Daniel Chudnovsky

Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992–2001)

Abstract Argentina received significant amounts of foreign direct investment inflows during the 1990s. This paper analyses whether positive (or negative) productivity spillovers arose from the increasing presence of transnational corporations (TNCs) affiliates in Argentina. We found that TNCs affiliates had higher productivity levels than domestic firms and that the latter, on average, received neither positive nor negative horizontal spillovers from the growing presence of foreign firms in the local economy. However, evidence of positive spillovers from TNC presence on domestic firms was found for those firms with high absorptive capabilities.

Market or policy driven? The Foreign direct investment boom in Argentina

Although the programme of structural reforms and price stabilization has contributed to a better environment for foreign direct investment (FDI) in Argentina in the 1990s, FDI flows are mainly explained by the incentives established in specific policies regulating the privatization of public services and in the automotive regime. The growth in internal demand has been the main locational advantage inducing recent FDI into Argentina. In this context, the impact of trade liberalization, entry of new firms and the requirements of the specific policies in force have encouraged firms to apply their human and physical resources in a more efficient way. Thus, in contrast to what happened in the era of import substituting industrialization, recent investments have been not only internal market but also efficiency seeking. However, most FDI has a significant import content and, except in the automobile industry, has not led to export growth. Furthermore, resource enhancement activities have been far less important than efficiency seeking investments and no significant strategic asset seeking investments have yet been made in the country.

Intra-industry trade and regional integration: the case of the auto industry in Argentina

This major Handbook offers a comprehensive analysis of the key issues surrounding the rapid expansion of Latin America’s manufacturing sector. It systematically examines the most important factors influencing the comparative advantages and the globalization of manufacturing industries in the region.

Policy Competition for Foreign Direct Investment

Fierce competition has arisen among developing as well as developed countries to attract increasing volumes of foreign direct investment (FDI). This new attitude in developing countries is part of the broad change towards market-friendly policies, as barriers and regulations are dismantled and intense competition for FDI is taking place at national as well as sub-national levels. This chapter addresses the global and regional dimensions of such competition. Section 7.1 addresses the main issues regarding policy competition for FDI. Section 7.2 describes the logic of the competition and the existing empirical evidence on its effects. Section 7.3 deals with the existing multilateral disciplines on investments. Section 7.4 considers the regional dimension of FDI policy competition, analyzing the cases of the European Union and Mercosur. Section 7.5 presents concluding remarks.

Inequality: The Argentine Experience

This book examines how policies implemented by members of the Organisation for Economic Co-operation and Development (OECD) affect development and poverty in developing and transition economies.

Economic and Social Performance During Convertibility “High Growth” Years

With the program of structural reforms launched by Menem’s administration and the application of a currency board scheme in 1991 (the Convertibility Law), the Argentine economy entered into a stabilization-cum-growth path that lasted until 1998 (only interrupted with the recession in 1995 due to the Tequila effect)—see table 2.2 and graph 2.3.

Argentina’s Economy in a Long-Term View

Until World War I, Argentina enjoyed a great economic expansion based largely on its exports of agricultural products. The country took advantage of trade opportunities opened by the growing demand of these products in industrialized countries, especially in Great Britain, a fact that was also helped by some key innovations in maritime transport and refrigeration techniques that allowed exporting chilled and canned meat to Europe.

The Microeconomics of Industrial Restructuring During The Convertibility Era

The structural changes analyzed in the two previous chapters had a strong impact on entrepreneurial strategies and performance. It is important to bear in mind that most manufacturing firms had been established during the ISI period and engaged in the learning processes in a highly protected domestic market, where growth was interrupted by recurrent crises and where institutional and political instability was the norm (see Lopez, 2006, for an analysis of the changing interaction between institutions and firms behavior in the different historical phases of the Argentine economy).

The Long Recession, 1975–1990

The military dictatorship that took office on March 1976 decided to light against guerrilla movements with a kind of “dirty war,” in which human rights were systematically violated. At the same time, political parties and labor unions were neutralized by the government (either through suspension of constitutional rights and changes in the labor legislation or through direct repression). It is in this context that a new economic policy was implemented, supposedly aimed at radically changing the structure and performance of the Argentine economy.

Introduction: The End of Panaceas; from the Postwar Consensus to the Post-Washington Consensus

The early Postwar Development Consensus (PWDC) was based on a few theoretical contributions (like Rosenstein-Rodan, 1943 on the “Big Push”)1 and mostly on “big ideas,” like the government being the driving force behind development and the importance of capital accumulation. This was stressed by authors such as Nurkse (1952) and Lindauer and Pritchett (2002).