Foreign direct investment by Argentine companies abroad

I. Foreign direct investment (FDI) as a way to access international markets:

In many countries, investment abroad by domestic companies is not encouraged because it is suspected that investing outside the country means losing local jobs and foreign currency. However, it is a common practice among companies from developed countries as a way to access new markets. The Dutch government has stated at the OECD that it has no problem with its companies investing abroad as long as their headquarters and their research and development department remain in the Netherlands, since it is these two areas that pay the best salaries, receive the royalties for trademarks and patents, and decide where future investments and divestments will go.

II. Investment abroad by Argentine companies

In the recent report published by UNCTAD, the World Investment Report 2024, we can see that the performance of Argentine investment reflects a positive trend over the last five years, as it rose from USD 1,523 million in 2019 to USD 2,403 million in 2023. (1) (2)

III. Mexico as a destination for Argentine investment

Among the countries chosen by Argentine companies is Mexico, where Ternium's investments have led the way, placing our country third in FDI in that country, after the US and Germany, during 2023 and the first quarter of 2024.

The challenge for Argentine SMEs is how to follow in the wake of an Argentine multinational's investment. Alliances not only make the work easier, but also save resources. One SME that can serve as an example is KMT Electronic S.A., a company from Santa Fe specializing in static power converters used in the pipes manufactured by Ternium, which has announced investments in Mexico. (3) Other SMEs from Santa Fe that have also been successful in Mexico are Kretz S.A., with its scales, and COL-VEN S.A., with its Vigia system. In both cases, these are investments that made it possible to bolster sales and provide after-sales technical service. It is worthwhile for Argentine SMEs to evaluate the possibility of making FDI in other countries; in many cases it is possible, and sometimes essential.

References

(1) World Investment Report 2024 . unctad.org

(2) World Investment Report 2024 - Argentina unctad.org

(3) “Tiene ADN rosarino, encontró la veta en Neuquen y planta bandera en México” [It has Rosario DNA, struck a vein in Neuquén and plants its flag in Mexico] 24-1-24 Puntobiz puntobiz.com.ar