ECONOMY-LATIN AMERICA: MULTILATINAS' IN A GLOBALISED WORLD

Buenos Aires, March 24, (IPS)- Economic growth in Latin America is driving the expansion of corporations from this region throughout the world -even in countries of the industrialised North that formerly seemed out-of-reach.

But does this expansion, which was spearheaded in the past by the United States, Japan, and European countries like Germany, contribute to the overall development of the countries where the multinationals are based, or does it merely fuel inequality and line the pockets of the corporate elites?

"This is a central concern," economist Bernardo Kosacoff, director of the centre for Entrepreneurship, Competitiveness and Development at the private University of San Andrés in Argentina, told IPS.

He immediately clarified, however, that "it would be wrong to suggest producing less wealth in order to avoid widening the gap. What are needed are policies and regulations to ensure that the benefits don’t only go to companies but contribute to the country's development”.

Kosacoff, former director of the Economic Commission for Latin America and the Caribbean (ECLAC) in Argentina, stressed that in order to grow, generate jobs and foreign exchange, and pay taxes, companies cannot limit their reach to the domestic market.

"Internationalisation definitely boosts development, not only in the initial phase, when companies are exporting goods, but also when they start to innovate and generate networks of suppliers and jobs, which has an impact on the country," he said.

Argentina was a pioneer in this respect. But now Brazil, which accounts for most of Latin America's over 500 multinational corporations, or "multilatinas", has taken the lead, followed by Mexico, he said.

Brazilian firms like mining giant Vale or the Petrobrás state oil company and Mexican firms like Cementos Mexicanos (Cemex) or the Bimbo bread maker are no longer only playing a dominant role in Latin America, but have begun to make headway in the U.S. market and other regions and have become drivers of economic globalisation.

And the phenomenon is not only based on the exploitation of raw materials like minerals or grains. There are corporations in the fields of cosmetics, gastronomy, telecommunications and the aviation industry.

Nor is the wave of Latin American companies that have become global actors limited to the largest economies in the region. There are also multilatinas based in Colombia, Chile, Guatemala or Peru.

"The emergence of Global Latinas, it cannot be doubted, has been facilitated by a general context in Latin America of surging economic growth driven by high commodity prices," writes Lourdes Casanova in the book 'From Multilatinas to Global Latinas; The New Latin American Multinationals'.

After many companies had already begun internationalising in search of new markets that would justify an increase in scale of production, the phenomenon really started to take off in 2003, when the region's economy began to grow at five percent a year on average.

The study by Casanova, a Spanish professor in the strategy department at international graduate business school and research institution INSEAD in France, was financed by the Inter-American Development Bank.

In a telephone interview with IPS, the expert reflected on the challenges faced by the multilatinas. She remarked that the founders of these companies "had a vision of their own country that was lost in time and must be recuperated.

"Because of the volatility that characterised the region for years, large companies of Latin America had to take a short-term focus, but for the long term it is necessary to think about the development of the middle class," she said.

Casanova pointed out that the growth of emerging powers like China or India has been based on the development of middle class sectors seeking access to mortgages, cars, computers or mobile phones.

In other words, the expansion is no longer based solely on cheap labour power, she stressed.

"Leaving aside the ethical question of the extremely serious problems of poverty and inequality, what is more profitable: exporting soy to China or stimulating the growth of the middle class?" she asked.

The multilatinas also globalised after learning to overcome all kinds of difficulties in their home markets. Some now have branches in as many as 30 countries, purchase companies abroad, invest and generate employment at home and overseas.

They differ from corporations based in developed countries in that they tend to have centralised management and are family-run and have strong leadership that facilitates swift decision-making and innovation.

The multilatinas learned to survive in economic environments that were not always favourable, and they know better than anyone how to navigate in turbulent waters, Casanova said.

In her book, she makes an in-depth case study of 11 Latin American firms, including Mexican corporations like Bimbo, which has 100,000 employees in 17 countries; Cemex, with 57,000 workers in 33 countries; and telecom giant América Móvil, with more than 200 million customers in 18 countries.

Since the publication of the book, Bimbo, Latin America's largest bread maker, has expanded to the United States, where it acquired the Sara Lee Corporation's North American bakery business.

Casanova also takes a look at cases in Brazil, like aircraft maker Embraer or cosmetics firm Natura, as well as Petrobrás and Vale, the last two of which are active on every continent.

Other large Brazilian corporations were not included in the study, like Gerdau, the 11th biggest steelmaker in the world, 55 percent of whose output is produced outside of Brazil; Friboi, Latin America's biggest beef producer; and processed foods company Marfrig.

Friboi is in first place in a ranking of the 60 biggest multilatinas by América Economía, a magazine published in Chile, and Marfrig recently took over U.S. processor Keystone Foods, making it a leading supplier of beef to McDonald's.

The book also looks at "emerging" companies like Chile's Concha y Toro, Latin America’s main wine exporter with sales in 115 countries, which recently sealed a deal to purchase a California vineyard for 200 million dollars; and the Brazilian-based global IT services firm Politec.

In addition, Casanova analyses the cases of two restaurant chains: Pollo Campero of Guatemala, with branches in the United States, Spain, China and Indonesia; and Astrid & Gastón of Peru, which has locales in eight countries in the region as well as Spain.

The boom enjoyed by the owners of the multilatinas is reflected in Forbes magazine's annual list of the world's richest people. Mexican telecom mogul Carlos Slim -who owns América Móvil- was the wealthiest person for a second year in a row in 2011, with a net worth of 74 billion dollars.

<