Ju ly

2015

RectoRCarlos Ruta

DiRectoRDiego Hurtado

executive DiRectoREduardo Mallo

eDitoRBruno Massare

PhotogRaPhy eDitoRPablo Carrera Oser

Staff WRiteRSVanina LombardiNadia LunaMatías Alonso

tRanSlationPilar Echave

layout anD DeSignPilar Echave

ManageMentSecretaría de Innovacióny Transferencia de TecnologíaUNSAM

contents

fRontieRS

5 •  Public Works in the New Argentina

13 • Who Innovates in Argentina?

techno-PoliticS

19 • Betting on Energy Sovereignty

ISSN: 2347-0380

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Public Works in the New Argentina

Investment in infrastructure is the backbone for the plan to recover Argentina and make it an industrial country. Which should be investment’s role in the future?

It is impossible to understand the scope of the transformation process that be-gun with Néstor Kirchner’s administration without weighing up the dilapidated state of the country he inherited in 2003. The terminal crisis that took place in 2001 was the consequence of decades of disinvestment in social development and infrastructure, an important deindustrialization process, the breaking up of the State, indebtedness, and the destruction of work sources. Where to begin?

In the last 12 years, public investment has been one of the pillars to the complex process of designing a new country. Housing, sewers, hospitals, schools, roads, transport, energy, telecommunications, science and technology; the country lacked everything. Twelve years later, Argentina is a new land. Today’s balance was unthinkable in 2003.

Drinking Water, Housing, and Hospitals

Labor market flexibility laws, the absence of the State, flights of capital, and the indebtedness of the nineties left behind the more vulnerable sectors of our soci-ety in unprecedented precarious living conditions.

To improve the living conditions of the most vulnerable sectors was (and still is) the most pressing part of the recovery process that begun in 2003. Then, the State launched and started to implement a project to lay 17,000 kilometers of piping and 22,000 kilometers of sewers. The strategic recovery of the company AySA by the State in 2006 made it possible to provide drinking water to 2.6 million people and sewers to 1.9 million. These policies were successful in lowering the number of hepatitis cases (from 60,000 to less than 300 per year) and, in the neighborhoods with drinking water, of diarrhea cases (reduced by 70 percent) and infant mortality (reduced by 35 percent). All the regions benefited from

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these positive consequences, although the Argentine Northwest and the Patago-nian region stand out.

The administration designed a housing policy that focused on structural poverty. To this day, more than 893,000 housing solutions, which include both new hous-es and improvements on existing infrastructure, have been fulfilled and more than 256,000 are in development. This means that more than five million Argen-tine people all over the country will have benefited from this.

As regards health, the fact that stands out the most is that between 2003 and 2015 there was building work done in 127 hospitals or health centers, and 30 of them have already been finished. The following are the most emblematic works: El Cruce Hospital (in Florencio Varela), El Calafate Hospital, The Mother and Child Hospital in la Rioja, the Mother and Child Hospital in La Matanza, and the Padilla Hospital in San Miguel de Tucumán. We should also mention that there are currently seven nuclear medicine centers being set up, which will use investment for infrastructure, equipment, and training programs for human re-sources.

Energy for the Industry and Transport

Abandoning the neoliberal model has turned the industry into the core for eco-nomic growth and social development. The first variable we should consider in this changing scenario was the energy needed to support the growth of produc-tion both in workshops and factories, and in transport. We should remember that YPF belonged to a transnational Spanish company, which exported oil to invest what they collected elsewhere in the world. The company’s nuclear plan had been abandoned in the mid-nineties.

In May 2004, the government launched the National Energy Plan. Eleven years later, 146 million pesos have been invested and the installed capacity was in-creased by 51 percent (11,590 megawatts). This means that more than four mil-lion extra homes gained access to the public energy grid. Besides, more than 5500 kilometers of high voltage cables were set, and ten provinces were incorpo-rated into the National Interconnection System.

A decisive step towards energy sovereignty was in April 2012, when the country became the majority shareholder of YPF once again. With this measure, the Argentine Sate incremented its share in the sector from 7 to 45 percent. Mean-

while, the private share was incremented from 13 percent to 30 percent, and the participation of foreign capital was lowered from 80 percent to 25 percent. In addition, the company Y-TEC was created, as a result of a partnership between YPF and the National Scientific and Technical Research Council, for the devel-opment of technology for non-conventional oil and gas, and alternative energy sources.

The conclusion of two great works that had been halted in 1998 is another sign of the recovery and expansion of the energy infrastructure. The first one is the hydroelectric dam Yacyretá, finished in 2011, which incorporated 1800 mega-watts to the electric grid. The second one is the nuclear station Atucha II, whose construction begun in 1981, was halted in the early nineties, and was picked up in 2004, as a key element in the reactivation of the nuclear plan. The new nuclear station, which was renamed “Néstor Carlos Kirchner”, started to operate in June 2014 and delivers 745 megawatts to the National Interconnection System. Its contributions means saving 400 million dollars in fuel imports every year.

A strategic decision for the long term is the diversified investment on nuclear en-ergy, which, on the one hand, made it possible to revive the sector in areas such as nuclear medicine, and on the other, promoted the work needed to export nuclear research reactors and develop the technology needed to become self-sufficient

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Knowledge, Technology, and Added Value

This administration assumes that improving of the living conditions of people and supplying of energy for economic growth should go together with a medium or long term goal, which is transforming the productive matrix and switching from having an agro-exporting model to being a country which exports high added-value goods and is capable of incorporating the knowledge developed in national laboratories to its production process. In opposition to the models that seek competitive advantages in low salaries, the project that begun in 2003 in-volves the generating knowledge to create highly qualified work positions.

That is, national companies should become more competitive by incorporating knowledge and technology in all the levels of the production process: from the scientist to the engineer, in the design of products and processes; to the plant worker. Everyone should deliver improvements that come from the experience they have acquired and ongoing training. Primary, secondary, and university edu-cation, as well as the infrastructure of research and development laboratories, are central to this variable.

With the creation of the Ministry of Science, Technology, and Productive Inno-vation, by the end of 2007 a project was launched to build more than 40 build-ings for scientific research and to update and extend more than 100. The total investment for this was over 1200 million pesos. Today, 123 buildings have been completed, 16 are in progress, and other 24 have been planned. Altogether, these buildings take up more than 151 thousand square meters across the country, which meets and exceeds the deficit of 120 thousand square meters that were destined to science and technology in 2003.

One of this works is the Scientific and Technological Hub sited on the plot of land that belong to the former Giol winery. It is the first center of management,

as regards nuclear fuel. Thus, the nuclear and hydrocarbons industries position themselves as strategic areas, which are beginning to have a multiplier effect on other sectors of the economy.

Meanwhile, the transport capacity of gas pipelines, which since 2004 has grown 27 million cubic meters a day, made it possible to connect other 2.3 million homes to the grid. Accordingly, the building of a gas pipeline for the Argentine Northeast begun, with more than 4144 kilometers of central networks that will benefit 3.4 million people by supplying natural gas to 168 towns in six provinces: Chaco, Corrientes, Formosa, Misiones, Santa Fe, and Salta. Moreover, in 2015 the province of Santa Cruz launched the Thermoelectric Plant Río Turbio, which works on coal and has an installed power of 240 megawatts, enough to supply for the entire province.

In the medium term, among the larger works being completed, there are the fourth and the fifth nuclear power plants, which are being negotiated with Chi-na, together with the hydroelectric plants Néstor Kirchner, Cepernic and Chi-huido I, the latter as a result of an agreement with Russia. These projects are basic not only because all the works, as a whole, generate nearly 5600 megawatts, but because a central part of the negotiations has to do with the conditions for the participation of the national industry.

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”A decisive step towards energy sovereignty was in April 2012, when the country became the majority shareholder of YPF once again. With this measure, the Argentine Sate incremented its share in the sector from 7 to 45 percent.

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production and dissemination of knowledge in Latin America. The building is the new seat of the Ministry of Science, the National Agency for Scientific and Technological Promotion, and the International Institutes for Interdisciplinary Innovation. The second stage of the works will include a building for the Nation-al Scientific and Technical Research Council and one for the Cultural Center for Science. The Hub is an architectural metaphor of the central role science and technology have today.

The increased investment in scientific infrastructure was mirrored by an invest-ment in education infrastructure, which meant building schools and universities across the country. A law that was sanctioned in 2005 for education funding, set a progressive increase of the investment by the national and local governments, until the total reaches a six percent of the gross domestic product.

A central aspect of this process is the project More Schools, by the Ministry of Federal Planning. About 870,000 students have profited from an investment of more than 16,000 million pesos. In the 12 years of this administration, 1882 schools have been built, and 354 are under construction. Besides, 5754 renova-tion or expansion works have been completed as well.

What the industrialization process needs are human resources, mainly engineers and technicians. The sources of these professionals are technical schools, which are probably the educational establishments that were more seriously affected during the deindustrialization process. In the nineties, these schools were even-tually shut down, but in the last twelve years they were recovered, and 53 new facilities were built. Thus, it was possible to increase the availability of qualified labor force to meet the demand of specialized workers, caused by the growth in the industry and other sectors, such as energy or transport.

Finally, between 2002 and 2013, the Support Program for University Infrastruc-ture Development resulted in the building of nine public universities; five in the Greater Buenos Aires area, and the others in Río Negro, Córdoba, Chaco, and Tierra del Fuego. This support for the building of new universities, as well as new equipment and improvements for the existing ones, had a positive impact on the university student population, which grew 35 percent since 2001 (from 1,412,999 students to 1,912,406 in 2013). That is, there are almost 500,000 new university students, 78 percent of which go to public universities. The number of graduates was increased by 80 percent (from 65,104 in 2001 to 117,374 in 2013).

Intangible Multiplying Effects

In technology, in addition to energy and transport infrastructure (especially roads and trains, which we have not dealt with in this article), the third more important aspect in the foundations of the growth of the national industry are telecommu-nications. The Ministry of Planning promoted the program Connected Argen-tina. The most outstanding achievement in this initiative is something that, ten years ago, was unthinkable: the design and development of ARSAT-1, the first Argentine telecommunications satellite, fully designed and built by Argentine engineers and scientists. In the near future, the second satellite, ARSAT-2, will be put into orbit, and it is expected that in 2017, ARSAT-3 will be launched into space.

Another central initiative is the implementation of a federal optic fiber network, which will be used for high quality and high speed data transport. ARSAT’s president, who is in charge of both projects, explains: “There is no other network in Latin America with this capillarity. And it has been promoted by the State.” To this day, 30 thousand kilometers have been built, of the 58 thousand kilome-ters planned. Besides, the project also includes the program Connecting Equality,

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for digital inclusion, which has already handed out five million netbooks to stu-dents from public schools.

As a counterpoint of the fragmentation inherited from the 2001 crisis, today the national project has systemic dimensions. Investment in infrastructure, as the backbone of this process, has allowed moving forward on three essential intangi-ble assets that are crucial for the years to come: (i) the recovery of our self-esteem, as a country which sets ambitious goals and achieves them; (ii) the development of organization and coordination skills for the country as a whole; (iii) the sta-bility of institutions and the connections between them. The final result is an intelligent State that creates the conditions it needs to be on an ongoing learning process and to continue achieving its goals with growing efficiency.

Ultimately, we have to translate into investments the desires of a country that, for the last 12 years, has expressed its political desire to be a in a place where democracy means inclusion, equity and social justice.

Who Innovates in Argentina?The first National Survey on Innovation and Employment Dynamics analyzes the Argentine manufacturing sector. According to the study, 60 percent of the companies have undertaken some innovation activities.

The Ministry of Science, Technology, and Productive Innovation and the Minis-try of Labor, Employment, and Social Security have introduced the first Nation-al Survey on Innovation and Employment Dynamics. The qualitative and quan-titative study analyzed 650 variables connected to innovation and employment in 3691 companies with more than ten employees, between 2010 and 2012. Some of the aspects included were investment in R&D, job creation, human resources management, and achieved level of innovation.

The data obtained was organized according to the size of the company that took part, the sector they belonged to, and the type of activity involved, “one of the basic elements for the development of public policies, which sometimes does not receive the attention it should,” said Mario Cimoli, director from the Economic Commission for Latin America and the Caribbean, which was one of the advi-sory bodies for the survey together with specialists from the National University of General Sarmiento.

The study, which took four years to be concluded, took into account two different groups of companies. First there were those that made an attempt at innovation, regardless of the results they obtained in the end, and then there were others that did produce a concrete result. The concept of innovation was defined as “a collec-tive phenomenon where different economic and social actors take part, which is not the result of individual behaviors by isolated companies.”

Almost all the companies that attempted to innovate managed to obtain some concrete results within the period considered in the survey (94 percent). This group, the ones that succeeded, represent more than half (56 percent) of the manufacturing firms in Argentina. In relation to the area, according to the survey, the most innovative one was the pharmaceutical sector (82 percent), followed by the chemical and petrochemical sector (71 percent); electrical equipment, elec-tronic devices, radio, and TV (69 percent); and the car industry, the shipbuilding

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industry, and railway equipment (67 percent). The least innovative areas were the textile sector and the wood and furniture sector.

Nearly 40 percent of the companies that attempted to innovate achieved some results, with products and production, organization, and marketing processes. A lower percentage (32 percent) managed to introduce a product and a process, 11 percent only innovated with products, and 2 percent only with organization processes.

The pharmaceutical sector was the one that invested more in what the survey defined as “Innovation Activities”: 4.3 percent of their total sales. Innovation activities include internal R&D activities, industrial design, and engineering. Following the pharmaceutical sector were the areas of rubber and plastics (2.96 percent), machinery and equipment (2.28 percent), and paper and editing (2 percent).

In relation to the type of innovation, the most popular one was investment in machinery and equipment. This activity was a favorite among medium-sized companies. With lower percentages, then came internal R&D activities, which

showed the greatest percentages among large and small companies, but not me-dium-sized ones.

“This survey hits the nail on the head,” said Cimoli about the data provided by the study. He believes that disregarding innovation in public policies “is one of the main issues that lead to the stronger contradictions at regional levels: We don’t have a diversified productivity scheme that favors social inclusion.”

“Large companies explain the 72 percent of investment in innovation (in the manufacturing sector). This has to do, partly, with the economic situation of these companies,” said Gustavo Arber, director of the Scientific Information area of the Ministry of Science, Technology, and Productive Innovation, during the pre-sentation of the survey. And he added that all companies protect their innova-tions: “The smallest ones usually use informal mechanisms, while the larger ones use formal mechanisms as well. Among these, the use of patents is still relatively low, in relation to the use of trademarks and designs, as well as exclusivity agree-ments.”

Innovation and Job Creation

“Innovation is key for the increase in productivity and competitiveness,” assured Lucía Tumini, from the Observatory on Employment and Business Dynamics of the Ministry of Labor. She stressed that “jobs are in the core of the innovative process, either as an input or as a result.”

The data obtained with the survey allows us to infer that, regardless of the size of the company, the most innovative ones created more jobs (and better-paid ones). Thus, the rates of job creation in innovative companies versus the rate in non-in-novative ones were the following: 14 percent and 6 percent in small companies; 9 percent and 2 percent in medium-sized companies, and 7 percent and 6 percent in large companies.

When innovation demanded more qualified personnel, more than 70 percent of the companies chose to train the existing one. Sixty two percent promoted incorporating new qualified resources, more than half hired new personnel and trained them, and only 10 percent replaced workers. The most popular training area was occupational safety and health, followed by updates in tool usage and procedures, and quality assurance.

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Even though the advantages of innovation are clear for companies, the truth is that the process has difficulties as well, and not all of the firms are qualified to overcome them. Internally, the main concern mentioned by the surveyed compa-nies were high costs, followed by the lack of qualified resources in the company, the excessive length of the investment’s payback period, and the limited produc-tive capacity. In connection to the external factors that hinder innovation, the most important one was economic and financial uncertainty, which affects half of

the manufacturing companies, followed by the difficulty to import capital assets, high costs, the obstacles to obtain funding, and legal uncertainty.

Trial and Error

“The best option in innovation is experimentation; in trying and creating analytic and evaluation abilities. The region has the challenge of improving capacities,” said Pablo Angelelli, senior specialist in the Competitiveness and Innovation Di-vision of the Inter-American Development Bank. He spoke about the gap there is between countries in Latin America and the so-called developed countries in areas such as the rate of investment in R&D over the GDP (which, except from Brazil, is less than one percent while in countries like Korea is more than 4 per-cent, and in others more than 8 percent), the number of researchers per inhabi-tant (three every one thousand in the region, while in more developed countries it is eight every one thousand), as well as investment in human resources. The bank gave 500,000 dollars to conduct the survey, through an agreement with the Latin-American Social Security Organization.

“When we look into the causes for this gap, we find systemic flaws that have to do with how the market works, but also with how the different actors that are part of the national innovation systems work in coordination,” said Angelelli, “we should not make the mistake of thinking there is only one way to design a public policy.”

In the case of Argentina, the specialist recognized the value of the technolog-ical policies that were developed in recent years, and stressed that there was a significant learning process which allows the country to move forward to more complex promotion measures. However, he stated that “knowledge should not remain in the public sector. We should make an effort to make the private sector get to know and learn how to use promotion tools. It is necessary not to lose sight of the right balance between efforts on the supply end and on the demand end.”

Production with Inclusion: Between Keynes and Schumpeter

Cimoli stressed the importance of the manufacturing sector for the creation of qualified and better paid jobs, among other things. Moreover, he stated that, if the United States “wants to establish an industrial policy centering on advanced manufacturing to uphold social inclusion and income distribution, it means that we are not the only ones paying attention to this, because it is a highly important matter.”

For this reason, the specialist from the Economic Commission for Latin Amer-ica and the Caribbean valued the survey’s contribution, because it analyzes the industrial sectors that have more potential to grow. He asked whether it was bet-ter to follow a Keynesian model, where promoting demand would be insufficient if the country has no way to respond to it. In this case, he considered that maybe we should adopt a model that favors industrial development, as a first step, or, in other words, to generate first the productive capacities and the diversification that are needed to uphold inclusiveness.

The specialist stated that this was one of the matters assessed by the commission, when evaluating the possibilities for development in Latin America. He suggest-ed opening the debate on these matters of regional economy and politics.“Is it more important to be Keynesian and to increase public expenditure and effective demand, or is it better to be Schumpeterian first, and to build capacities?” ques-tioned Cimoli.

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...knowledge should not remain in the public sector. We should make an effort to make the private sector get to know and learn how to use promotion tools. It is necessary not to lose sight of the right balance between efforts on the supply end and on the demand end.

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Nadia Luna

Betting on Energy SovereigntyY-TEC, the technology company created by YPF and the National Scientific and Technical Research Council, has announced the completion of a new building in Berisso, which will house 12 pilot plants for energy research.

“Our main activity involves coming up with technological solutions for the in-dustry. Our goal is for the industry, its companies, and value chains to see us as the innovative aid that will provide the technological solutions they need to face new challenges,” said Santiago Sacerdote, general manager of Y-TEC, about the company’s mission.

During a press meeting at the building of the state oil company, Sacerdote, to-gether with Sergio Affronti, member of YPF’s board of directors, spoke about the advances in some of the more than 100 current R&D projects they have with different research institutions across the country. Besides, he announced that, in the next few months, a new building of over 12,000 square meters will be in-augurated in Berisso, Province of Buenos Aires. “It will allow us to house more than 250 researchers. It will have 48 laboratories, which will be added to the 12 we currently have at the Center of Applied Technology in La Plata, as well as 12 pilot plants, of which one will work in Exploration and Production, and anoth-er with lithium,” said Affronti. “I believe this is the most important center the country will have for applied research, and it will be in a strategic area. We plan to make it operative by the end of this year,” added Sacerdote.

Y-TEC’s managers also stressed the need of coordinating the company’s work with other research centers across the country, so as to build on the existing ca-pacities, share knowledge, and “set up a network of innovation centers” to gener-ate new ideas with technological added value. Besides, they stated that their goal is not only to work with YPF, but with the entire energy sector, including SMEs and input suppliers.

According to Sacerdote and Affronti, Y-TEC has identified three kinds of tech-nology development projects. First, there are those that pose a challenge that goes beyond the national technological frontier. Then, there are emerging tech-nologies, which imply entering the market with a solution at the same time other

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”Our main activity involves coming up with technological solutions for the industry. Our goal is for the industry, its companies, and value chains to see us as the innovative aid that will provide the technological solutions they need to face new challenges

competitors come up with a different solution for a similar need. Finally, import substitution projects for equipment and spare parts needed by the energy sector.

As regards other projects Y-TEC is currently involved with, they mentioned drilling for energy in the sea. The first phase, which involved measuring parame-ters with buoys in Patagonian waters, has already been completed. Today, they are initiating the second phase: they will analyze four different locations to establish the cost of the energy in relation to the available maritime resources. For this, they will set up a turbine that is being developed by the state company INVAP.

Another project, which has to do with emerging technologies, is to use optic fi-ber to detect several variables. “In the last two years, we have developed a special piece of equipment that can identify useful information by measuring with optic fiber, after it undergoes a hydraulic stimulation process. It is a new technology, a product that is being developed in the country, and which will be transferred to a national company, for it to manufacture it on a large scale,” said Sacerdote.

Besides, Y-TEC has been working for some years in the development of fuel for the rockets CONAE uses in the trials for Tronador II. According to Sacerdote, research into lithium’s properties is “an opportunity the country has for complet-ing a chain of value”. Finally, he added: “Our goal is to work with a technological package for the extraction phase of the lithium present in brine, to make the work in the Puna area cleaner and more efficient. For the production stage, we believe there should be a production unit to manufacture the cells for lithium batteries. Y-TEC has been working on mastering this technology with the sup-port of researchers from the National Scientific and Technical Research Council; now we are ready to transfer the technology so that a national company starts producing the battery cells”.

Affronti and Sacerdote also mentioned that they are training experts together with the Research Council by co-funding doctoral scholarships to generate the human resources the industry needs, especially within the latest specializations and areas of knowledge which appear every day in the field of energy.

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