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

Daniel Chudnovsky, Andrés López and Fernando Porta

Oxford Development Studies, 1997, vol. 25, issue 2, 173-188

Abstract: 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.

Date: 1997
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DOI: 10.1080/13600819708424128

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