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

In summary, the theoretical assumption that foreign firms tend to situate themselves in oligopolistic markets, as proposed by Dunning (1976), appears to be upheld, although indirectly, by the reality of the Argentinean economy through two feedback loops: increase in general economic concentration for the manufacturing industry (which is at the same time spreading horizontal and vertical integration, as well as “price leader” situations, Sylos Labini, 1966. Secondly, the accelerated process of foreignization in the growing industrial economic power.15


To reach a more all-encompassing understanding of the behavior of the different fractions that comprise the elite industrial companies in Argentina in the post-convertibility era, this section of the study analyzes the main structural and performance differences between large foreign firms, national companies and associations.

Due to the nature of available information, the study will not focus on the 100 leading firms in this section. Rather, we will focus on the group of companies from the manufacturing sector that comprise the panel from the National Large Enterprise Survey (Encuesta Nacional a Grandes Empresas, enge) prepared by the indec on an annual basis.16 There is no such thing as a homogenous business universe, but this approach allows us to extract some additional elements to reflect upon and understand impacts on the socio-economic and industrial dynamics of the country, separate from the foreignization of the manufacturing economic power seen in recent years.

Table 5 shows how from 2003-2009 (annual averages) the firms controlled by foreign investors had a majority participation in key economic variables revealed by the enge. For example, these businesses (172, 56.9% of the total) contributed 74.1% of total production, nearly 78% of the aggregate value, around 80% of global profits, 55.9% of employment, 66.7% of all salaries paid, 76.9% of gross fixed investment, 73.8% of exports, 81.9% of aggregate imports and something like 70% of exterior commercial surplus. These uneven levels of participation allow us to infer a discrepancy among foreign firms and the rest of the industrial leaders. Among other factors, in terms of the average size of the firms, relative productivity, respective salary levels, functional distribution of domestic income, intensity of capital formation, profit margins and methods of opening into the international market.

Table 5

15 It is illustrative to examine the evolution of major industrial prices between 2001 and 2009 to prove the close relationship between concentration, foreignization and the “price leader” situation. In the time period mentioned, when inflation was around 238%, the majority of the branches that led the inflationary process, with the consequent surplus differential in their favor, are characterized by presenting highly concentrated market structures and a strong presence of foreign capital. Among other branches, the following stand out: elaboration of basic metallic products (437%), fertilizers (414%), basic chemical substances (410%), oils and vegetable fats (359%), rubber covers (358%), cement and limestone (312%), paper and paper products (293%), beer (279%), automotive vehicles, bodywork, spare parts (263%) and chemical products and substances (243%). (Information consulted on June 27, 2011, available at:

16 Here we are talking about the 500 largest corporations in the country (with fluctuations, from the period 2003-2009, the quantity of industrial firms was about 300). Just like in the database of the 100 largest industrial companies in the country, prepared by the Area for Economics and Technology of flacso, the indec annual earnings as an indicator of company size. Regarding the origin of capital for the firms on the panel and according to special calculations from indec, the enge defines three categories: those controlled by foreign funds (that we call foreign firms); those where multinational participation in the social capital is greater tan 10% but less tan or equal to 50% (associations); and those controlled by domestic capital (national companies can have up to 10% foreign participation in their stock package.