In Search of the Latin American Variety of Capitalism

Abstract

[...]Latin America's comparative institutional advantage lies in simple manufacturing and commodities, which contrasts with both the radical and incremental types of innovation enabled by the institutions of Liberal Market Economies (LME) and Coordinated Market Economies (CME), respectively. The facts that prototypical diversified business groups that historically never went public, e.g., Votorantim, are launching IPOs for some of their member firms, and that grupos more generally-especially those whose sales are concentrated in the domestic markets-need to tap domestic sources of finance, suggest that the image of large business groups that exclusively rely on retained earnings to self-finance their large investment projects may not continue to accurately depict how grupo CFOs actually operate in the field.