Industrial Business Groups in a Context of Deindustrialization. The Uruguayan Case, 1980-2015

Abstract: During the 1990s, a series of institutional transformations took place that strongly affected the national productive structure, as well as its agents. Among the main effects of the new openness and liberalization policies are: the loss of relevance of the manufacturing sector in the economy, the abandonment of the complex system of tariffs and subsidies and the accelerated growth of foreign direct investment. How have these transformations impacted the structure of national industrial business groups? This is the central question that guides the article. The paper takes two samples from large industrial business groups in the late 1980s and in 2015, comparing their evolution in both benchmark years. In the construction of both samples, information was taken from the Central Bank of Uruguay, the Montevideo Stock Exchange, Official Newspaper and press sources, in addition to previous work. The evidence presented shows that aspects such as size, level of diversification and the form of family control have not varied much in each period. In this sense, the groups have remained stable around certain attributes. On the other hand, there are notable variations in the formation of alliances, the sector distribution of the business portfolio and the links with the government in different modalities. These variations and permanence can be explained by the impact of the new institutional context in the framework of a small economy like Uruguay. Although similar reforms in other countries in the region have strengthened national business groups (promoting their internationalization and their internal expansion into new business areas), the Uruguayan case seems to represent the opposite. In this way, the paper contributes to the discussion about family groups and their adaptation to the context of the second globalization in peripheral economies.