Archive for the ‘Region – South America’ Category

Latin America’s emerging multinationals

April 15, 2009

“Latin American companies have fallen through the cracks,” says Lourdes Casanova, a lecturer in strategy at INSEAD and author of Global Latinas: Latin America’s emerging multinationals.

 

“Latin America has been undersold. This book wants to celebrate the success of the region and its multinationals.” Since 2002, Latin American firms have expanded aggressively on a global scale and investment in foreign countries has jumped accordingly. And commodities now account for less than 30%, with a range of products now accounting for the rest – IT services, steel, electricity, wine, cosmetics, oil and gas.


Until 1980, Latin American countries were the emerging market of choice. Brazil and Mexico had China-like growth. But during the 1980s (the ‘lost decade’ due to the debt crisis) the region’s growth stalled as Russia, China and India stepped up. Prompted by the strict policies imposed in the 1990s by the IMF and World Bank, Latin American governments began the privatisation of state companies, deregulation and tariff cuts.  

 

The deregulation brought a wave of foreign multinationals to compete against domestic firms. Latin American companies had to grow and expand internationally. “These companies had been growing in a protected environment before this,” Casanova says. “Now they felt threatened by foreign multinationals competing against them in their own region. The best defense was to attack.” During the 1990s, Latin American firms grew domestically and expanded into nearby regions and/or with the same language and shared history. NAFTA smoothed the way and enabled cross-border acquisitions. Now they are entrenched.

 

Source: INSEAD, Paris

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