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Multinational Firms' Responses to Integration of Latin American Markets

Published online by Cambridge University Press:  20 January 2017

Claudio Frischtak
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Abstract

This paper discusses how MNCs reacted to NAFTA and MERCOSUR in terms of their investment and operations patterns in three sectors - automotive, electronics, and apparel - and assesses the likely impact of the upcoming Free Trade Agreement of the Americas (FTAA). It shows that NAFTA functioned – at least in its first years - as an investment relocation engine, while MNCs' reaction to MERCOSUR was significant only in the automotive sector. The emergence of China and other Asian economies, with their low cost and vast markets, and the progressive enlargement in the scope of MNCs operations, seem to diminish the economic relevance of NAFTA and MERCOSUR. FTAA may provide a new impetus to the integration of the automotive industry in the Americas, and a stronger rationale for a slowdown of plant relocation to Asia in light industries such as electronics and garments. But it is unlikely that it will reverse current trends which point to Asia – with China at the epicenter – as the global magnet for manufacturing and exports.

Keywords

MultinationalsNAFTAMERCOSURFTAA
Type
Research Article
Information
Business and Politics , Volume 6 , Issue 1 , April 2004 , pp. 1 - 37
Copyright
Copyright © V.K. Aggarwal 2004 and published under exclusive license to Cambridge University Press 

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