Sturzenegger: 'deregulation Favors Small and Medium-sized Enterprises and Reduces Corruption'

The Minister of Deregulation and State Transformation, Federico Sturzenegger, stated at the AlUla Conference for Emerging Markets Economies, organized by the International Monetary Fund (IMF) in Saudi Arabia, that the deregulation policy promoted by the Argentine Government is benefiting small and medium-sized enterprises (SMEs) and reducing corruption by eliminating bureaucratic obstacles.

Deregulation and competitiveness of SMEs

During his presentation on the panel “Productivity in EMDEs: Challenges and Opportunities”, Sturzenegger emphasized that the elimination of unnecessary regulations allows SMEs to compete on equal terms with large companies.

According to the minister, excessive regulations act as a barrier to market entry, favoring larger companies, which can handle bureaucratic costs without issues.

“If the regulatory cost is very high, a large company can overcome it, but an SME can't”, he explained. In this regard, he highlighted that deregulation levels the playing field,  promoting greater competition and innovation in the sector.

Fewer regulations, less corruption

Another key point addressed by Sturzenegger was the positive impact of deregulation in the fight against corruption.

According to the minister, reducing the regulatory burden decreases opportunities for bribery and discretion in public administration. “Having a freer economic environment is a key element of the potential of SMEs in the near future”, he stated.

The "Baltimore Effect" and the impact of regulation

During his speech, Sturzenegger introduced the concept of the “Baltimore Effect,” referring to the collapse of a bridge in the United States in 2024 after a large ship collision. He explained that this event led to a tightening of maritime transport regulations in several countries, even though the incident was not directly related to the regulations in place at that time.

He contrasted this situation with the process of deregulating the Navigation Code in Argentina, where he encountered resistance to changes due to fear of similar events. “Everyone said: ‘you can't get rid of this, because then what happened in Baltimore could happen to you.’ But that tragedy had nothing to do with regulation”, he noted.

Artificial intelligence and renewable energies

Sturzenegger also addressed the relationship between technological development, energy, and the location of economic activity. He explained that, historically, industries have tended to establish themselves near energy sources. As an example, he cited the textile mills of the northeastern United States in the 18th century, which were located next to rivers to harness hydraulic energy.

He pointed out that the advancement of renewable energies and the growth of artificial intelligence could transform the global productive geography. In particular,  he highlighted that Argentina has vast wind resources in Patagonia, which could turn the region into an industrial hub in the future.

Meeting with Kristalina Georgieva

In the context of the conference, Sturzenegger held a meeting with the IMF Managing Director, Kristalina Georgieva, where they analyzed implementation strategies of the recently formed committee by the organization. His participation in this group is part of the process of deregulation and state transformation promoted by Javier Milei's government.

An ambitious deregulation plan in Argentina

Since coming to power, Milei has implemented an aggressive economic deregulation plan, with Sturzenegger as one of the key figures. According to a report by the Cato Institute, in the first year of management, 672 regulatory reforms were carried out, with an average of 1.84 deregulations per day, including weekends.

This process began with the Decree of Necessity and Urgency (DNU) 70/2023, which reviewed 366 articles to eliminate or modify regulations considered obsolete or harmful to the economy. Subsequently, in June 2024, Congress approved the Ley Bases, granting the Executive the power to continue with regulatory reforms for one year.

The Cato Institute report highlights that Argentina has historically been one of the most regulated countries in the world. In the Fraser Institute's Economic Freedom Index, the country ranks 146th out of 165 in terms of regulatory burden. In this context, the Milei administration seeks to reverse decades of regulations that, according to its proponents, hindered economic growth and benefited privileged sectors to the detriment of competition.