The new international political economy of the automotive industry: deglobalization trends and challenges for Mercosur

Type de publication:

Conference Paper


Gerpisa colloquium, Brussels (2023)


The automotive industry is one of the strategic sectors of the international economy and a key player in Mercosur intra-regional trade. In this regional space, automobile manufacturing reflects the preferences of transnational companies and local capital -companies in charge of the distribution and supply of auto parts- and the interest of the states in the creation and maintenance of a factory in the region. Likewise, this region, as a market for the industry's global sales and production, is also central for several reasons. First, because of the prominence of transnational companies in the region industrial activity, particularly in the terminal sector. Secondly, the automotive agreement between Argentina and Brazil in the second half of the 1980s and its successive negotiations for the establishment of a Common Automotive Policy (CAP) is a key element in explaining the way in which transnational capital has structured this space of regional integration. Thirdly, Mercosur intra-regional trade is mainly explained by the intra-firm exchange carried out by automotive companies, which have consolidated a regional production chain over the years of the bloc's existence. Finally, this region is the fifth largest vehicle producer in the world, and its largest economy, Brazil, is among the top ten producers in the global industry.
Mercosur is a paradigmatic case, in relation to the structural transformations of transnational capital and, in particular, of the automotive industry in recent years. This region presents some peculiarities that the literature characterizes when thinking about the development of countries and their regional coordination. One of them refers to the specific configuration of global automotive production and its productive organization in regional spaces. In Mercosur, this organization has been concentrated mainly in Brazil, relegating Argentina as a secondary actor, being a limitation when it comes to thinking about complementary productive integration strategies. Another restriction, associated with the previous one, is the dependence of the Argentine sector on Brazil and the regulatory frameworks that characterize the bilateral relationship between both economies. The third restriction is associated with the auto parts sector, given that terminal strategies involve low local content, reinforcing the presence of global supplier companies in the first and second rings (where a greater amount of technological content is concentrated). Finally, Mercosur is the automotive region that has a strong presence of transnational firms (subsidiaries) that have little mandate and autonomy when it comes to making investment decisions regarding what is dictated by the central parent companies (Baruj, Obaya & Porta, 2017: 140-141).
The emergence of the Covid-19 pandemic and the outbreak of the war in Ukraine exacerbated the transformations of the capitalist economy turned towards digitalization. Since then, the international system has been experiencing a stage of change and a crisis of the hegemonic structure of globalization (Sanahuja, 2017) that is altering the organizing principles on which the post-fordism manufacturing economy was based. This crisis, in which the so-called Fourth Industrial Revolution or Industry 4.0 takes center stage, makes the use of artificial intelligence, the "internet of things" and "cloud computing" its leitmotiv. Companies are adapting their strategies to new production modes and models to organize and master activities in "disrupted" global supply chains. In this automotive metamorphosis, new companies offering industrial internet technology services are joining the field of traditional manufacturing, which are currently disputing the hegemony for the accumulation of capital in vehicle manufacturing (Siemens, General Electric, Apple, and Samsung, among others). In this sense, states and regions are facing new problems when it comes to thinking about international insertion and development. Latin America and Mercosur in particular, will have to adopt policies that will enable them to bridge the double gap that the globalization crisis and the pandemic are deepening: the technological-digital and the environmental gap. The region continues to face difficulties in developing policies of cooperation and productive complementation, taking advantage of the technological learning that could result from cooperative processes between states and automotive firms. At the same time that R&D investment policies are necessary industrial and technological policies are needed to strengthen the regional productive structure and thus adapt to the new configuration of world trade.
This paper proposes to problematize, from the critical perspective of international political economy (IPEc) (Cox, 1981, Gill & Law, 1989,) the scope and limitations that this new framework of automotive capital accumulation represents for Mercosur. In an international context marked by economic protectionism, the return of industrial policies and the questioning of globalization, regional productive integration and complementarity are key when thinking about productive strategies aimed at the sustainable autonomy of the region.
The theoretical-methodological postulates of the EPIc allow us to investigate these aspects, studying the structural power of global capitalism, and the agency exercised by a "transnational business class" in the international system. We delve into the Gramscian concept of hegemony and the method of historical structures, we place our research problem in a "framework of action" that we call "the governance of the automotive industry in neoliberal globalization", and thus study Mercosur in the current scenario of reconfiguration towards electromobility.

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