Volume 43, Number 170,
July-September 2012
Foreignization and Industrial Economic Power in Argentina
Pablo Manzanelli and Martín Schorr

Influence of foreign firms on industrial production is growing, but unlike global economic concentration, average levels of foreignization in the post-convertibility era (27.8%) are not only higher than those seen in the 1990s (17.3%), but they are also above levels registered in 2002 (27.6%).

In this way, domestic industry shows a strong tendency towards global economic concentration and foreignization of the manufacturing framework during the period from 1993-2001. This bias persists in the post-convertibility era on a new level (much higher) following profound adjustments to the country’s economic functioning brought about by the monetary devaluation in 2002, and the “high dollar” as a key axis of the “policy” towards manufacturing sectors.

This behavior is replicated, with even greater relevance, when looking at the weight of exports for both aggregates (the leading manufacturing companies and the foreign firms) in total external sales for Argentinean industry. In the 1990s, there was a growing tendency among the leading companies to export, with a resulting increase in influence for manufacturing exports. However, in the post-convertibility era, said capital was consolidated as a solid platform for exports, further reinforcing the hegemonic weight of the leading companies in total manufacturing external sales, which was expanding quickly in those years (Azpiazu and Shorr, 2010a). This occurred to such an extent that the concentration of industrial exports among leading companies reached 78.3% in the post-convertibility era (a number that was only 67.5% in the 1990s), while the participation of foreign firms that form part of the elite manufacturing economic power for sectorial exports was 49.8% in the same period (and 33.1% during convertibility).

In this sense, we can infer that during the convertibility period, certain actors (and sectors) used exports as a way to compensate for consequences of the domestic economic cycle. Others started to establish themselves as important currency generators through international commerce, and others, in favor of the variety of natural resources and/or a privileged operative context, turned over growing proportions of their production to external markets, despite the exchange rate slowdown. This phenomenon assumes much more marked intensity in post-convertibility, a stage at which the combination of a new exchange relationship with favorable international conditions, a significant increase in commodities prices (including for industrial items) and the business strategies in a sectorial context marked by structural consolidation of branches linked with processing basic resources and automotive assembly,7ended up giving sales to outside the country a much higher economic importance.8

To summarize, in response to this study’s first objective, we can say that sectorial influence from leading industrial companies and multinational corporations is extremely transcendent and significant. Both subsets reveal a clearly growing tendency or, in other words, the processes of general economic concentration and foreignization of the domestic manufacturing industry emerge as one of the continuities noted between the phase of convertibility (1993-2001) and post-convertibility (2003-2009).

Thus, in order to evaluate the second of our objectives, the analytical choice to focus on only 100 firms is clearly justified by the importance of these actors as a central nucleus in the performance of the Argentinean industry as a whole.

With this goal in mind, we proceeded to break down this panel of large companies according to the company types: private national firms, foreign firms and associations (with participation from two or more stockholders, generally one of national origin and one foreign).

7 That is, for those branches with a clear presence of foreign oligopolies. Regarding this topic, Azpiazu and Schorr write, “Currently, multinationals with activity in the country enjoy a sort of ‘double’ structural insertion. On the one hand, there are those companies linked to the “old” international division of labor: production structured on a base of comparative static advantages, mainly abundant raw materials (agroindustry, mining, oil and some industrial commodities). On the other hand, there are those companies linked to the “new” phase of internationalization of productive processes: the de-verticalization of processes on a regional and/or global scale. A key example of this is the automotive sector, for which Brazil plays an indubitable dynamic role at the regional level, and Argentina lags behind in growing de-integration of activities in the framework of corporate strategies defined at the sub-regional level and/or on an international scale” (Azpiazu and Schorr, 2010b: 120).

8 This is to such a point that export growth among leading companies became one of the pillars of notable dynamism among total sales and of the increase in global economic concentration confirmed by the domestic manufacturing sector after the collapse of convertibility. The principal explanatory factors behind the important jump in level shown in economic industry concentration in recent years can be found in works by Azpiazu and Schorr (2008).

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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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