BOGOTA – A group of Latin American companies that have expanded beyond their national borders and achieved regional or global scale – as well as growing influence due to their close links to political power – are now the undisputed drivers of investment and productivity in that region.
Between 2008 and 2016, “multilatinas” tracked by the Massachusetts-based Boston Consulting Group registered annual revenue growth of 5.2 percent as measured in United States dollars, or approximately three times the average for all large Latin American companies, according to a BCG report titled “Why Multilatinas Hold the Key to Latin America’s Economic Future.”
The multilatinas evaluated for that report include Brazil’s Embraer, Vale, Globo, Braskem and Alpargatas; Mexico’s Aeromexico, Televisa, Volaris and America Movil; Chile’s Antofagasta Minerals, Cencosud, Falabella and Latam Airlines; Argentina’s MercadoLibre, Arcor, Despegar and Ternium; Colombia’s Ecopetrol, Avianca, Bancolombia and Grupo Nutresa; and Peru’s Gloria, Alicorp and Belcorp.
“Latin American companies have been expanding their (reach) throughout the region since the end of the last century, making investments across the hemisphere” and extending their horizons to consumer goods and services, the director of the Economic Environment Research Group at Colombia’s Universidad Ean, Fabio Fernando Moscoso, told EFE.
The 10 largest multilatinas posted roughly $442.07 billion in revenue last year, or 1.3 times the amount of Colombia’s gross domestic product, 1.5 times Chile’s GDP and 4.1 times the market value of all goods and services produced in 2018 by Ecuador.
GEOGRAPHIC MIX OF MULTILATINAS
Mexico led the way in Latin America in 2018 with 28 multilatinas, followed by Brazil with 26 (although that number was down 24 percent from 2009) and Chile with 18, the BCG said.
Colombia has 11 of these companies, which operate in sectors as diverse as consumer goods, telecommunications and infrastructure, up from five in 2009.
Next on the list are Argentina (nine), Peru (five) and other countries (three), according to the report, which also noted that “employment at multilatinas expanded by 2.6 percent annually from 2013 through 2016, above the regional average of only 0.3 percent per year for the same period.”
Veneta Andonova, an associate professor at Colombia’s Universidad de los Andes’ School of Management, said that three Brazilian multilatinas – Petrobras, Vale and JBS – account for more than 60 percent of the assets of Brazil’s 20 largest multilatinas.
“These companies tend to have sophisticated managerial practices, personnel development programs, budgets for innovation and development and social responsibility and sustainability programs that significantly impact the communities in which they operate,” she said.
But a researcher at the Latin American Strategic Center for Geopolitics (Celag), Sergio Martin-Carrillo, warned recently about the growing power of the multilatinas, several of which he said move in the dark alleyways of “the markets,” which become rattled if “citizens don’t vote correctly.”
In a column posted on Celag’s Web site, Martin-Carrillo said the “anti-democratic power” of the multilatinas also has found a breeding ground for expansion in a highly unequal region, where in recent years CEOs of large companies have moved to Cabinet posts as part of an ever-spinning revolving door phenomenon.
A recent report by Oxfam and the Economic Commission for Latin America and the Caribbean also raised concerns about the amount of tax revenue being collected from large corporations.
According to the study released on Sept. 10, tax incentives provided by countries to corporations in Latin America led to lost revenues that amounted – on average – to 3.7 percent of GDP.
THE STAIN OF CORRUPTION
Corruption cases in the region, including revelations that Brazilian engineering giant Odebrecht paid more than $788 million in bribes to secure contracts in Latin America and Africa and that billions of dollars were diverted from Brazilian state oil company Petrobras via inflated contracts, with politicians providing cover for the graft – also have damaged public trust in emblematic corporations.
The problem for the multilatinas has been this “reinforcement of the image of companies, multilatinas or not, as enemies of society,” Andonova said, adding that corruption scandals have “affected citizens’ confidence in their public systems and politicians and fostered cynicism.”