Global Players from Emerging Markets: Strengthening ... - Unctad

14 Outward Foreign Direct Investment by Enterprises from Argentina
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
Source: ECLAC.
Figure 2. OFDI cumulative flows from Argentina and other large outward
investors from Latin America, 1992-1997 and 1998-2004
(Millions of dollars)
1992
-199
7
(ii) most firms operated independently and
with a small volume of ramifications and/or
diversification in the local market; they were
also in general not connected to the financial
system;
(iii) companies were often national leaders in their
respective markets, having developed under
an import-substitution regime (that included
protection, government credit and promotion
mechanisms);
(iv) they developed their own technological capital
by adapting existing product and process
technologies to the characteristics of the local
market; many also came to produce new and
original products; and
(v) they often operated with a high degree of
vertical integration, largely as a result of
the insufficient degree of development of
independent distribution networks.
By the late 1970s and early 1980s, crisis in
the domestic market, factors inherent to the firms,
and crisis and changes in target markets, led to the
closing down of most of the Argentine operations
abroad. It was only after the crisis of the 1980s and
the beginning of the internationalization process with
the adoption of new OFDI policies that they began to
pick up again. A new wave of OFDI took place, against
a background of overseas investment by Argentinean
trade liberalization, deregulation, privatization and
stabilization programmes. Investments in this period
were undertaken mainly in neighbouring countries or
in developed countries.
1998
-200
4
Argentina Brazil Chile Colombia Venezuela Mexico
OFDI from Argentina took off in 1992 (figure
1). The country was the largest outward investor in
Latin America and the Caribbean during the period
1992-1997 (figure 2).This upward trend was provoked
by the restructuring of Argentine industry, which
came as a response to the economic transformations
during that decade (Kulfas 2001). OFDI flows
peaked in 1997 and 1998, led by investments made
by large enterprises including Arcor, Pérez Companc
and Techint (table 1). Since 1998, OFDI flows from
Argentina declined in each consecutive year, except in
2003. While OFDI flows recovered in 2003-2004 from
the dramatic disinvestment in 2002, they remained
under $1 billion. 10 Macroeconomic crisis and the
acquisition of important Argentinean companies by
foreign investors contributed to the OFDI decline in
the early 2000s.
Geographical destination. The large
acquisitions made by Argentine companies took
place within the Latin American region, reflecting
the influence of geographical proximity, business
knowledge and cultural affinity. Investment
opportunities created by the privatization process in
the region were also a determinant. Between 1997
and 2000, 85 per cent of Argentine OFDI flows were
directed at Latin American countries, of which 31 per
cent in Brazil and 28 per cent in Venezuela (Kosacoff
1999). This geographical distribution was prevalent
throughout the 1990s up until 2004. This is not to say
that OFDI was limited to the region. Some enterprises
10 Available data do not yet permit an interpretation of the
beginning of a reversal of the previous trend.