Thursday, December 29, 2011

Don't iPhone For Me, Argentina

Here's one way to make economic policy: block sales of a popular consumer product:

Argentina has blocked the sale of iPhone and BlackBerry devices in a move that is intended to boost its ailing economy. The ban is part of a selective consumer electronics ban aimed at slowing inflation and balancing its own pesos currency against the U.S. dollar.

It is similar to traditional import substitution industrialization. If you want to sell, you need to build a plant in Argentina or partner with an Argentine company. And with other companies it actually may have worked:

Other manufacturers like Motorola, Nokia and Samsung have already moved part of their manufacturing to Argentina after the government passed Internal Revenue Law which nearly doubled tax levies for certain imported devices.

It seems like a game of chicken, particularly for a very popular product. The government doesn't want to anger its middle class, who want iPhones and BlackBerries, yet companies don't want to lose the large Argentine market. Thus far, apparently many companies are swerving.

The Wall Street Journal discussed this issue recently, and basically came to the reluctant conclusion that the Fernández government is very protectionist but that it was not suffering as a result. Somewhere there is a tipping point where companies stop swerving and just leave the market, but it hasn't happened yet.

Update: Punk'd. Apparently this was a joke and it is not really true. This deeply disappoints me, because I thought it was a cool story and I got to use the chicken game metaphor. It is also deeply disappointing to learn that not everything on the internet is true. Bummer!


Jeff 9:28 AM  

Well, part of this story has some truth behind it. While the iPhone is not officially banned, there is some type of hold within the Argentine customs office on importing iPhones. None of the cell carriers have iPhones available and haven't for most of 2011. If you want an iPhone in Arg you have to resort to someone smuggling it in. There are some for sale on mercadolibre. The currents price there for an iPhone 4S is at least us$1,300.

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