Rents, “infant industry” and contingent protection policies: gains and losses for Argentina’s biodiesel industry / Rents, “infant industry” and contingent protection policies: gains and losses for Argentina’s biodiesel industry

Resumo

Since 2007 and in response to nascent legislation providing subsidies, Argentina’s biodiesel industry started growing fast. The legislation was approved on the conception that the economy should diversify away from exporting primary products, and shifting to higher processing stages in this case, shifting from soybeans to soybean oil and biodiesel. Initially, responding to these policies clearly tilted towards foreign sales, most of the output was exported. Nevertheless these export subsides put investment at risk when the EU imposed antidumping measures. More recently, policies have been tilted towards sales in the domestic market but at the cost of government controlled biodiesel prices. The paper offers estimates of protectionist rents (subsidies) received by the industry from export sales, as well as sales in the domestic market. We also address the future risks in international markets faced by subsidized biodiesel exports.