Industrial restructuring through mergers and acquisitions: the case of Argentina in the 1990s

DANIEL CHUDNOVSKY; ANDRÉS LÓPEZ

Transnational Corporations

UNCTAD

Año: 2000

1014-9562

In the 1990s, Argentina had received substantial amounts of foreign direct investment (FDI) inflows, of which cross-border mergers and acquisitions (M&As) accounted for almost 60 per cent. In the early 1990s, most were related to privatizations. During 1993-1994, most were acquisitions of private firms, and these accounted for one-third of FDI inflows during 1996-1998. Domestic M&As also increased during the 1990s. The experience of Argentina is relevant for understanding the impact of M&As on developing economies. By comparing the performance of manufacturing firms participating in crossborder M&As with an appropriate control group of firms that did not do so, the evidence presented here suggests that M&A firms, besides being more dynamic in terms of domestic sales growth than non-M&A firms, have also devoted more resources to training activities and have been able to introduce more improvements in process and product technologies, as well as in managerial and organizational routines. In turn, contrary to expectations, job rationalization has not been more significant in M&A firms than in non-M&A firms. Almost no public policies were in place to assist domestic firms to adapt to the changes in the rules of the game introduced by the structural reforms adopted in the 1990s. M&As operated as a sort of ?market-driven? restructuring strategy, delivering some positive effects in most cases. However, this restructuring process has not led to higher export propensities of the firms involved, which remains low. Even when spillovers were created by M&As through training of human resources, domesticinnovative activities remained negligible. Furthermore, the effects of this restructuring process on welfare and competition still remain to be analyzed.