Foreignization and Industrial Economic Power in Argentina
Pablo Manzanelli and Martín Schorr

Table 2 presents a breakdown of the elite manufacturing companies according to each type of ownership in the time period from 1993-2009. This evidence shows radical changes in each firm’s performance. For example, between the first and last years, and as a long-term trend, these changes are clearly shown in a huge drop in the presence of national capital corporations (from 53 to 24 companies and more than 14 percentage points in terms of their participation in aggregate sales). In a similar fashion, there is a clear and accentuated increase in the influence of companies belonging to foreign investors; the number of these businesses more than doubles (from 35 to 72) and their contribution to the total earnings among leading companies grows more than 33 percentage points.9

Table 2

These opposing phenomena, which are really two sides of the same coin, are characterized by stability over time. Considering annual averages, from 1993-2001, something like half of total earnings were in the hands of foreign capital, while national capital accounted for about 36% and associations 12%. But in 2003-2009, the participation of foreign firms in total sales was approximately 70%, compared to 28.1% for national companies and only 3.9% for associations.

In this way, during the 1990s, and mainly the second half of the decade, there is dissolution of important associations, which is a notable process of denationalization of domestic companies and the arrival of a few large foreign manufacturing companies.10 During these years, the growing foreignization of leading manufacturing firms is particularly strong, a tendency that will be sustained during the post-convertibility years, at even more intense levels, given how fast the tendency grew even under the convertibility regime.11

9 During the years mentioned, there was a significant decrease in the weight of associations, both in the number of firms that this category contributed to the leader panel (8 less), as well as their weight in global sales (drop of nearly 19 percentage points).

10 This time period saw the dissolution of three associations that operated in the automotive field (Autolatina, Ciadea and Sevel), which implied reassignment of their earnings toward multinational companies like Peugeot-Citroen, Volkswagen, Fiat, Ford and Renault. Something similar occurred with the dissolution of the capital associations that controlled Celulosa Argentina and Alto Paraná, which ended up in the hands of foreign firms. The systematic decrease in the number of national firms was fundamentally linked to the fact that certain economic groups let go of ownership of numerous companies in favor of foreign capital firms (Astra, Bagley, Terrabusi, Canale, Indupa, Atanor, among others). To all this, we add the arrival of a new foreign manufacturing firm in the automotive sector (Toyota Argentina).

11 Regarding the magnitude and practices of the de-nationalization process for the domestic manufacturing sector during convertibility, please see, among other works, research from Basualdo (2006), Kosacoff and Porta (1997) and Kulfas (2001).