2009 Alicia Bárcena Executive Secretary Antonio Prado Deputy Executive Secretary Mario Cimoli Chief Division of Production, Productivity and Management Susana Malchik Officer-in-Charge Documents and Publications Division Foreign Investment in Latin America and the Caribbean, 2009 is the latest edition of a series issued annually by the Unit on Investment and Corporate Strategies of the ECLAC Division of Production, Productivity and Management. It was prepared by José Eduardo Alatorre, Álvaro Calderón, Wilson Peres, Miguel Pérez Ludeña and Carlos Razo, with assistance from Isabelle Bosshard. Contributions were received from consultants Jorge Carrillo, Germano Mendes de Paula and Fernando Sarti. ECLAC wishes to express its appreciation for the contribution received from the executives of the firms consulted in connection with chapters II and III. The information used in this report has been drawn from a number of international organizations, including the International Monetary Fund (IMF), the United Nations Conference on Trade and Development (UNCTAD) and the Organisation for Economic Co-operation and Development (OECD), as well as from a host of national institutions, in particular central banks and investment promotion agencies in Latin America and the Caribbean, and the specialized press. Please send any comments or suggestions regarding this publication to Álvaro Calderón ([email protected]) or Miguel Pérez Ludeña ([email protected]). Notes and explanations of symbols Three dots (...) indicate that data are missing, are not available or are not separately reported. Two dashes and a full stop (-.-) indicate that the sample size is too small to be used as a basis for estimating the corresponding values with acceptable reliability and precision. A dash (-) indicates that the amount is nil or negligible. A blank space in a table indicates that the concept under consideration is not applicable or not comparable. A minus sign (-) indicates a deficit or decrease, except where otherwise specified. The use of a hyphen (-) between years (e.g., 1990-1998) indicates reference to the complete number of calendar years involved, including the beginning and end years. A slash (/) between years (e.g., 2003/2005) indicates that the information given corresponds to one of these two years. The world “dollars” refers to United States dollars, unless otherwise specified. Individual figures and percentages in tables may not always add up to the corresponding total because of rounding. United Nations Publication ISBN: 978-92-1-121738-4 • ISSN printed version: 2076-4065 LC/G.2447-P • Sales No. E.10.II.G.4 Copyright © United Nations, July 2010. All rights reserved Printed in Santiago, Chile • 2010-414 Applications for the right to reproduce this work are welcomed and should be sent to the Secretary of the Publications Board, United Nations Headquarters, New York, N.Y. 10017, U.S.A. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and inform the United Nations of such reproduction. Foreign Direct Investment in Latin America and the Caribbean • 2009 3 Contents Pages Summary and conclusions ............................................................................................................................................ 9 Chapter I .............................................................................................................................................................................. Regional overview of foreign direct investment .................................................................................................. 19 A. Introduction .......................................................................................................................................................................... 19 B. An overview of foreign direct investment worldwide .......................................................................................................... 20 C. FDI inflows and transnational corporations in Latin America and the Caribbean ............................................................... 23 1. Trends and characteristics of FDI flows to Latin America and the Caribbean in 2009 ............................................ 23 2. Transnational corporations and foreign direct investment in a crisis year ............................................................... 30 3. Technology intensity of transnational activity in the region ..................................................................................... 37 4. Transnationals in R&D in the region ........................................................................................................................ 41 5. Conclusions............................................................................................................................................................... 42 D. Outward foreign direct investment and the trans-Latins ...................................................................................................... 43 1. Outward foreign direct investment flows .................................................................................................................. 43 2. Conclusions............................................................................................................................................................... 47 E. Final remarks ........................................................................................................................................................................ 47 Annex .......................................................................................................................................................................................... 48 Chapter II The automotive industry and the crisis: business strategies in Brazil and Mexico ........................... 61 A. Introduction .......................................................................................................................................................................... 61 B. Global overview: a radical restructuring intensified by the financial crisis ......................................................................... 62 1. An industry that is constantly evolving ................................................................................................................... 63 2. Globalization of the industry: the triad leans to the East .......................................................................................... 64 3. Concentration in the industry: towards a few global companies .............................................................................. 70 4. The collapse of Detroit: the Big Bang of the automobile industry crisis? ..................................................... 74 5. Global contagion of the automotive crisis ................................................................................................................ 79 6. After the crisis, a second round of consolidation ..................................................................................................... 81 C. Latin America: two different stories ..................................................................................................................................... 84 1. The Brazilian domestic market provides the basis for the industry’s growth ........................................................... 86 2. Mexico: dependence on the North American market ............................................................................................... 95 D. Conclusions .......................................................................................................................................................................... 102 4 Economic Commission for Latin America and the Caribbean (ECLAC) Chapter III Corporate strategies in the Latin American iron and steel industry: consolidation, growth and crisis ................................................................................................................................. 105 A. Introduction .......................................................................................................................................................................... 105 B. World overview of the iron and steel industry ..................................................................................................................... 106 1. Production and trade trends ...................................................................................................................................... 106 2. BRIC countries: key to a new structure for the industry .......................................................................................... 108 3. Principal production strategies and their impact on internationalization ................................................................. 110 4. Leading iron and steel companies in Latin America ................................................................................................ 113 5. Industry segments and foreign investment strategies ............................................................................................... 115 6. World economic crisis and corporate strategies ....................................................................................................... 117 C. Strategies of foreign iron and steel companies in Latin America........................................................................................