Argentina's bussiness leadership and its role
in economic development
Juan E. Santarcángelo and Guido Perrone
THE BUSINESS LEADERSHIP IN THE POST-CONVERTIBILITY PERIOD ( ...continuation )

As mentioned when examining Figure 4, the value added of the 500 leading companies in the country experienced a sharp increase after the devaluation. In distributive terms, we can see that the proportion of value added aimed at profits and salaries shows conflicting progress, and the collapse of Convertibility Regime proves a key moment in the evolution of these relationships. On the other hand, salaries show higher values than profits during the 1990s, but with a declining trend that stabilizes at around 27% in the years prior to the crisis. From the devaluation onwards, the share is reduced by 50% later recovering its position in the post-Convertibility period reaching a value of nearly 24% in 2009. Although this level is the highest since the collapse of the Convertibility Regime, it is still lower than in 2000, the lowest point prior to the devaluation. This decreasing trend is registered by the performance of the profits/value added ratio, which while showing a decreasing trend from 1997, doubles from the devaluation onwards, increasing to a maximum of 37% in 2006 and ending the period with values close to 32%.

This salary and profit trend is evidence that the Convertibility crisis and future devaluation brought about a large redistribution of the resources generated by the business leadership within the context of a considerable increase in value added from leading companies. This trend can be explained by analyzing the progress of value added per worker in the 500 leading companies and comparing this to the progress of the average salary per worker in these companies.

Figure 6 shows that the progress of salary per worker in leading companies was in line with the performance of value added per worker in the total economy, but totally disassociated from the performance of the value added generated by these same companies. Taking this as an approximation of the capacity to generate surplus, it can be observed that salaries in leading companies follow the performance of average labor productivity in the economy and not that of the business elite which shows considerably higher levels in the whole series, particularly from 2002. The result was a significant increase in the capacity to appropriate an increasingly larger proportion of the surplus generated by the business leadership, in the context of a high increase in value added. This trend can be ratified by analyzing the profits ratio over sales for the business leadership and the value added per worker over the salary per worker, whose developments can be considered approximations of the trajectory of the profit margin and exploitation rate respectively.

Figure 6. Value Added Per Worker in the 500 Largest Companies
in the Economy and Salaries Per Worker in 500 companies
1993-2009
Source: Prepared by the authors on the basis of data supplied by indec in enge.

The information in Figure 7 shows that the profit margin increases at the beginning of the 1990s, but decreases dramatically from 1998 until its collapse in 2001, in line with the acute recession that affected the Argentine economy during these years. However, from the collapse of the Convertibility Regime and the devaluation of the peso, business leadership profit recovers quickly and shows a sharp increase throughout the following decade, at much higher levels than those shown in the 1990s.