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The Emergence of Latin Multinationals: Spain, Mexico and Brazil

The Emergence of Latin Multinationals: Spain, Mexico and Brazil. Javier Santiso Deputy Director/Chief Economist OECD Development Centre. World Economic Forum  Chile 25-27 April, 2007. 1. Spain and Latin America: A Helping Hand. 2. New Emerging Multinationals: Mexico & Brazil?. 3.

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The Emergence of Latin Multinationals: Spain, Mexico and Brazil

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  1. The Emergence of Latin Multinationals:Spain, Mexico and Brazil Javier Santiso Deputy Director/Chief Economist OECD Development Centre World Economic Forum  Chile25-27 April, 2007

  2. 1 Spain and Latin America: A Helping Hand 2 New Emerging Multinationals: Mexico & Brazil? 3 Conclusions

  3. The IBEX 35: A Latin Flavour 60% of Spanish capitalisation Source: Bolsa de Madrid, October 2006.

  4. 30% Latin America: a helping hand for Spain Source: OECD Development Centre 2007, based on Annual Reports.

  5. Spain: a helping hand for Latin America Source: OECD Development Centre 2007, based on Annual Reports.

  6. Spanish multinationals: a helping hand for Latin America Fiscal contribution of Telefónica per country in 2005 Fiscal contribution of Telefónica as % of GDP in 2005 3500 0.70% 3000 0.60% 2500 0.50% 2000 0.40% Euros Millions 1500 Total fiscal contribution Euro 7266 0.30% 1000 0.20% 500 0.10% 0 0.00% Perú Chile Brasil México España Argentina Perú Colombia Venezuela Chile Brasil México España Colombia Argentina Venezuela Source: OECD Development Centre 2007, based on Telefónica Annual Report.

  7. Spanish multinationals: a helping hand for Latin America Source: OECD Development Centre 2006, based on Telefónica data.

  8. Spain has become one of the leading direct foreign investors in Latin America Source: UNCTAD, World Investment Report 2006. Source: Ministerio de Industria Turismo y Comercio de España, 2006.

  9. Spanish multinationals have a huge stake in Latin America Source: OECD Development Centre 2007, based on Annual Reports.

  10. …leaving other European firms far behind Source: OECD Development Centre 2007, based on Annual Reports.

  11. …leaving other European firms far behind Source: OECD Development Centre 2007, based on Annual Reports.

  12. Spanish multinationals also generate some of the highest employment rates in Latin America Source: OECD Development Centre 2007, based on Annual Reports.

  13. 1 Spain and Latin America: A Helping Hand 2 New Emerging Multinationals: Mexico & Brazil? 3 Conclusions

  14. Leaders of the globalisation process in Latin America are Mexico… Source: OECD Development Centre 2007, based on América Economía.

  15. …and Brazil Source: OECD Development Centre 2007, based on América Economía.

  16. Emerging multinationals: from recipients to foreign investors Investments in 2006 Investments in 2000 90000 50000 Outward 80000 Inward Inward Outward 40000 70000 60000 30000 50000 US$ millions 40000 US$ millions 20000 30000 20000 10000 10000 0 0 -10000 India Peru Chile India Brazil Peru China Chile China Brazil Mexico Mexico Argentina Colombia Argentina Colombia Venezuela Venezuela Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).

  17. Mexico and Brazil leading the investment trend abroad Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).

  18. …and competing with China and India Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).

  19. Capital flows from emerging markets are increasingly important Source: OECD Development Centre, 2007; based on UN Comtrade datababase, World Bank. Source: World Bank, Global Development Finance, 2006.

  20. …and South-South flows are a key financing source, both in Asia and Latin America Note: The “Emerging countries” category excludes most African countries. Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).

  21. LatAm companies have multiplied their acquisitions at home and abroad Source: OECD Development Centre 2007, based on BBVA Corporate Finance.

  22. Spreads of major emerging economies in LatAm Total outward FDI from LatAm 45000 Brazil Latin America Mexico 40000 2500 35000 30000 2000 25000 US$ millions 1500 20000 15000 1000 10000 5000 500 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 6/1997 2/1998 6/1999 3/2000 7/2001 3/2002 8/2003 4/2004 8/2005 5/2006 1/2007 9/1994 5/1995 1/1996 9/1996 10/1998 11/2000 12/2002 12/2004 12/1993 …helped by the fall of cost of capital * Data for 2007 is estimated and includes recent deals Source: OECD Development Centre 2007, based on Economist Intelligence Unit, 2007. Source: OECD Development Centre 2007, based on Emerging Markets Bond Index - Global, 2007.

  23. …helped by the fall of cost of capital * Data for 2007 is estimated and includes recent deals Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).

  24. Target Nationality Acquirer Deal Value ($m) Corus UK/NL Tata Group 7700 Oil & Gas Assets (Campos Basin) Brazil Oil & Natural Gas Corp 1670 Omnimex de Colombia Colombia Oil & Natural Gas Corp: China Group 850 Oil & Gas Assets (Brazil) Brazil ONGC Videsh 820 Greater Nile Petroleum (25%) Sudan Oil & Natural Gas Corp 783 Glaceau (30%) US Tata tea 677 Shell Development Angola Angola Oil & Natural Gas Corp 600 Oil & Gas Assets (Syria) Syria Oil & Natural Gas Corp: China Group 581 Betapharm Arzneimittel Germany Dr Reddy's Lab 572 Hansen Transmissions Belgium Suzlon Energy 562 Eve Holding Belgium Suzlon Energy 548 Terapia Rumania Ranbaxy 324 Total 15687 Increasing appetite for overseas expansion can also be seen in other countries such as India… Source: OECD Development Centre., 2007; Based on Dealogic and local press.

  25. 1 Spain and Latin America: A Helping Hand 2 New Emerging Multinationals: Mexico & Brazil? 3 Conclusions

  26. Globalization strategies have turned into success stories in Spain, Latin America and other emerging markets. Multinational groups are becoming leaders in their domestic market but also in foreign markets. In the future we will see more emerging giants from Latin America and Asia taking over OECD-based firms and continuing to be at the centre of the globalization process. Conclusions

  27. Thank you! For more information contact: Javier Santiso: javier.santiso@oecd.org Based on Santiso, J. (March 2007) “The Emergence of Latin Multinationals”, OECD Emerging Markets network Working Paper, OECD Development Centre, Paris.

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