Argentina's bussiness leadership and its role
in economic development
Juan E. Santarcángelo and Guido Perrone
INTRODUCTION ( ...continuation )

With these elements in mind, and in view of the increasing impact large companies have had on the structure of the Argentine economy in previous decades, the aim of this paper is to analyze the characteristics of the Argentine business leadership 1 from the collapse of the convertibility model and the part this leadership has played in economic development during these years of strong growth. In particular, given that major changes have taken place in this period in the manufacturing sector, this analysis will place special emphasis on the study of industrial leaders 2 examining in particular the performance of the most dynamic sectors during this phase. With these objectives in mind, this paper is structured in four sections. The second section analyzes briefly the impact of the collapse of the Convertibility regime on business leaders’ profitability, organization and capacity to generate employment. The third section examines behavior of business leaders in the same period. Finally, this paper reflects on conclusions that can be drawn from the impact business leaders have had on economic development over the past decade.


Industrialization by import substitution (ISI) was the guiding principal of accumulation in Argentina from the end of the 1930s to the middle of the 1970s, when the military dictatorship instated a new accumulation regime, often referred to as “openness with financial hegemony” or “financial valorization” 3with the view to eliminating the socio-economic foundations upon which the previous development model was based. While the changes that have occurred since the mid-1970s have formed part of a global crisis and restructuring of capitalism, the military regime had the distinctiveness of applying a vast range of economic and social policies, which being well articulated, had a re-foundational impact on the economy. However, when democracy was reinstated in 1983, successive constitutional governments tended to consolidate and later strengthen the existing accumulation pattern rather than to revert the process initiated by the dictatorship. Under this new arrangement, the country experienced increasing difficulties generating employment, recurring problems with high inflation, the dismantling of productive structure, an exponential rise in debt, capital flight and from the mid-1990s in particular, rising unemployment, underemployment and a population living in poverty. This led to a situation that culminated in major economic, social and political crisis in 2001.4However, if these developments proved profoundly regressive in social terms, there were also major winners who consolidated their power and dominance over the markets and who are represented by the country’s business leaders.5

The economic crisis of 2001 had an enormous impact on all of society. After the collapse of the Convertibility Regime and the devaluation of the peso – which heavily appreciated – in the same year, the local economy made a steady recovery, which rapidly turned to vigorous expansion. In this context Néstor Kirchner assumed the presidency, maintaining an economic policy essentially supported by a high exchange rate (characterized as an administered appreciation policy.) This offered certain protection to local production, which had been greatly facilitated by the reduction in real salaries and more so by the reduction in salary costs, which promoted expansion in the tradable-goods sectors. Furthermore, as economic recovery strengthened, the national government promoted various measures aimed at reverting some of the negative impact of policies implemented in previous decades. Among those that stand out are the restructuring and cancellation of a large proportion of external debt, the sanctioning of a new labor law and the re-nationalization of some of the companies privatized in the 1990s.

The performance of the Argentine economy has been successful in various important ways since the collapse of the Convertibility Regime. Most notably, the economy registered annual growth rates which averaged over 8% from 2003-2008 (the highest growth trend in the country in the last hundred years), the Gross Domestic Fixed Investment (GDFI) grew steadily and the relationship between GDFI and Gross Domestic Product (GDP) increased by more than 200%; while from 2003, more than 4 million jobs were generated in the country. As a result unemployment, underemployment and poverty rates dropped steadily in 2009 to 8.8%, 10.5% and 12% respectively. 6

1 According to information published periodically and the classification prepared by the National Institute of Statistics and Censuses (INDEC) in the National Census of Large Companies (ENGE), the business leadership refers to the 500 largest private companies in the country in terms of production value, excluding the agricultural and financial sectors.

2 By industrial leaders we refer to the one hundred companies in the sector with the highest sales value.

3 Among the exponents of financial valorization, Basualdo, E. (2006), Azpiazu, D. and Basualdo, E. (2009) can be cited. Rapoport (2000) is among those who maintain that the model is better characterized when defined as openness with financial hegemony.

4 It is important to underline that the period of economic recession began in 1998 and reached its height in December 2001.

5 While there are winners and losers among the business leaders, the information that ENGE presents, as previously mentioned, reveals the 500 best performing companies in the country in terms of production value. This implies that the losing companies have been automatically eliminated from study, enabling attention to be focused on the best performing companies, and permitting the “winning” companies to serve as a proxy.

6 It is important to note that while these variables show a clear tendency, problems encountered by the INDEC in measuring price and growth indices could mean an underestimation in poverty figures.