Transnationalization and integration of production in Latin America

Abstract

Trade among the ALADI countries has grown with exceptional vigour so far in the 1990s, especially in the branches of metal products, machinery and equipment, chemical products, and foodstuffs, beverages and tobacco. In order for this dynamic growth to be sustainable in the long term, these countries must develop their intra-industry trade by promoting reciprocal supply in those branches. The bulk of transnational productive capital in Latin America is concentrated in those branches, and it is in the metal products, machinery and equipment sector that the swiftest increase in intra-industry trade takes place and the link between the growth of intra-regional trade and a strong presence of transnational capital is most marked. In the motor industry --which is a textbook example of these features-- the existence of systems and agreements which include elements of preference, and in whose formulation the companies themselves have played a leading role, has been essential for their survival and growth. Examples of this are the rules governing trade in this field between Argentina and Brazil and the areas subject to the regulations governing assembly-type ("maquila"); activities in Mexico. When shaping future strategies for open regionalism and the most suitable arrangements for attracting foreign direct investment without giving rise to an improductive struggle among the prospective recipient countries, what has been observed in the motor industry suggests that it is not only through economic liberalization but also through special conditions agreed between the firms involved and the members of a given integration scheme that transnational productive capital can be attracted and retained.