The West European Chemical Industry in Latin America after the First Oil Price Shock

For a long time, Latin American countries were among the main investment areas of Western European corporations. A broad literature has shown the importance of South American markets as destinations for FDI - especially for the period before 1914 (Stone 1977; Wilkins 1974). At the same time, the Western European chemical industry was one of the most international industries. German companies had a world market share of over 80% for certain products prior to World War I. Despite the loss of their foreign assets as a result of the two world wars, German companies continued to penetrate the world market after 1945. Taken together, this meant that German chemical industry FDI to Latin America was higher than that to the EEC in the mid-1960s. But in the 1970s and 1980s, in the face of high inflation rates and rising debt, Latin American countries became much less attractive and fell behind other world regions as an investment area. The article takes these findings as an opportunity to ask about the reactions of Western European chemical companies to the economic turbulence of the 1970s and 1980s in Latin America – with a focus on Brazil and outlooks on Argentina and Mexico. What importance did companies attach to Latin American markets? To what extent did they change their investment policies? What changes in strategy did they make? What was the importance of exports and foreign production for the Latin American subsidiaries? What consequences did the companies draw from accelerated inflation? These questions will be answered using four case studies of the Western European chemical industry (Hoechst, Bayer, BASF, Rhône-Poulenc) and are based on original sources from several company archives.