The Foreign Direct Investments of Spanish Multinational Enterprises in Latin America, 1989–2005

Abstract

AbstractThe inflow of Spanish investment in Latin America after 1989 was the result of a strategy by the managers of seven leading firms to gain access to new markets and to become world leaders in their industry, by applying the know-how that they had developed in Spain during the period of rapid economic modernisation in the 1980s. This article examines the context for these investments in Spain and in Latin America and provides a constructivist theoretical framework to explain them. It analyses seven firms in four industries (BBVA and SCH in banking, Repsol-YPF in oil and natural gas, Endesa, Iberdrola and Unión Fenosa in public utilities, and Telefónica in telecommunications). The knowledge and techniques that developed in Spain in the 1980s, it is argued, gave them significant advantages in Latin American markets during the period of liberalisation and privatisation in the 1990s. The Spanish government played a significant role in this process, by promoting the growth of large firms in the service industries through mergers and acquisition, protecting their domestic market, and encouraging their investments overseas.