Transnational corporations, industrial policy and the 'war of incentives': The case of the Argentine automobile industry

In the context of intensified internationalization of production, automobile firms in Argentina face a profoundly different structure of incentives to the prior decades of import substitution industrialization. Recent policies in the Argentine auto industry have been aimed at a recovery through a reorientation towards exports. Two initiatives set the context for changes during the 1990s: an industry-government-labour agreement and the implementation of a commercial partnership with Brazil. The dramatic recovery of the sector is an apparent validation of the policies implemented. This article questions this recovery by drawing on case-study work at a number of auto plants and components suppliers. The effects of these policies on changes in the structure of production and industry and on externalities supporting domestic firms are examined. Lessons are drawn for the role of government policy in supporting the contribution of transnational corporations to domestic technological and organizational development.