Multilatinas and the Pacific Alliance

Analysis article by:

• Carolina Herrera Cano (International Business Professional, and editorial assistant at Latin Trade)
• Juan Gonzalo Pérez Guisao (International Business student, Universidad EAFIT, Colombia)

The increasing importance of Latin American in the international arena is undeniable. The existence of emerging economies, high population, and the availability of natural resources are nowadays important advantages for this region. In the 2013 World Investment Report, the United Nations Conference on Trade and Development (UNCTAD, 2013) highlighted the importance of this continent: the foreign direct investment flows to this region maintained the high levels they reached in 2011, and the South American economy presented a significant growth. This context has been an appropriate scenario for the emergence of an economic agent that is shaping the course of the international trade in this region: the Latin American multinationals, or simply Multilatinas.

AméricaEconomía (2013) evaluated these companies in its 2013 Multilatinas Ranking, by highlighting the top 50, and it has observed that the geographic distribution regarding the companies’ origin has not drastically changed. Since 2007, Brazil, and Mexico have maintained their presence in the list, but Colombia, and Chile were the ones that actually presented a considerable growth in the number of Multilatinas within the list. In this way, it is possible to observe that 60% of the top 50 Multilatinas are from Pacific Alliance members.

The Pacific Alliance is a regional integration initiative conformed by Chile, Colombia, Mexico, and Peru that was created in 2011 to encourage free trade, economic growth, development, and competitiveness of these economies. The importance of this market is related with its population of about 210 million, its participation in the Latin American GDP with a 35%, and a growth economic average of 5%, and for the purpose of this analysis the FDI promotion (Viswanathan, 2012).

The Pacific Alliance will be a significant integration process for its member countries, but it is not possible to talk about an imminent liberalization process, mainly because there were already free trade agreements between the parties when the Alliance was conformed. As some authors have argued (Gutiérrez Viana, 2013), the consequences of the Pacific Alliance in terms of macroeconomics will be evident only in the long term but the great achievement of the treaty is the facilitation of internationalization processes like mergers and acquisitions, and FDI in general. In this sense we can still see the Pacific Alliance as a promoter of the Multilatinas of its member-states.

References

AméricaEconomía. (2013). Ranking 2013 Multilatinas- las empresas más globales de la región. Available online at: http://rankings.americaeconomia.com/2013/ranking_multilatinas_2013/ranking.php

Gutiérrez Viana, Santiago; Gonzalez-Perez, Maria-Alejandra., Rodríguez-Ríos, Juan David & Gutiérrez Gómez, Laura (2013). Evaluación de la Justificación Económica y Política de la Alianza del Pacífico. Proexport Colombia. Available online at: http://www.tlc.gov.co/descargar.php?id=68684

UNCTAD (2013). Economic Development in Africa. United Nations: Geneva, Switzerland. Available online at: http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=604