Volume 43, Number 168,
January-March 2012
Argentina's Business Leadership and its Role
in Economic Development
Juan E. Santarcángelo and Guido Perrone
IMPLICATIONS FOR DEVELOPMENT ( ...continuation )

Another significant feature in the analysis of Argentine industrial leadership and its influence on local economic development is that of foreign influence on the country's leading companies, a development that acquired particular significance during the 1990s and far from changing has been further consolidated during the present decade. As we have seen, from 2003 to 2009, foreign capital has not only held its place within the business leadership at extremely high rates (in the order of 65%) in the context of unprecedented economic growth, it has also been practically the only player in economic recuperation, which has important implications for development. On the one hand, although foreign capital can increase the level of local investment and improve productivity rates in the economy, profit remittance and dividends, there is a continuous draining outwards of resources generated internally, which are not reinvested in the local economy. Furthermore, decisions about investment and production are increasingly determined by the requirements of accumulation processes outside the economy that receives them.

In the same way, another element in business leadership, of medium importance, is the capacity to generate employment. As we have observed, employment generation in leading companies expanded by 40% between 2003 and 2009. However, the number of jobs in leading firms in relation to the whole economy remains relatively low throughout the period, 6.5% of the total. This trend demonstrates that contrary to what is happening in the total economy, and in the context of considerable expansion in production, leading companies exhibit a poor capacity to generate employment per unit of product during the post-Convertibility period.

This phenomenon means that most of the benefits generated by leading companies during the post-Convertibility period have not been passed on to the majority of the population, which has led to a higher level of income concentration. This was possible largely because of the effect the devaluation had on the exploitation rate, which as we have seen, rose sharply with the devaluation, maintaining historically high levels over the following years. We can conclude from this performance that the actual exploitation rate is even more compelling than the one registered during the worst economic crisis in the country's history, contributing to significantly higher profitability rates for the business leadership during this period than those attained during the 1990s.

In this context it is worth posing two relevant questions. Firstly, is the industrial leadership responsible, through its meager influence, for development in the local economy? Secondly, how can those elements that do not encourage economic development be changed? Regarding the first question, it must be understood that the business leadership operates in the interest of attaining the highest possible returns and profits, and that the country's economic development is not an objective in itself. Instead the leadership seeks to operate according to the challenges it faces. Clearly then, local limitations for economic development cannot be attributed to the actions of this group.

This leads us to the second question: if the business leadership does not have to involve itself in questions of development or have working objectives compatible with it, economic development clearly needs an agent -the State- to intervene in the operation of the economy and implement operation patterns compatible with development. Success stories in developed countries in the twentieth century have shown that for effective intervention to take place there must be a development plan in place that seeks both to promote economic growth, make changes to productive structure and modify income distribution patterns.

Recent Argentine history has shown that one of the key changes that took place in the country since the mid-seventies was that State's submission to large company interests. In so doing, the State abandoned its objectives for development and inclusion, which were key during the import-substitution industrialization period, in line with a major scheme for the accumulation of capital in this new phase. As we have seen throughout this analysis, the momentum generated in previous decades has not changed significantly in recent years, and the relationship between the State and business leadership must change to put the country on course for economic development. However, this change is unlikely to come about naturally and smoothly. It must be forged by the working class. This can be achieved mainly by improving organization and articulating self-interest, to contest one the hand capital generated on surplus and on the other to pressure the State to intervene in the people's favor. It would seem impossible to follow the path forged under Neoliberal guidelines unless the working class played an active role in this.

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Published in Mexico, 2012-2018 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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