ABSTRACT
Spanish direct investment in Latin America became significant in the 1990s as a consequence of a conjunction of economic developments in Latin America and in Spain. Investment in the less competitive enterprises undermined the overall rate of productivity of the economy. The advantage of Spanish firms rested on their knowledge of and familiarity with the needs of economic liberalization, especially in the basic infrastructure sectors such as telephony, finance and banking and energy. A proper analysis of multinational enterprises (MNEs) competitive advantage needs to go beyond the analysis of the firm, and situate it in a broader historical, social, political, cultural, and economic context. Alliance theory, as developed by Gomes-Casseres, also provides useful theoretical support to explain the expansion of Spanish MNEs in Latin America. A competitive advantage determines the degree of competitiveness of a firm in a particular industry, within a single market, or in many markets.
