is based on the comparative advantage of the natural resources of the region and not on the technology or the differentiation of their products or services. In addition, towards the end of the 1980s the fishing rights over the national Exclusive Economic Zone were opened to foreign fleets, which increased the pressure and competition over the same resources, adding new disadvantages to the national and local fishing industry.

In this context, the process of restructuring the local industry towards export markets, has resulted in a shift from a large scale pattern of industrial establishments, to small factories and households which develop market oriented activities. A few large enterprises still concentrate the process of catching and trade, subcontracting most of the processes of production (which demand low incorporation of technology and intense labour force), through the engagement of smaller units and households, which represent approximately 40% of the total number of establishments operating in the fish industry [4]. Due to the scarcity and higher price of the raw materials (resulting from the over-exploitation of the regional fisheries) and unfavourable international prices, the strategy of subcontracting is implemented by the larger enterprises in order to reduce the initial capital investment and the costs of production.

Most of the subcontracting units lack municipal permission to develop their activities and operate within the working procedures of the informal sector, engaging temporary workers according to the fluctuations of the demand. In this way, the vulnerability of the sector to the fluctuations of the international market is transferred to the small units engaged within the informal sector, which perform productive activities lacking the infrastructure and environmental conditions to develop their tasks in an adequate manner. There is empirical evidence of the worsening conditions of environmental degradation and social inequality that has come about with the recent process of economic growth.

In a context where the economy seems to be taking off, public authorities appear to be concentrated on maintaining the growth of output without giving much attention to the environmental costs involved. This results in a general relaxation of the enforcement of environmental regulations.

Recapitulating, the central argument of this paper is that: as a result of the economic policies introduced since 1991, the local fish industry is undergoing a process of restructuring characterised by the following trends:

• The opening-up of the national Exclusive Economic Zone (EEZ) to foreign fleets has led to an increasing depletion of regional and extra-regional fisheries, higher prices of the raw materials and the intensification of unsustainable practices by the local fishing activity.
• The shift of the activity from both domestic and export markets to almost exclusively the latter, has led to a higher exposure of the sector to the international market under comparative disadvantages (low productivity, low diversification of the production, and structural incapacity of the sector to invest in new technologies to overcome the aforementioned problems), resulting in a process of restructuring and a higher concentration of the economic circuit in a few enterprises.
• Through the process of restructuring, the sector has based its output growth in two strategies: First, the informalisation of several processing activities, which are transferred from the larger industrial units to smaller domestic units, in order to reduce their operation and maintenance costs (which includes their obligation of social security payment to their employees). Second, the externalisation of environmental costs through the lack of compliance of the environmental regulatory framework, which has resulted in increasing water and air pollution and the environmental degradation of the harbour area, where formal and informal units are concentrated.

In order to establish the links between current economic reforms, the restructuring of the fish industry and its environmental and social outcomes, the analysis considers the dynamic interactions between three main components: (1) the ecological system or ecological conditions on which the fishing industry is based and impacts upon; (2) the socio-economic system or business environment conditions (political, social, cultural, economic and technological factors), that influence the subsystem of the fish industry; and (3) the strategies and practices of different units of production within the subsystem of the local fish industry.

NOTES

4. Ibid.

N-AERUS: Network-Association of European Researchers on Urbanisation in the South
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