1. The Emergence of Latin Multinationals: Spain, Mexico and Brazil Javier Santiso Director and Chief Economist OECD Development Centre Vale Rio, March 2008

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

20. 20 …and South-South flows are a key financing source, both in Asia and Latin America Source: OECD Development Centre 2007, based on Thomson Datastream (Economist Intelligence Unit).

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

22. 22 …helped by the fall of cost of capital Source: OECD Development Centre 2007, based on Emerging Markets Bond Index - Global, 2007. Source: OECD Development Centre 2007, based on Economist Intelligence Unit, 2007. * Data for 2007 is estimated and includes recent deals Spreads of major emerging economies in LatAm 0 500 1000 1500 2000 2500 12/1993 9/19945/19951/19969/1996 6/19972/1998 10/1998 6/19993/2000 11/2000 7/20013/2002 12/2002 8/20034/2004 12/2004 8/20055/20061/2007 BrazilLatin AmericaMexico

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

24. 24 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. TargetNationalityAcquirerDeal Value ($m) CorusUK/NLTata Group7700 Oil & Gas Assets (Campos Basin)BrazilOil & Natural Gas Corp1670 Omnimex de ColombiaColombiaOil & Natural Gas Corp: China Group850 Oil & Gas Assets (Brazil)BrazilONGC Videsh820 Greater Nile Petroleum (25%)SudanOil & Natural Gas Corp783 Glaceau (30%)USTata tea677 Shell Development AngolaAngolaOil & Natural Gas Corp600 Oil & Gas Assets (Syria)SyriaOil & Natural Gas Corp: China Group581 Betapharm ArzneimittelGermanyDr Reddy's Lab572 Hansen TransmissionsBelgiumSuzlon Energy562 Eve HoldingBelgiumSuzlon Energy548 TerapiaRumaniaRanbaxy 324 Total15687

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

26. 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. 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.