Market or Policy Driven? The Foreign Direct Investment Boom in Argentina

DANIEL CHUDNOVSKY; ANDRÉS LÓPEZ; FERNANDO PORTA

Oxford Development Studies

Taylor and Francis

Año: 1997

Although the programme of structural reforms and price stabilisation have contributed to a better environment for FDI in Argentina in the 1990s, FDI flows are mainly explained by the incentives established in specific policies regulating the privatisation of public services and in the automotive regime. The growth in internal demand has been the main locational advantage to induce recent FDI into Argentina. In this context, the impact of trade liberalisation, entry of new firms and the requirements of the specific policies in force have encouraged the firms to apply their human and physical resources in a more efficient way. Thus, in contrast to what happened in the ISI, recent investments have been not only internal market but also efficiency seeking. However, most FDI has a significant import content and except in the auto 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 been yet made in the country.