OBSERVARE
Universidade Autónoma de Lisboa
e-ISSN: 1647-7251
Vol. 10, Nº. 1 (May-October 2019), pp. 112-124
THE INVESTMENT OF SPANISH COMPANIES IN LATIN AMERICA, PATTERNS
AND DETERMINING FEATURES
Gonzalo Solana González
gsolana@nebrija.es
Holder of a Bachelor Degree in Economics and Business Sciences, Universidad Autónoma de
Madrid. Holder of a Bachelor in Law, Universidad Nebrija. Holder of a Ph.D. in Economic Sciences,
Universidad Castilla-La Mancha. Director of the Nebrija Santander Global Chair in
internationalization of companies, Universidad Nebrija (Spain)
Rafael Myro Sánchez
rmyrosan@ucm.es
Holder of a Bachelor Degree in Economics and Business Administration, Universidad
Complutense, Madrid. Holder of a Ph.D. in Economic Sciences, Universidad Complutense. Full
Professor of Applied Economics, Universidad Complutense (Spain).
Abstract
The objective of this paper is to analyse the recent evolution of Spain’s Foreign Direct
Investment in Latin America and the internationalization patterns of Spanish companies in
these countries. To this end, statistics on investment flows have been studied and the main
work of the authors in the business field have been reviewed. As a result, investment interest
in Latin America has not decreased despite the crisis that began in 2008, due to its dynamism,
the growth of its middle classes and the need to improve basic infrastructure. The interest in
Latin America for the opportunities these countries offer to address third markets and improve
competitive capacity is also noteworthy..
Keywords
Foreign investment; Companies; Spain; Latin America
How to cite this article
González, GS; Sánchez, RM (2019). "The investment of Spanish companies in Latin America,
patterns and determining features". JANUS.NET e-journal of International Relations, Vol. 10,
N.º 1, May-October 2019. Consulted [online] on the date of the last visit,
https://doi.org/10.26619/1647-7251.10.1.8
Article received on August 16, 2018 and accepted for publication on February 4, 2019
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 10, Nº. 1 (May-October 2019), pp. 112-124
The investment of Spanish companies in Latin America, patterns and determining features
Gonzalo Solana González, Rafael Myro Sánchez
113
THE INVESTMENT OF SPANISH COMPANIES IN LATIN AMERICA, PATTERNS
AND DETERMINING FEATURES
1
2
Gonzalo Solana González
Rafael Myro Sánchez
Introduction
The globalization phenomenon has been driven by the progressive liberalization of capital
movements on a world scale, leading to a remarkable dynamism in the flows and stock
of foreign direct investment (FDI) in the last three decades, Fouquin and Hugot (2016).
In 2016, according to data from the United Nations Conference on Trade and
Development (UNCTAD), (2017), the world stock of FDI amounted to 26,7 billion dollars,
representing 35,5% of the world GDP, compared to the 2,2 billion dollars of 1990 (10,1%
of the world GDP).
Spanish companies have participated in this growth in a very active way. Between 1993
and 2016
3
, the flows of Spain’s gross FDI abroad totalled 691.000 million euros, an
annual average of 28.790 million euros. As a result, in 2015 the Spanish economy
maintained a stock of investment abroad exceeding 433.000 million euros.
Spain’s investment profile in global markets has varied substantially according to the
national and international situation, with the period 2003-2007 being the most dynamic,
with annual average flows close to 50.000 million euros. Since then, investments abroad
have been characterized by a more moderate evolutionary profile.
In order to analyse the patterns of business internationalization towards Latin American
countries, the evolution of Spanish FDI in Latin America is examined first, and then the
main patterns of the internationalization processes in these destinations are presented.
1
The translation of this article was funded by national funds through FCT - Fundação para a Ciência e
a Tecnologia - as part of OBSERVARE project with the reference UID/CPO/04155/2019, with the aim of
publishing Janus.net. Text translated by Carolina Peralta.
2
This work originated in the interest to know what the investment trajectory of Spanish companies in Latin
America in the 21st century has been, in order to know its dynamics and the potential impact of the crisis
that started in Spain in 2008 on the aggregate investment behaviour of the country. The article combines
research with reflection on this subject. This research is part of the activities conducted in collaboration
between the Nebrija Santander Global Chair in the internationalization of companies and the Complutense
University of Madrid.
3
Data obtained from Spain’s Registry of Foreign Investments Registro de Inversiones Exteriores (Ministry
of Industry, Trade and Tourism).
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Gonzalo Solana González, Rafael Myro Sánchez
114
1. Spanish investment in Latin America: characteristics and evolution
Latin America has gradually become the second priority destination of the investing
efforts of Spanish companies abroad, after the group of developed countries
4
(in
particular, the European Union). Specifically, in 2015, 28,8% of Spain's FDI stock was
concentrated in the Latin American region, as shown in Table 1.
Table 1. Stock of Spanish gross FDI abroad: investment position (millions of euros)
2007
2009
2010
2011
2012
2013
2015
Developed
countries
230 661,91
229 932,86
251 448,58
250 357,26
270 043,22
254 364,90
317 090,70
Emerging
countries
80 929,77
106 889,53
132 112,67
144 185,10
145 641,32
144 924,74
138 419,85
Africa
3 788,06
3 583,56
4 142,76
4 161,80
4 214,88
3 859,96
4 019,70
Asia and
Oceania
5 178,65
9 061,78
12 995,26
15 681,25
16 258,28
12 989,28
8 834,87
Latin
America
71 408,42
93 445,48
113 914,12
123 159,58
123 800,90
126 596,17
124 796,46
Russia
554,64
798,71
1 060,53
1 182,47
1 367,26
1 479,33
768,82
Rest of the
world
-19 652,10
-18 833,79
-21 090,21
-20 371,63
-24 529,31
-22 149,08
-22 485,01
TOTAL
291 939,58
317 988,60
362 471,04
374 170,73
391 155,23
377 140,56
433 025,54
Note: the negative sign in terms of stock means losses associated with the investments.
Source: Ministry of Industry, Trade and Tourism.
The Spanish investment trajectory, however, has been unequal over time, as can be
seen in Chart
Chart 1. The nineties were characterized by the leading role of Latin America among
destinations, with some FDI flows directed to this area higher than those sent to
developed countries (9.590 million euros compared to 7.001 million euros in the annual
average between 1993 and 2000). Behind this dynamic were the liberalization and
privatization processes in certain sectors in Latin America, the attractiveness of the size
of its markets, the incipient international vocation of the large Spanish companies and,
of course, the existence of strong cultural links.
4
According to the United Nations’ criterion of country classification in economic terms:
http://unctadstat.unctad.org/EN/Classifications.html
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The investment of Spanish companies in Latin America, patterns and determining features
Gonzalo Solana González, Rafael Myro Sánchez
115
Chart 1. Spanish gross FDI flows abroad (millions of euros)
Source: Ministry of Industry, Trade and Tourism.
In the early stages of the 21st century, there was a turning point, with a gradual loss of
the relative strength of Spanish FDI in Latin America, although this area remained in the
second position as an investment destination, as shown in Table 2. The progress in the
process of economic and monetary integration within the European Union, together with
certain instabilities and uncertainties in the world scenario, to a large extent may explain
this behaviour.
Table 2. Spanish gross FDI flows abroad (millions of euros)
1993-1997
1998-2002
2003-2007
2008-2012
2013-2016
Total 1993-2016
Developed countries
12 089,9
83 542,9
221 034,3
106 210,9
81 068,7
503 946,7
Emerging countries
6 737,4
80 936,8
33 103,7
45 514,3
41 781,4
208 073,5
Africa
190,7
1 272,7
3 726,5
2 224,1
629,3
8 043,3
Asia and Oceania
150,8
2 140,6
2 513,6
5 477,8
2 659,3
12 942,0
Latin America
12 504,1
79 707,6
29 004,6
32 975,8
35 945,3
190 137,4
Russia
28,8
73,5
854,9
639,3
339,3
1 935,7
Rest of the world
7 653,7
-5 195,8
-5 548,5
-14 521,3
-3 440,4
-21 052,3
TOTAL
26 481,0
159 283,9
248 589,5
137 204,0
119 409,7
690 968,0
Note: the negative sign in ends of flow reveals divestment dynamics.
Source: Ministry of Industry, Trade and Tourism.
0
50,000
100,000
150,000
200,000
250,000
300,000
1993-1997 1998-2002 2003-2007 2008-2012 2013-2016
Developed countries Latin America TOTAL
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The investment of Spanish companies in Latin America, patterns and determining features
Gonzalo Solana González, Rafael Myro Sánchez
116
However, in the 2013-2016 period, Spanish FDI in Latin America increased again, in
contrast to its downward trend in other areas
5
, reaching an annual average flow of around
8.986 million euros (higher than 5.801 million euros and the 6.595 million euros recorded
in the annual average in the 2003-2007 and 2008-2012 periods, respectively). This
recovery also took place in a context of sustained reduction of the flows of foreign
investment from the rest of the world to Latin America (of 16% in 2016), as indicated by
UNCTAD (2017). Thus, even in this scenario, the Spanish companies trusted the economy
of the area, by consolidating and increasing their presence in a sustained manner.
This is an adequate response of the companies to the important economic results
obtained from their investment operations in the area. In fact, as Table 3 shows, the
results obtained by Spanish companies linked to their investments in the area were about
15.000 million euros in 2015. On the other hand, investments in developed countries
were also prominent in terms of results, totalling 28,872.3 million euros in that year.
Table 3. Results of Spanish gross FDI abroad (millions of euros)
2007
2008
2009
2010
2011
2012
2013
2014
2015
Developed countries
38 333,62
6 847,92
12 694,34
25 238,85
25 964,88
22 945,12
23 422,64
24 164,59
28 872,31
Emerging countries
18 927,84
32 793,33
27 385,17
32 650,87
39 617,89
38 857,56
34 834,51
35 147,36
34 642,34
Africa
1 077,65
3 334,30
597,45
715,99
481,43
842,54
710,92
617,86
487,76
Asia and Oceania
8 263,94
1 085,67
1 175,41
1 417,37
1 438,08
1 807,28
1 213,28
1 041,98
313,65
Latin America
9 632,95
9 657,85
11 791,23
16 821,80
18 459,39
15 488,03
14 391,44
17 089,11
15 086,51
Russia
-46,70
-212,33
-44,41
176,03
107,80
233,01
148,01
-65,24
70,71
Rest of the world
-9 675,93
-20 788,01
-16 025,89
-15 393,70
-20 876,71
-22 987,97
-22 116,21
-20 496,25
-22 820,63
Total
47 585,53
18 853,24
24 053,62
42 496,02
44 706,06
38 814,71
36 140,94
38 815,70
40 694,02
Note: the negative sign in terms of stock means losses associated with the investments.
Source: Ministry of Industry, Trade and Tourism.
The higher nominal value of Spanish investments in Latin America was accompanied by
a growing number of companies established there, as the information in Table 4 and
Chart 2 shows. In 2013, 2.619 Spanish companies had investments in Latin America,
which represents an increase of 27,3% compared to 2007, higher than that experienced
by the number of Spanish companies located in developed countries and around the
world (increases of 14,6% and 23,9%, respectively).
The geographical concentration is the dominant trend in Spain’s investing relations in
Latin America, with the group formed by Brazil, Mexico, Venezuela, Chile and Argentina
being the undisputed protagonist. These five countries concentrated 87,3% of the stock
5
It should be noted that Spain’s decrease in aggregate investment figures abroad does not mean that the
investment does not remain positive. On the contrary, during the years of economic crisis, the gross
investment of Spanish companies abroad continued to grow, albeit at a more moderate pace than in the
previous period, of intense boom. So did the net investment, although in a more limited way. The effect of
the economic crisis was felt in the increase in divestment, especially from medium and large companies,
which needed to obtain funds to rebalance their sheets and sold shares in their foreign subsidiaries.
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The investment of Spanish companies in Latin America, patterns and determining features
Gonzalo Solana González, Rafael Myro Sánchez
117
of Spanish FDI in Latin America in 2015. The interpretation is similar if the analysis is
made in terms of the average flows sent to the area since 1993: these five countries
totalled more than 85% of Spain’s FDI flow to Latin America in the 1993-2014 period.
During the crisis period, specifically from 2007 to 2014, the stock of Spain’s FDI in Brazil
and Venezuela grew very considerably, almost doubling; the same applied in the case of
Chile, although to a lesser extent. The stock of Spanish FDI in Mexico remained
unchanged and, on the other hand, in Argentina it decreased, as underlined by Álvarez,
Myro and Vega (2016)
6
.
From the point of view of the number of companies present in the different Latin American
countries in 2013 (last available year), again Mexico (523 Spanish investment
companies), Brazil (432), Argentina (359) and Chile (313) stood out as the most relevant
focal points for Spanish business.
In terms of comparison with the other areas, Latin America has also experienced a
notable increase in the number of Spanish investment companies. The advance since
2007 of the Spanish investment fabric there has been the highest in absolute terms,
despite the fact that Spanish investments in developed countries continue to maintain
their relative importance. This dynamic is probably the result of greater investment
propensity in recent years towards less mature destinations for the Spanish companies
(both from the rest of the world and from emerging countries, especially Latin America),
in line with the intense process of internationalization of the business fabric since 2008.
Table 4. Spanish investment companies abroad (number)
2007
2008
2009
2010
2011
2012
2013
Developed countries
3 245
3 619
3 724
3 827
3 954
4 006
3 718
Emerging countries
2 493
2 776
2 898
3 025
3 260
3 419
3 273
Africa
229
258
254
274
293
308
294
Asia & Oceania
180
224
234
273
306
352
316
Latin America
2 057
2 271
2 378
2 441
2 615
2 716
2 619
Russia
27
23
32
37
46
43
44
Rest of the World
467
546
612
649
672
699
698
Total
6 205
6 941
7 234
7 501
7 886
8 124
7 689
Source: Ministry of Industry, Trade and Tourism.
6
One should keep in mind that the evolution of the stock is not only a consequence of the net investment,
but also of changes in the value of the shares and changes in the exchange rate.
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The investment of Spanish companies in Latin America, patterns and determining features
Gonzalo Solana González, Rafael Myro Sánchez
118
Chart 2. Spanish investment companies abroad (number)
Source: Ministry of Industry, Trade and Tourism.
In addition to this quantitative approach, it is interesting to analyse the relative
importance of Spanish investment in each Latin American country, as per information
provided in Table 5. In this sense, the stock of Spanish FDI accounted for 83,3% of the
total world FDI received by Venezuela in 2015, 13,1% of that received by Bolivia, 9,8%
by Ecuador, 8,3% by Brazil, 7,6% by Argentina, and 7,5% by Chile. Spanish FDI has,
therefore, played a very important role in the productive structure of certain Latin
American economies during the second decade of the 21st century.
Table 5. Spain’s investment position in Latin America - main investment countries - Year 2015
Spanish FDI stock (mill. eur)
% total Spanish FID in Latin
America
% of FDI stock received
from the country
ARGENTINA
5 824,6
4,7%
7,6%
BOLIVIA
1 375,7
1,1%
13,1%
BRAZIL
35 138,0
28,2%
8,3%
CHILE
15 031,9
12,0%
7,5%
COLOMBIA
3 969,5
3,2%
3,0%
COSTA RICA
468,7
0,4%
1,7%
ECUADOR
1 387,2
1,1%
9,8%
EL SALVADOR
104,0
0,1%
1,3%
GUATEMALA
317,2
0,3%
2,7%
GUIANA
22,9
0,0%
0,9%
HONDURAS
35,6
0,0%
0,3%
MEXICO
31 662,5
25,4%
6,9%
NICARAGUA
17,6
0,0%
0,2%
PANAMA
1 783,3
1,4%
5,0%
PARAGUAY
237,5
0,2%
6,0%
PERU
3 543,6
2,8%
4,6%
DOMINICAN REPUBLIC
926,2
0,7%
3,4%
URUGUAY
1 279,8
1,0%
6,5%
VENEZUELA
21 313,9
17,1%
83,3%
TOTAL LATIN AMERICA
124 796,5
100,0%
8,0%
Source: Ministry of Industry, Trade and Tourism and UNCTAD (2017).
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2007 2008 2009 2010 2011 2012 2013
Developed countries Latin America Total
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119
From the sectors’ point of view, as shown in Chart 3, the Spanish FDI in Latin America
has been directed mainly to financial and insurance activities (40,3% of the total stock
invested in the area in 2015), with an increase of the interest of Spanish investors in this
sector since 2007 (when it represented 26,4% of the Spanish FDI stock in Latin America).
It also highlights Spain’s investing presence in the supply of electricity, gas and others,
(9,5%) and telecommunications (7,6%), although in both cases the share of all Spanish
investments in the area declined. (14,3% and 19,6% in 2007, respectively).
Chart 3. Stock of Spanish FDI in Latin America by main branches of activity at the destination -
Year 2015
Source: Ministry of Industry, Trade and Tourism
In terms of profitability, contained in Table 6, investments directed towards financial and
insurance activities have been the most lucrative, concentrating 55,2% of the total
results of Spanish FDI in Latin America in 2015. Conversely, other activities did not obtain
positive results, although in general their relevance to Spain’s accumulated investment
stock in the area was limited in relative terms.
By geographical areas, Spanish investments in financial and insurance activities have
been located mostly in Mexico and Brazil; regarding information and communications, in
Brazil; in the manufacturing industries, Brazil and Mexico; and in the energy supplies of
Chile and Brazil, as indicated by Cerón et al. (2014).
FINANCIAL SERVICES, EXCEPT
INSURANCE AND PENSION FUNDS ;
0.276550553
INSURANCE,
REINSURANCE AND …
SUPPLY OF ELECTRIC POWER,
GAS, STEAM AND AIR;
0.095428508
TELECOMMUNICATIONS
; 0.075584997
WHOLESALER AND
INTERMEDIARIES;
0.072515038
METALLURGY: IRON
AND STEEL PRODUCTS:
0.059608021
CIVIL ENGINEERING;
0.036
EXTRACTION OF OIL
CRUDE AND NATURAL
GAS; 0.027
REAL ESTATE
ACTIVITIES;
0.027
MANUFACTURE OF
OTHER NON METALLIC
MINERAL PRODUCTS;
0.022
REMAINING SECTORS:
0.182526011
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The investment of Spanish companies in Latin America, patterns and determining features
Gonzalo Solana González, Rafael Myro Sánchez
120
Table 6. Stock and results of Spanish FDI in Latin America. Main sectors of destination
Sector of investment destination
Total % of Spanish FDI in
Latin America
Total % of Spanish FID results
in Latin America
2007
2015
2007
2015
64 FINANCIAL SERVICES, EXCEP. INSUR AND PENSION
FUNDS
24,29%
27,66%
40,02%
46,14%
65 INSURANCE, REINSURANCE. PENSION FUNDS,
EXCEPT S. SECURITY
2,12%
12,60%
2,20%
9,08%
35 SUPPLY OF ELECTRICAL ENERGY, GAS, STEAM AND
AIR
14,25%
9,54%
11,35%
8,11%
TELECOMMUNICATIONS
19,58%
7,56%
12,13%
3,11%
46 MAJOR AND INTERMEDIATE TRADE, TRADE, EXC. M.
VEHICLES
2,16%
7,25%
1,45%
0,09%
24 METALLURGY; IRON, STEEL PRODUCTS PRODUCTION
2,34%
5,96%
3,66%
-2,64%
42 CIVIL ENGINEERING
1,72%
3,62%
1,72%
0,66%
06 EXTRACTION OF OIL CRUDE AND NATURAL GAS
8,63%
2,70%
9,91%
0,00%
68 REAL ESTATE ACTIVITIES
0,37%
2,67%
-0,04%
17,53%
23 MANUFACTURE OF OTHER N-METALLIC MINERAL
PRODUCTS
3,90%
2,18%
4,86%
3,21%
52 STORAGE AND ACTIVITIES ASSOCIATED WITH
TRANSPORT
2,38%
1,96%
1,72%
2,65%
55 ACCOMMODATION SERVICES
3,00%
1,69%
-0,15%
-1,96%
20 CHEMICAL INDUSTRY
1,31%
1,68%
2,08%
4,99%
41 BUILDING CONSTRUCTION
1,40%
1,35%
1,32%
-0,52%
66 AUXILIARY ACTIVITIES TO THE FINANCIAL SERVICES
0,59%
1,22%
0,90%
1,85%
47 RETAIL TRADE, EXCEPT MOTOR VEHICLES
1,05%
0,96%
0,87%
0,37%
43 SPECIALIZED CONSTRUCTION ACTIVITIES
0,92%
0,63%
1,01%
0,32%
10 FOOD INDUSTRY
0,33%
0,60%
0,23%
0,44%
REMAINING SECTORS
9,68%
8,16%
4,77%
6,55%
Source: Ministry of Industry, Trade and Tourism.
2. Business patterns: main features, determinants and strategies
Several analyses have been carried out on the determinants of Spanish investments
abroad, especially by Ramírez, Delgado and Espitia (2004), Ramírez, Delgado and Espitia
(2006), Gordo and Tello (2008), Martínez Martín (2011), Martí, Alguacil and Orts (2013),
Fariñas and Martín Marcos (2013). These studies highlight the role of the attractiveness
of market location, with a distinction between developed and developing countries and,
within them, Latin America. A comprehensive synthesis of these studies can be found in
Myro (2014a) and Myro (2014b).
Their conclusions indicate that Spanish companies with greater advantages regarding
size, profitability and productivity have led the rapid process accessing foreign markets
through export and FDI. Larger companies, with their own technological assets, brand
and more extensive export experience, have channeled their preferences to less
developed markets that are larger, have growth possibilities and better surrounding
markets, where they can expect higher benefits from their competitive advantages. Large
companies have directed their investments to a greater number of countries and have
reached the most distant and unknown markets.
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Gonzalo Solana González, Rafael Myro Sánchez
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It should be noted that in this process, Latin America has played a very prominent role.
At present, almost one third of the FDI stock of Spanish companies abroad is located in
Latin American countries and has been the most important destination in the recent
investment boom by Spanish companies abroad. Thus, in the first biennium of heavy
investments by Spanish companies abroad (1999-2000) in Latin America, over 56.000
million euros were invested there, which accounted for 61% of total Spanish FDI abroad
and for 98,8% of the amount targeted to emerging market destinations. The protagonists
of these investments were the large companies. Chile and Argentina, and to a lesser
extent Mexico, were the first countries where the Spanish presence stood out.
Regarding the main determinants and strategies followed by Spanish companies in Latin
America, this paper summarizes the results of the studies conducted by the Nebrija
Santander Global Chair in the internationalization of companies
7
.
On this basis, the main reasons for Spanish companies to establish themselves in Latin
American countries were related to the potential of the latter’s domestic markets (both
in terms of size and economic dynamism). In particular, the growth of the middle classes,
with the basic services they demand, and the need to improve their infrastructure opened
up numerous business opportunities.
The factors associated with legal security and macroeconomic stability, aspects in which
many Latin American countries have improved since the beginning of the 21st century,
were also relevant, as in the rest of destinations, for Spanish companies to settle in Latin
America.
In this sense, according to the study carried out by Solana (2017) on the location of
Spanish companies abroad, the factors that determine their choice of location the most
are related to the quest for company greater efficiency through internationalization, as
well as having a secure institutional political framework and an appropriate business
environment. In Latin America, these factors are very important, but in differential terms
we can see that Latin America was the destination where, for Spanish companies, the
factors associated with size and market potential stood out as the most relevant in these
decisions.
On the other hand, cultural proximity has been a crucial aspect in the relevance of Latin
America for the investments made by Spanish companies abroad. Having a common
language has facilitated this process, especially for smaller companies. However, the
studies show that, on numerous occasions, proximity is confused with cultural identity,
which is a potential source of conflicts and problems.
Within Latin America, there are very diverse economic and political situations, which
explain why the entry processes in these markets are very different. However, in most
of them it has been usual, especially among the smaller companies, to resort to the figure
of the local partner, at least in the first years of the development of their activity, and to
the establishment of subsidiaries or acquisition of companies, instead of using more
complex formulas, such as joint ventures, which have traditionally been less common.
On numerous occasions, Spanish businessmen have reached an agreement with a local
partner, which has allowed them to get to know local singularities better and more quickly
and facilitated relations with different agents and institutions, although sometimes these
7
Available on the website of the Cátedra Global Nebrija Santander en Internacionalización de empresas.
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agreements have caused problems over time. For this reason, companies highlight the
importance of evaluating with great care and time the profile of the local partner and
their long-term business commitment.
Most of these investment operations have been financed by the companies' own
resources. The implantation operations in other countries require a lot of maturation time
and it is necessary to take up the existing sunk costs. That is why it is necessary to
reduce, as far as possible, the financial costs.
Another significant aspect of the Spanish companies’ internationalization strategies in
Latin America is the fairly widespread use of mixed and local structures in the
organization of the different areas or departments of companies, in which, as the years
go by, local personnel prevail over Spanish expatriates.
Regarding the main obstacles encountered by Spanish companies in their establishment
process in Latin America, those related to the bureaucratic procedures or to the
functioning of the corresponding Public Administration, the strong competition or the high
economic power of certain local business groups, or the difficulty in finding qualified
personnel for certain activities stand out. Undoubtedly, these are issues that can be very
different in each country, and require a process of prior information and knowledge that
can lead to tensions, delays or even suspend the FDI operation. Therefore, it is very
important that all companies understand these obstacles and internalize them in their
study strategy to settle in a Latin American country.
On the other hand, the results obtained by the majority of Spanish companies in Latin
America have been satisfactory. The vast majority point out that thanks to their
investments in Latin America, they have increased their sales, profits and market share.
However, the most highlighted aspects by Spanish businessmen are the long-term
component of these investments, with clear benefits in terms of improving business
reputation and better future business prospects. For these companies, their presence in
Latin America has increased their growth potential and the possibilities arising from using
certain countries there as a platform for expansion to third markets. In particular, the
interest in reaching strategic agreements between Spanish and Latin American
companies for joint access to other markets is beginning to emerge, an aspect of special
relevance to enter dynamic markets such as the Asian.
In short, Spanish companies in Latin America highlight their interest to stay in the area,
their desire to be rooted in Latin American society and their firm commitment to its
culture and customs.
Finally, it is worth noting the existence of efficient support institutions and appropriate
commercial policies as relevant aspects of the Spanish companies’ internationalization
process in Latin America, especially for smaller companies.
Conclusion
Latin America has been a priority destination for Spanish companies since the end of the
20th century. In fact, in spite of the moderation during the years of economic crisis
experienced in Spain between the end of the last decade and the middle of the current
one, and of the gloomy perspectives of the UNCTAD for the area, since 2010 the Spanish
presence has experienced remarkable growth, both regarding investment volume and
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e-ISSN: 1647-7251
Vol. 10, Nº. 1 (May-October 2019), pp. 112-124
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Gonzalo Solana González, Rafael Myro Sánchez
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the number of companies located there. Latin America continues to be a priority
destination for the investments of Spanish companies, attesting their commitment to the
development of this continent.
Recent Spanish FDI is significant in Latin America (with a particular presence in Brazil,
Mexico, Venezuela, Chile, and Argentina) and in certain economic sectors. Some
weaknesses of the Spanish FDI were related to their excessive concentration at sector,
business and geographical levels.
From the point of view of the patterns and motivations for the establishment of Spanish
companies in Latin America, one can see the attractiveness that these markets offer due
to their dynamism, driven by the growth of the middle classes and the needs to improve
their basic infrastructure. In addition, all this is driven by the relevance of cultural
proximity to undertake investments there. It is also important to highlight the firm
commitment to permanence and integration of Spanish companies in the context of the
country in Latin America where they are located.
Spanish FDI in Latin America is characterized by its higher relative performance
compared with that obtained in other parts of the world, something recognized and
valued by companies. At the same time, Spanish companies have acquired an intangible
knowledge and international experience that allow them to expand to other markets and
improve their competitive capacity.
Faced with certain obstacles, Spanish companies interested in productive investment in
Latin America must gather prior information and knowledge, contact partners at
destination, and get closer to the support institutions and entities present in these
countries, which can provide assistance and help with the bureaucracy.
Regarding future research, it would be interesting to analyze the divestment dynamics
that could be occurring in some destinations, as the negative results of the investment
stock show. For this purpose, the FDI sector dimension could be further studied, as well
as the influence seen in other countries regarding the reversion of industrial relocation
processes, with the possible return of foreign investment to the country of origin (linked
to the influence of Industry 4.0).
Ultimately, the intense cultural and economic links between Latin America and Spain
open up numerous opportunities for collaboration between companies from both areas
to face the challenges of globalization and access to other markets, figuring as a priority
in the political agendas of the governments on both sides of the Atlantic.
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