Technological trajectories in peripheral integration processes. The case of multinational companies in the MERCOSUR automotive space
thesisposted on 29.11.2016, 03:44 authored by Obaya, Martin
In March 1991, in the context of an ambitious programme of market-oriented structural reforms, Argentina, Brazil, Paraguay and Uruguay launched the MERCOSUR integration process. One of the initiativeâ€™s main purposes was to promote an endogenous process of technological change in member countries. In the context of greater opening to international trade and capital flows, subsidiaries of multinational companies (MNCs) were expected to play a crucial role in achieving this goal as â€˜carriers of modernisationâ€™, bringing up leading-edge knowledge embedded in goods, services, practices and people with â€˜spill overâ€™ into backward economic structures. The thesis contributes to the understanding of the actual technological behaviour adopted by MNCs operating within MERCOSUR and of its effective contribution to the process of technological change in member countries. Focusing on the case of the automotive industry in the two largest countries â€“i.e. Argentina and Brazilâ€“, it specifically addresses three issues: i) the evolution of the technological strategy adopted by carmakers from the date of creation MERCOSURâ€™s creation; ii) the evolution of the division of labour among subsidiaries in Argentina and Brazil; iii) the role played by state agents â€“as regulators of the integration processâ€“ and corporate agents â€“parent companies and subsidiariesâ€“ in shaping the two above mentioned issues. The proposed analytical framework relies on a variety of conceptual insights found in the evolutionary approach to economic development; the management and economic literature on MNCs; and interdisciplinary studies on global production networks. The study uses an original multiple embedded case study research design that facilitates the examination of subsidiaries from a network perspective and brings out their interrelation with respect to technological behaviour. From the cross case comparison, some general conclusions are drawn. Firstly, a technological gap between parent companies and subsidiaries in MERCOSUR crystallised in an intra-firm centre-periphery type of division of labour. Although, subsidiaries in the region managed to assume more knowledge-intensive responsibilities within the corporation, this gap seems to be a structural feature of the MNCs network structure. Moreover, parent companies retained great power to regulate the technological learning process of peripheral subsidiaries which in the final analysis are shown to have had very little autonomy. Secondly, there were limitations to MNCs bringing about technological change in a balanced manner. The hierarchical nature of the MNC network ended up being replicated within the MERCOSUR automotive space: Brazilian subsidiaries adopted a higher hierarchical position within the intra-region division of labour assuming more knowledge-intensive responsibilities than their Argentinian counterparts.The study concludes that the market-driven multi-level regulatory framework adopted to â€˜governâ€™ the MERCOSUR automotive space did not develop the tools to foster an endogenous process of technological change in the region. In fact, it favoured the consolidation of the hierarchical division of labour between Brazilian and Argentinian subsidiaries, division inconsistent with the principle of â€˜balanceâ€™ to which MERCOSUR member countries were committed.