Volume 43, Number 168,
January-March 2012
Argentina's Business Leadership 1 and its Role
in Economic Development
Juan E. Santarcángelo and Guido Perrone *
Date submitted: February 22, 2011. Date accepted: September 29, 2011


After the collapse of the Convertibility Regime, Argentina registered average growth rates in the order of 8% year-on-year for the period 2002-2009, generating more than four million jobs. One of the key participants in this process has been the country's business leadership, which has consolidated a determining role in the process of local capital accumulation. Within this framework, the aim of the present study is, on the one hand, to examine the main characteristics of Argentina's business leaders in the post-Convertibility period and given the importance of this sector to current recovery, to analyze the most significant features of the industrial leaders. On the other hand, this study examines the role of these large companies in the country's economic development by studying their influence in generating value and employment, and their impact on income distribution.

Keywords: business leadership, economic development, Argentina.

The changes that took place in the international economy in the inter-war period, together with the rise in important economic theories dedicated to the specific study of problems afflicting Asia, Africa, Latin America and Eastern Europe, gave rise to new economic development strategies. In Latin America, hand in hand with Latin American structuralism (Prebisch, 1949) the idea was put forward that development was attainable through a process of industrialization in the periphery economies. As a result, the model of development adopted by countries of the region from the 1950s onwards was industrialization by import substitution (isi). However, the characteristics that this process acquired quickly led to severe limitations as the substitutive strategy became more complex. This was due essentially to the growing need to import the supplies and capital goods necessary for industrial expansion in which the traditional sectors (usually the main source of currency) proved incapable of expanding at the rate necessary to cope with external requirements. The structural features of the Latin American economies for their part directed industrial growth towards more capital concentration and high technical progress, which benefitted a smaller proportion of society, all the while increasing inequalities in income distribution (Furtado, 1961, 1968).

Within this process and as a consequence of industrial change, two factors took center stage. Firstly, in the inter-war period, the State assumed the role of planner of the industrialization process. The State was responsible for investment in infrastructure, which favored development in new sectors and expanded the market. In addition the State coordinated these investments through policies that diminished the problems derived from structural heterogeneity. Furthermore, business leaders were the players in charge of leading the accumulation process and implementing strategies compatible with the interests of developmentalists. Traditionally in Latin America, this role has been assumed by transnational companies of foreign origin, who saw the periphery countries as potential recipients for their investments.

The advance of Neoliberal theory in the 1970s throughout the world, coupled with the ending of substitution processes in most of Latin America, corresponded with growing industrial abandonment on the political horizon. However, the authorities of Latin American countries tended to introduce reforms aimed at the withdrawal of the State from the economic sphere, delegating the assignation and distribution of internal resources to market mechanisms, which during the Import Substitution Industrialization (isi) period were to a great extent regulated by State institutions, either directly or indirectly (Azpiazu and Kossacoff, 1985). These trends were strengthened at the beginning of the 1990s with the implementation of the "Washington Consensus" whose recommendations for deregulation, liberalization and privatization were greeted with great enthusiasm by various Latin American governments. The result was practically the total withdrawal of the State from economic activity, a void that was increasingly filled by the industrial leadership, which becomes a sole player in all relevant economic activities.

Argentina is a perfect example of this process and her unique feature centers on the strength these changes acquired during both periods. In this way the development, complexity and complementarity of her industrial framework was, until the mid-1970s, one of the richest in the region in terms of the speed and strength of open policies, economic and financial deregulation and the acute process of privatization experienced at the end of the twentieth century, all of which reached a new level in Latin America. The flow of direct foreign investment and the role of foreign companies also proved decisive in shaping her production structure, essentially by strengthening and extending the process towards the production of intermediate, durable goods during the second phase of isi. In the 1990s, State withdrawal, which began in the mid-seventies, strengthened while the industrial leadership experienced a process of increasing concentration and centralization and succeeded in enhancing its capacity to influence price structure and profitability in the economy (Azpiazu and Schorr, 2010; Basualdo, 2006 and Santarcángelo, 2010). At the same time, foreign capital acquired significant weight during the period among the business leadership, particularly through the purchase of leading national firms.

However, the country's economic climate has changed significantly during the past decade. From the collapse of the Convertibility Regime at the end of 2001, and the resulting strong devaluation of the local currency, Argentina saw growth rates approaching on average 8% annually from 2002 to 2008 and the economy generated more than four million jobs. This has permitted a reversal of the downward trend shown by most social indicators in previous decades.

* Research Associate at conicet and The National University of Sarmiento (ungs) Argentina and Research Associate at The National University of Sarmiento (ungs) respectively. Email: jsantarc@ungs.edu.ar, gperrone@gperrone@ungs.edu.ar

1 The business leadership is made up of a group of 500 companies with the highest volume of sales in the country.

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