Received: January 2017

| Revised: January 2018

|
DOI: 10.1111/meca.12208

ORIGINAL ARTICLE

Mergers and acquisitions in Latin America

1990–2014: Factorial distribution and contractionary
impacts
Germ
an Alarco
Pacífico Business School, Universidad del
Pacífico, Lima, 15072, Peru
Correspondence
German Alarco, Avenida Salaverry 2020
- Jes
us María, Pacífico Business School,
Universidad del Pacífico, Lima, 15072,
Peru.
Email: g.alarcotosoni@up.edu.pe
Abstract
The evolution of mergers and acquisitions (M&A) in Latin
America from 1990 to 2014 is analyzed herein. A one-sector
production model without government and external sectors
that links prices/costs, income distribution, demand and out-
put is proposed, and the effects of changes in M&A on
profit margins, income distribution and gross domestic
product (GDP) are evaluated. The model is applied to most
regional economies to determine the impact of these transac-
tions on the profit share and level of economic activity. Our
analysis does not reject the hypotheses that M&A have dis-
tributive effects favorable to profits and that they have
contractionary effects on GDP in Latin American countries.

1 | INTRODUCTION

M&A activity began to spread in the 1980s; it increased in the United States and developed economies
in the 1990s and has expanded to emerging economies, including countries in Latin America. There
were previous peaks of M&A activity in developed economies in 1900, 1929 and 1963 (Pryor, 2001).
A detailed analysis of this phenomenon in Europe and the United Kingdom was carried out by Hughes
(1992). Although the sources of information differ, M&A transactions in Latin America were
reported to amount to US $ 2,016 billion between 1990 and 2014.1 In 2010, M&A activity peaked at
US $251 billion, accounting for 8.5% of these transactions worldwide. Although this topic is important
for more than just developed economies, literature on its regional importance is scarce. M&A activity
in Latin America and its composition by country and sector have changed over time. The purpose of
this paper is to describe this phenomenon and evaluate the effects of these transactions on inequality
and GDP.
A merger or acquisition is carried out to increase shareholder value by increasing profits or market
share. Within the framework of a competitive economy, such activities would be illogical because, in

1
Brock (2011) noted that, from 1985 to 2008, the 142,000 US M&A amounted to US $13.4 trillion, equivalent to 4.5
times the total private R&D spending by U.S. companies.

Metroeconomica. 2018;69:681–706. wileyonlinelibrary.com/journal/meca V

C 2018 John Wiley & Sons Ltd | 681
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such a market structure, there are no extra profits to be gained and therefore no reason for one firm to
be attracted to another. Likewise, economic agents are viewed as rational, operating in efficient markets
with perfect information. Thus, these transactions are better explained under noncompetitive market
conditions. Firms can increase their profits through increased growth and by taking advantage of their
market share. An increase in market power would generate a fall in consumer welfare. However,
according to the neoclassical approach, efficiency gains could eliminate, offset or strengthen those
social welfare losses (Collins, 2003).
M&A is a phenomenon of an economy in which imperfect competition is the dominant market
structure. However, the list of explanatory factors behind M&A is extensive. Trebing (1985) proposes
six factors: new possibilities that technological change might generate in a specific sector; a decline in
normal market growth rates; the energy crisis, which generated incentives for backward integration;
the diversification or integration of various activities to avoid regulatory action; financial synergies that
would increase firm value; and operational synergies that would allow for better use of resources and
skills, thereby increasing the firm’s productivity and profitability. PricewaterhouseCoopers (2016) pro-
poses the following objectives of M&A: (a) obtaining strategic assets and higher operating efficiency
through synergy; (b) increasing market share; (c) entering foreign markets; (d) expanding the supply of
products and services; and (e) achieving vertical integration.
Brock (2011), working from a mainstream perspective, observes that M&A have cumulative
effects, concentrating decisions in the hands of the few. Likewise, he notes that there are three levels of
impact. The initial level includes the conventional economic consequences of price increases in all sec-
tors. The second level relates to the ability of larger firms to limit competition and opportunities for
market access, curb innovation and achieve greater concentration. The third level relates to an
increased ability to pressure governments with regard to major prerogatives and mobilize people and
organizations in their favor. The last of these has been previously considered; for instance, Gruchy
(1985) argues that the main impact of M&A is to increase corporations’ power to manipulate the gov-
ernment, workers and consumers and increase corporate profits.2
Kaplow and Shapiro (2007) provide a valuable review of the antitrust literature (including on
M&A) from a mainstream perspective. Pautler (2001, 2003) provides a series of studies on the effects
of M&A both globally and within industries, describing specific cases. His conclusion is that the bal-
ance with regard to firm value following such transactions is positive. However, the results are not
clear with respect to their effects on profits. Whinston (2006) proposes that, in the largest M&A trans-
actions, there is a strong tendency to raise prices, although there are cases where prices increase and
others where they decrease. With regard to efficiency, he noted highly heterogeneous results. Kaplan
(2000) provides studies of specific industries, but they are not conclusive. Andrade, Mitchell, and Staf-
ford (2001) assess the effects of M&A on shareholder value, beginning with the announcement of an
M&A and continuing with the subsequent effects on the target firm, the purchaser and the joint opera-
tion, finding that the beneficiaries are the shareholders of the target firm. Likewise, they conclude that
operational performance, in terms of cash flow following an M&A, tends to improve.
More recently, Ormosi, Mariuzzo, and Richard (2015) and Kwoka (2013, 2015) conducted ex post
evaluations of M&A in the European Union and the United States, respectively. For the European
Union, the authors note that average prices had increased by 3.7%, with 14 observations showing an
increase in average price of 8.2% and 7 observations showing a decrease in average price of 4.2%.
Based on 119 studies in the United States through 2015, prices increased on average by 4.3%. Addi-
tionally, studies have found decreases in R&D (9.7%) and quality (4%). According to Kwoka, the

2
U.S. president W. Wilson commented in 1913: “If monopoly persists, monopoly will always sit at the helm of govern-
ment. I do not expect to see monopoly restrain itself. If there are men in this country big enough to own the government
of the United States, they are going to own it” (Acemoglu & Robinson, 2012, p. 364).
ALARCO
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intervention of the Competition Authority was inadequate or posed ineffective remedies, given that, in
such cases, prices rose by 7.7%, increasing even more when conduct remedies were proposed (12.8%)
with respect to divestiture, that is, when assets or firms were sold (6.1%). In an analysis of 46 cases
(2013), prices were found to have increased by an average of 7.3%, with 38 cases showing an average
increase of 9.9% and 8 cases showing an average decrease of 4.8%.
Kalecki (1954) explicitly links price determination, income distribution, demand and GDP. The
degree of monopoly is explained by various factors. One important determinant is business concentra-
tion, which leads to the formation of large firms, with prices implicitly following the prices of the
leader firm or following them explicitly through a cartel. These practices are the result of M&A activ-
ity. Given these practices, ceteris paribus, profit share increases, while demand and GDP fall. At this
point, the dominant effect is that on income distribution. Even when there are greater efficiencies, the
final outcome depends on the price/cost ratio and ultimately the price/wage ratio, while GDP is deter-
mined by the variables that compose demand. The main hypothesis of this paper is that M&A increase
the profit share (reducing the wage share) and negatively affect economic activity unless they are
accompanied by a significant increase in private investment and net exports.
In an interesting paper within the Post-Keynesian tradition, Grant (1979) links M&A, the degree of
monopoly, the wage share and the profit share by way of a mathematical model. However, in contrast
with this paper, Grant focuses on the process by which M&A, which raise the degree of monopoly,
help avert the collapse of the capitalist system. Higher levels of M&A are periodically required in
response to a reduction in the wage share, an increase in the capital-output ratio and a fall in the profit
rate, although this ultimately leads to a dead end. On the other hand, an important concern for Labini
(1992) is whether the M&A activity hinders the operation and growth of small firms.
This paper does not address how M&A have led to new methods of capitalization of corporate
assets and the adoption of new innovative financial instruments more acceptable to investors (Hake,
1998) or how merger cycles at the end the 19th and 20th centuries were accompanied by the pro-
nounced development of capital and stock markets (Du Boff & Herman, 1989). Additionally, we do
not consider how M&A create greater instability due to higher market capitalization values that depend
on expectations of share prices that have an unknown future. The model follows the Post-Keynesian
approach, not the Marxian. The econometric analysis of the model is simple. We do not analyze effects
on prices of specific economic activities, the issue of economic groups, vertical integration or the con-
trol or regulation of mergers, among other topics.
This paper has four sections in addition to the introduction, conclusion and appendix. In the first
part, basic statistics on M&A in Latin America are presented, showing the evolution of M&A activity
from 1990 to 2014 and the distribution of such activity by country and economic sector. Additionally,
information on the profit share and the volume of M&A transactions in the region is presented. The
second section presents a basic Post-Keynesian model that establishes the link between prices, the fac-
torial distribution of income and GDP. The third section presents tests of Granger causality between
M&A and the profit share in Latin American countries. The fourth part presents preliminary results of
the application of the basic equations and other variables of the proposed model to 16 Latin American
countries.

2 | COUNTRY, SECTORIAL AND REGIONAL DATA

All M&A databases are private rather than public. There are at least four sources: Thomson Reuters,
Bloomberg, Dealogic and Merger Market. The first source includes the most extended period of Latin
American transactions, 1990–2014, while the other sources cover shorter periods. Latin America is
defined as including the economies of Central America, South America, the Caribbean region and
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FIGURE 1 Annual value of M&A transactions in Latin America, 1990–2014 (US$billion)

Source. Thomson Reuters, Bloomberg, Dealogic and Merger Market

Mexico, whose language is Spanish or Portuguese but not English. For all transactions, except those
from Thomson Reuters, we consider transactions directed to (country of destination) or coming from
each of the Latin American economies (country of origin) that involve other economies. The Thomson
Reuters database includes information on M&A and Joint Ventures only for transactions directed to
countries of destination, while Dealogic exclusively includes transactions of outright purchase, majority
interest, acquisition of assets and partial interest. The alternatives of remaining interest or divestment
are not taken into account.
Thomson Reuters data include additional information about M&A agreements, such as announce-
ment dates, acquirer names, acquirer nations, percentage shares of acquisitions, payment type and the
deal status, among other items. However, some of this information will not be utilized, as this is a mac-
roeconomic analysis, not an analysis of microeconomic behavior or of a specific sector.
Figure 1 shows the evolution of M&A transactions in Latin America based on the four sources
cited above. While the results differ depending on the source, the upward trend is clear. Higher values
are found in the oldest Thomson Reuters series, which we will use as a basic source in this paper. The
statistical series appear to be pro-cyclical with respect to economic growth, as higher values and num-
bers of transactions occur during periods of higher economic growth: 2000, 2008 and 2010 (US $250
billion). Minimum values are found in 1993, 2003, 2009 and 2014. In 1993 and 2003, these values
amounted to only US $17 billion and US $26 billion, respectively.
Table 1 shows both the value of M&A transactions by destination in Latin America and the percen-
tages of the total for selected dates. First, Brazil is highlighted, with a percentage of 47% and rising val-
ues from 2008 to 2010. Mexico is second, with values close to 21%, although its share was close to
40% in the early 1990s. The third economy is Argentina, with an average share of 10% of the total,
although it fell below 3% in the final years of the sample period. Argentina is followed by Chile,
Colombia, Peru and Venezuela, with percentages that fluctuate between 2.5 and 8.3% of the regional
total. Both Chile and Peru accounted for large numbers of transactions in the last years of the sample
period. The remaining Latin American economies were headed by Panama, which had shares below
1% of the regional total. Cuba and the Dominican Republic did not register transactions during the
period under review.
The sectorial composition of destinations of Latin American M&A has changed over time, in
accordance with global trends and some regional particularities (Table 2). Transactions linked to the
telecommunications sector, the electrical energy sector and the financial sector were more important
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TA B LE 1 Value of M&A transactions by Latin American countries, 1990–2014

US$million
1990 1995 2000 2005 2010 2014 1990–2014

% Total of Latin America

Argentina 6,329 2,915 17,860 2,764 15,511 2,989 200,817
Bolivia – 957 94 3 66 466 5,378
Brazil 997 5,257 53,454 11,678 151,666 51,525 940,952
Chile 425 3,445 8,494 4,200 10,099 16,373 166,759
Colombia 352 475 2,146 9,594 6,555 2,894 95,285
Costa Rica 3 196 364 59 7 20 3,662
Ecuador 3 46 166 1,496 396 731 7,245
El Salvador – 40 320 232 166 281 7,813
Guatemala 3 – 465 41 1,159 58 8,255
Honduras – 1 314 – 1 1 2,372
Mexico 25,262 6,637 28,393 6,187 49,994 16,403 429,496
Nicaragua – – 301 – 15 54 1,235
Panama 4 22 725 547 3,735 1,333 18,156
Paraguay – – – – 3 6 808
Peru – 2,850 2,958 2,674 3,348 11,412 68,996
Uruguay – 20 304 208 449 108 7,875
Venezuela 130 386 3,477 214 7,591 572 50,767
Total 33,506 23,247 119,834 39,898 250,762 105,225 2,015,871

% Total of Latin America

Argentina 18.89 12.54 14.90 6.93 6.19 2.84 9.96
Bolivia 0.00 4.11 0.08 0.01 0.03 0.44 0.27
Brazil 2.97 22.61 44.61 29.27 60.48 48.97 46.68
Chile 1.27 14.82 7.09 10.53 4.03 15.56 8.27
Colombia 1.05 2.04 1.79 24.05 2.61 2.75 4.73
Costa Rica 0.01 0.84 0.30 0.15 0.00 0.02 0.18
Ecuador 0.01 0.20 0.14 3.75 0.16 0.69 0.36
El Salvador 0.00 0.17 0.27 0.58 0.07 0.27 0.39
Guatemala 0.01 0.00 0.39 0.10 0.46 0.06 0.41
Honduras 0.00 0.00 0.26 0.00 0.00 0.00 0.12
Mexico 75.40 28.55 23.69 15.51 19.94 15.59 21.31
Nicaragua 0.00 0.00 0.25 0.00 0.01 0.05 0.06
Panama 0.01 0.09 0.61 1.37 1.49 1.27 0.90
Paraguay 0.00 0.00 0.00 0.00 0.00 0.01 0.04
Peru 0.00 12.26 2.47 6.70 1.33 10.85 3.42
Uruguay 0.00 0.09 0.25 0.52 0.18 0.10 0.39
Venezuela 0.39 1.66 2.90 0.54 3.03 0.54 2.52

Source. Thomson Reuters.

during the 1990s. These three activities represent more than 56% of the value of transactions in the
whole region. The next important group consists of raw materials (included in the item, materials), con-
sumer products and services, consumer staples and industrial products in general. The next group, in
terms of importance, includes transactions linked to real estate, facilities for retail trade and the media.
Two items that have grown in recent years are transactions linked to healthcare and high-tech firms,
according to Thomson Reuters Business Classification.
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TA B LE 2 Value of M&A transactions by target macro industry in Latin America, 1990–2014 (% total of Latin
America)

1990 1995 2000 2005 2010 2014 1990–2014

Consumer products, services and consumer staples 2.91 11.30 4.08 17.97 8.12 5.67 11.21

Energy and power 0.04 14.69 19.35 13.62 37.83 17.14 20.41

Financials 0.03 31.89 21.01 16.05 6.96 10.60 15.80

Government and agencies 0.00 0.00 0.08 0.00 0.00 0.00 0.01

Healthcare 0.02 1.01 0.10 0.32 1.43 3.72 1.27

High technology 0.03 0.22 1.69 0.67 1.12 2.98 1.25

Industrials 2.98 2.30 0.91 6.74 6.80 6.39 6.55

Materials 7.93 15.47 6.90 17.51 14.39 18.41 15.30

Media and entertainment 0.00 3.34 2.93 1.59 1.64 1.84 2.04

Real estate 0.00 2.99 0.13 1.71 2.37 4.60 2.20

Retail 0.00 0.58 0.74 9.04 1.15 4.07 4.42

Telecommunications 86.06 16.23 42.10 14.78 18.18 24.59 19.54

Source. Thomson Reuters.

Figure 2 shows the importance of the cumulative real value of M&A for each country between
1990 and 2014 relative to real GDP in 2014. M&A operations are equivalent to 95% of GDP in Chile.
In the second group are Argentina, Brazil, Panama and Peru, with M&A transactions as a portion of
GDP between 53 and 78%. In the third group are Colombia, Mexico, El Salvador and Bolivia, with
figures ranging between 39 and 42%. Honduras, Venezuela, Uruguay, Costa Rica, Ecuador, Nicaragua
and Paraguay have smaller shares. The Latin American average is 57.9% of GDP.
The relative importance of M&A differs among Latin American countries. The regional average is
slightly higher than 20% of private investment over the 1990–2014 period. This percentage is below the
average for the United States, where M&A from 1985 to 2008 were equivalent to the total private invest-
ment (nonresidential plant and equipment) from 1985 to 2011 (Brock, 2011).3 Figure 3 shows that Chile
had a higher level of M&A (more than 30%), reaching its maximum value in 1999 (154%). Bolivia had
the second highest level (29%) but exhibited highly varying values over time, reaching its maximum in
1995 and 1996. Brazil, Argentina and Panama take third, fourth and fifth place, respectively. Venezuela,
Peru, El Salvador, Colombia and Mexico had values between 10 and 20%. The economies in which
M&A play a less important role are Uruguay, Honduras, Costa Rica, Nicaragua, Ecuador and Paraguay.
Figure 4 shows the relationship between the profit share and the real value of M&A transactions in
Latin America.4 The most recent information available from Alarco (2014) includes both the profit
share and mixed incomes share.5 This account was obtained from the profit shares of each of the 16

3
Andrade et al. (2001) also noted that in 1995, M&A in the United States were equivalent to 5% of GDP and 48% of
nonresidential gross investment.
4
Table A1 in the Appendix.
5
This important component of national accounts, by type of income, is not presented independently in many regional
countries.
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FIGURE 2 Accumulated M&A transactions, 1990–2014 (% of 2014 real GDP).

Source. CEPAL and Thomson Reuters

regional economies and real GDP in 2005 constant prices, provided by the World Bank. The same
economies included in the GDP factorial distribution were considered in the case of M&A. There
appears to be a direct link between the two variables as well as between the annual absolute variation
in the real value of M&A transactions and the profit share. The Appendix presents statistical informa-
tion on the real value of M&A transactions and corresponding graphs for each country (Appendix
Figure A1).

3 | BASIC MODEL AND EXTENSION

Kaldor (1955, 1961) provides the basis for establishing a simple model to assess the macroeconomic
effects of M&A activity within a closed economy, with two economic agents (wage earners and profit
makers), without government or a foreign sector and with only one productive sector that produces

FIGURE 3 Importance of M&A transactions for private investment in Latin America; average for 1990–2014 (%)
Source. CEPAL and Thomson Reuters
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| ALARCO

% US$ 2005 billion

57 250

56

55 200

54

53 150

52

51 100

50

49 50

48

47 -
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Profit share Value of M&A transactions

FIGURE 4 Profit share and real value of the M&A transactions in Latin America, 1990–2014
Source. CEPAL, Thomson Reuters, World Bank and other domestic data

only one product. There are five basic equations: in Equation (1), GDP or income ðY Þ is the sum of
wages ðW Þ and profits ðPÞ; in Equation (2), total savings in the economy ðSÞ are the sum of the sav-
ings of profit makers ðSP Þ and wage earners ðSW Þ; Equations (3) and (4) define the savings of both
agents as the product of their propensities to save and their income levels; and Equation (5) indicates
that investment equals savings.
Y5W1P (1)
S5 SW 1SP (2)
SW 5sw W (3)
SP 5sp P (4)
I5S (5)
Equation (6) below is obtained by substituting the elements of (2), (3), (4) and (1) into Equation
(5) and dividing by Y. The private investment share of GDP depends on the difference between the
propensity of profit makers and wage earners to save multiplied by the profit share plus wage earners’

difference
propensity to consume. Equation (7) shows that the profit share is equal to the  between price
ðpÞ and cost ðcÞ divided by p; thus, it is equivalent to the profit margin 11z z
. Equation (7) is then
substituted into Equation (6) to determine Y. GDP depends positively on private investment and nega-
tively on the difference between the propensities of profit makers and wage earners to save and the
profit margin, which is obtained once price is determined.
I  P
5 sp 2sw 1sw (6)
Y Y
P ðp2cÞ z
5 5 (7)
Y p 11z
I I
Y5   ðp2cÞ
5 (8)
sp 2sw ðsP 2sw Þ 11Z
Z
1sw
p 1sw
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| 689

Equation (8) shows the Post-Keynesian logic, whereby output is determined by idle capacity. These
assumptions differ from those of neoclassical economics, according to which output is determined by
supply factors. In principle, because prices are fixed, an increase in demand leads to an increase in out-
put unless production costs (including wages) increase and/or the profit margin rises owing to
increased market concentration or other factors.
If it is assumed that sp >sw and I > 0, then a change in GDP resulting from a change in the profit
margin has a negative value, as shown in Equation (8). An increase in the profit margin, holding all
other variables constant, leads to a decrease in demand and GDP.
 
o ðY Þ o ðY Þ I sp 2sw

 5
 52 h  i2 < 0 (9)
o p2c o 11z sp 2sw ðp2c Þ
z
p p 1s w

Various factors determine the profit margin. Since Kalecki (1954), the degree of monopoly has
been seen as dependent on sales promotion through advertising (product differentiation), general
expenditures, labor union power (negatively) and business concentration and cartel formation through
M&A.
Subsequently, the list of explanatory factors has expanded, with microeconomic and macroeco-
nomic factors added. For instance, Labini (1962) maintains that the profit margin is determined to pre-
vent new firms from entering the market; Steindl (1976) argue that it is determined by domestic
demand for investment funds; and Eichner (1973) observes that self-financing has limits because of
substitution effects, entry factors and the risk of regulatory enforcement. Wood (1975) and Harcourt
and Kenyon (1976) argue that the firm faces two key boundaries: the domestic financing of investment
and expectations regarding market size.6
Therefore, Equation (10) below depicts the profit margin as directly proportional to M&A and the
domestic financing of investment ðF Þ and inversely proportional to the wage share ðwÞ and the union-
ization level ðOÞ. With 10 > 0; 11 > 0; 12 <0 and 13 < 0, profit margin elasticities are
explained by changes in the explanatory variables. M&A increase market concentration, which raises
the profit margin via increases in consumer prices or decreases in production costs. Here, we do not
analyze the effects of unionization levels, following Kalecki (1954), due to a lack of statistical informa-
tion. Next, Equation (10) is substituted into Equation (8) to obtain Equation (11), whereby GDP
depends directly on investment and inversely on the difference between the propensities of profits mak-
ers and wage earners to save, the value of M&A transactions and other factors. Equation (12) shows
the change in GDP as explained by a change in the value of M&A transactions, with the expected neg-
ative sign. A higher value of such transactions increases the profit margin and reduces the level of eco-
nomic activity.
p2c
5gðM&A; F; w; OÞ5A0 M&A10 F 11 w12 O13 (10)
p
I
Y5   (11)
sp 2sw A0 M&A10 F 11 w12 O13 1Sw


o ðY Þ 10 Y p2c
p
52 h
 i < 0: If sp > sw ; p > c (12)
oM&A M&A ðsP 2sw Þ p2c 1sw p

6
Gordon (1998) added other factors based on an analysis of the historical evolution of the degree of monopoly in the
United States.
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4 | G R A N G E R C A U S A L I T Y : T H E R E A L V A L U E O F M &A
TRANSACTIONS AND THE PROFIT SHARE

Table 3 provides evidence regarding the direction of Granger causality between the profit share and
annual real values of M&A transactions, analyzed in both levels and accumulations for each Latin
American economy and for the region as a whole during 1990–2014. The only cases listed are those
where hypotheses of the effects of M&A transactions on the profit share are not rejected. The F-stat is
useful in identifying the dominant causal factor among the two groups of variables. In this regard, the
proposed linkage is not present in all the economies analyzed. The influence of the real values of
M&A transactions on the profit share is clear only in the cases of Brazil, Ecuador, Mexico, Panama,
Peru, Venezuela and the region as a whole.
The model does not include positive effects of M&A on private investment or an increase in M&A
trades as a consequence of rising demand and production in a specific industry.

5 | COUNTRY AND REGIONAL RESULTS

In the second section of this paper, we introduce a model that requires the parameters of two regressions
and the average values for the period under review of the profit share, the volume of M&A and GDP.
The first regression provides the propensities of both wage earners and profit makers to consume, which
are necessary to calculate the corresponding propensities to save. The second equation provides the elas-
ticities of the profit share with respect to changes in the real value of M&A transactions. The impact of
M&A on GDP is determined using these parameters, in accordance with Equation (12).
Information regarding the wage share and profit share through September 2016 is obtained from
the adjusted database of Alarco (2014). National accounts data in 2005 constant prices by country
and data on private sector credit/GDP are from the World Bank.7 The econometric technique
applied in our model is simple. The first equation is linear, while the second is a double-log equa-
tion, where the parameters are elasticities. The equations are estimated for each economy and for
the region as a whole using OLS. The best results for private consumption and the profit share are
shown in Tables 4 and 5. These tables present the estimated parameters, their t-statistics below
them, autocorrelation adjustments (AR(1), AR(2), MA(1) and MA(2)), goodness of fit statistics,
F-statistics and the time period considered.8 Dummy variables are used only for particular years, as
noted in the tables.
In most cases, private consumption depends positively on the wage share and the profit share during the
same time period. There are time lags between private consumption and its explanatory variables in such
cases as Argentina, Colombia, El Salvador, Paraguay, Venezuela and Peru, subject to a yearly time lag. Two
or three-time lags are used in specific cases. In all equations, the propensity of wage earners to consume is
greater than the propensity of profit makers to consume. The difference between the propensities to save of
these economic agents is greater than 0. Wage earners’ propensity to consume is close to or greater than 1 in
Bolivia, Chile, Costa Rica, El Salvador, Honduras, Mexico, Nicaragua and Uruguay. The goodness of fit is

7
As a complement, we use information from CEPAL and the domestic national accounts to distinguish between public
and private investment.
8
The purpose of estimating these equations was to obtain the values of the parameters and the correlations between the
dependent and independent variables, not to make projections. Therefore, it was considered unnecessary to perform a
unit root test of consumption and the profit series. However, in most cases, autoregressive (AR) and moving average
(MA) components were included. In this way, we can speak of the absence of stationarity in cases where the coefficient
of an AR component is less than 1.
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TA B LE 3 Granger causality between the profit share and the real value of M&A transactions

Null hypothesis: Lags Observations F-Stat Prob.

Brazil’s M&A transactions do not Granger cause Brazil’s 2 23 3.7170 0.0445

profit share

Brazil’s profit share does not Granger cause Brazil’s M&A 0.1474 0.8640
transactions

Brazil’s accumulated M&A transactions do not Granger 2 23 3.7137 0.0446

cause Brazil’s profit share

Brazil’s profit share does not Granger cause Brazil’s 0.1608 0.8527
accumulated M&A transactions

Brazil’s M&A transactions do not Granger cause variations 2 22 6.2621 0.0092

in Brazil’s profit share

Variations in Brazil’s profit share do not Granger cause 0.9155 0.4192

Brazil’s M&A transactions

Brazil’s accumulated M&A transactions do not Granger 2 22 6.8806 0.0065

cause variations in Brazil’s profit share

Variations in Brazil’s profit share do not Granger cause 0.3692 0.6967

Brazil’s accumulated M&A transactions

Ecuador’s M&A transactions do not Granger cause 2 21 0.7310 0.4968

variations in Ecuador’s profit share

Variations in Ecuador’s profit share do not Granger cause 7.3334 0.0055

Ecuador’s M&A transactions

Variations in Ecuador’s M&A transactions do not Granger 2 20 0.6283 0.5470

cause variations in Ecuador’s profit share

Variations in Ecuador’s profit share do not Granger cause 5.6009 0.0152

variations in Ecuador’s M&A transactions

Ecuador’s accumulated M&A transactions do not Granger 2 22 0.0397 0.9612

cause variations in Ecuador’s profit share

Variations in Ecuador’s profit share do not Granger cause 8.1710 0.0033

Ecuador’s accumulated M&A transactions

Mexico’s M&A transactions do not Granger cause 2 23 0.0305 0.9700

Mexico’s profit share

Mexico’s profit share does not Granger cause Mexico’s 4.3939 0.0279
M&A transactions

Mexico’s accumulated M&A transactions do not Granger 2 22 7.2429 0.0053

cause Mexico’s profit share

Mexico’s profit share does not Granger cause Mexico’s 0.0555 0.9462
accumulated M&A transactions

Panama’s M&A transactions do not Granger cause 2 23 0.5210 0.6026

Panama’s profit share
(Continues)
692
| ALARCO

TA B LE 3 (Continued)

Null hypothesis: Lags Observations F-Stat Prob.

Panama’s profit share does not Granger cause Panama’s 9.3566 0.0016
M&A transactions

Peru’s accumulated M&A transactions do not Granger 1 23 8.8380 0.0075

cause Peru’s profit share

Peru’s profit share does not Granger cause Peru’s 0.5088 0.4839
accumulated M&A transactions

Venezuela’s accumulated M&A transactions do not 2 21 5.1795 0.0184

Granger cause Venezuela’s profit share

Venezuela’s profit share does not Granger cause 1.9511 0.1745

Venezuela’s accumulated M&A transactions

Panama’s M&A transactions do not Granger cause 1 24 0.8286 0.3730

Panama’s profit share

Panama’s profit share does not Granger cause Panama’s 14.8330 0.0009
M&A transactions

Latin America’s M&A transactions do not Granger cause 2 22 8.2966 0.0031

variations in Latin America’s profit share

Variations in Latin America’s profit share do not Granger 0.3717 0.6950

cause Latin America’s M&A transactions

Latin America’s accumulated M&A transactions do not 2 22 8.0606 0.0035

Granger cause Latin America’s profit share

Latin America’s profit share does not Granger cause Latin 0.7090 0.5061
America’s accumulated M&A transactions

Latin America’s M&A transactions do not Granger cause 1 24 4.7874 0.0401

Latin America’s profit share

Latin America’s profit share does not Granger cause Latin 2.2131 0.1517
America’s M&A transactions

Latin America’s M&A transactions do not Granger cause 1 23 6.2677 0.0211

variations in Latin America’s profit share

Variations in Latin America’s profit share do not Granger 1.5819 0.2230

cause Latin America’s M&A transactions

Source. CEPAL, Thomson Reuters, World Bank and other domestic data by country.

low only in Ecuador, El Salvador and Panama. In the region as a whole, the propensity of wage earners to
consume is slightly less than one, while the propensity of profit makers to consume is less than 0.6.
For every economy analyzed, the hypothesis that the value of M&A transactions positively affects
the profit share cannot be rejected, although the coefficients are small, as expected. Other variables,
such as the wage share, are negative and significantly different from zero. In no case was the private
sector credit/GDP, during the same time period or with a time lag, significantly different from zero. As
in the previous equation, the profit share depends on the explanatory variables, with a time lag of 1 or
T AB L E 4 Selected private consumption functions (C/Y)
ALARCO

Period
DW- C/Y, W/Y,
Country W/Y p/Y W/Y21 p/Y21 W/Y22 p/Y22 W/Y23 p/Y23 AR(1) AR(2) MA(1) MA(2) R2 F-stat stat p/Y

Argentina 0.882466 0.613503 0.5942 0.7059 25.1961 2.1509 1991–2014

(20.8265)* (21.0855)* (5.3900)*

Bolivia 0.996912 0.691897 0.740275 0.966115 0.8056 27.6281 1.8010 1991–2014

(24.1761)* (26.5410)* (5.5087)* (46.8236)*

Brazila 0.834755 0.707265 0.89656 0.6407 11.8881 1.6706 1991–2014

(8.4421)* (5.4617)* (7.8579)*

Chile 1.028081 0.503869 0.659558 0.8879 83.1856 1.8410 1991–2014

(12.4072)* (6.9831)* (3.8911)*

Colombia 0.833754 0.68604 20.486257 0.961031 0.8461 34.8149 1.3558 1992–2014

(13.0191)* (17.1909)* (25.9440)* (52.5214)*

Costa Rica 1.194847 0.307576 1.310692 0.91699 0.7096 17.1077 1.1447 1990–2014
(12.7008)* (2.7941)* (39.0754)* (36.7622)*

Ecuador 0.303637 0.166849 0.988065 20.934968 0.2889 1.8278 2.1150 1992–2014

(2.6943)* (2.1401)* (143.4998)* (214.3831)*

El Salvador 1.093003 0.914134 0.952180 0.2199 2.6780 1.4505 1993–2014

(8.4426)* (13.6238)* (35.9063)*

Hondurasb 1.28074 0.437208 0.662458 0.9606 170.7597 2.2267 1990–2014

(12.2714)* (3.7752)* (4.6369)*

Mexico 1.113029 0.566886 0.902979 0.8714 71.1542 2.3052 1991–2014

(6.9085)* (9.4276)* (10.4129)*

Nicaraguac 1.079649 0.89748 0.129309 0.9519 131.9277 1.5310 1991–2014

(31.7347)* (38.5583)* (2.1123)*

(Continues)
|
693
TA B LE 4 (Continued)
694
|

Period
DW- C/Y, W/Y,
Country W/Y p/Y W/Y21 p/Y21 W/Y22 p/Y22 W/Y23 p/Y23 AR(1) AR(2) MA(1) MA(2) R2 F-stat stat p/Y

Panama 0.884097 0.498177 0.714467 20.857594 0.2212 1.8935 2.0602 1991–2014

(5.5171)* (5.3959)* (4.7842)* (27.0452)*

Paraguayd 0.819439 0.592909 0.716123 0.4816 5.8847 1.9948 1992–2014

(5.7744)* (7.3076)* (4.3191)*

Peru 0.795309 0.703376 0.740739 0.8118 25.8749 2.0020 1993–2014

(3.0900)* (5.1900)* (7.9462)*

Uruguaye 1.064847 0.68912 0.6341 19.0592 1.7069 1990–2014

(14.4289)* (10.5547)*

Venezuela 0.650285 0.575931 0.945628 0.9251 123.4668 1.6321 1992–2014

(4.9523)* (4.7829)* (16.8571)*

Latin America 0.977820 0.566746 0.851144 0.8248 49.4158 1.7305 1991–2014

(8.2676)* (7.1784)* (10.7038)*

Notes. *Non-zero coefficient at 5% level of significance.

a
This includes a dummy for 2014, which has an estimated coefficient of 20.039997 (t-stat 5 22.3269).
b
This includes a dummy for 2014, which has an estimated coefficient of 0.371372 (t-stat 5 20.2750).
c
This includes a dummy for 2014, which has an estimated coefficient of 20.290106 (t-stat 5 218.3469).
d
This includes a dummy for 2002–2003, which has an estimated coefficient of 20.042117 (t-stat 5 22.4924).
e
This includes a dummy for 2009, which has an estimated coefficient of 20.0043 (t-stat 5 26.7098.
Source. Banco Central de Chile, Banco Central de Ecuador, Banco Central de Uruguay, CEPAL (several years), DANE, INEGI, Instituto Brasileiro de Geografia e Estatística, Instituto Nacional de
Estadística de Bolivia, Manuelito and Jim
enez (2013), Ministerio de Hacienda de Costa Rica, Ministerio de Planificaci

on Nacional y Política Econ

omica de Costa Rica, OBELA-UNAM, Tapia (2013),
Thomson Reuters, UCA, Urgiles, Urgiles, Vizcarra, and Zambrano (2006), and World Bank.
ALARCO
TA B LE 5 Selected profit margin equations (ln P/Y)
ALARCO

Ln Ln Ln Ln DLn DLn DLn

Country c Ln M&A M&A21 M&A22 Ln W/Y Ln W/Y21 Ln W/Y22 ACM&A ACM&A22 ACM&A21 ACM&A22 ACM&A23

Argentina 21.600128 0.03277 20.614033

(214.9913)* (3.4939)* (210.8214)*

Boliviaa 20.658553 0.006767 0.095821

(213.2477)* (2.1578)* (1.8852)

Brazilb 2173.9873 0.02513 20.761352

(20.0004) (2.6994)* (24.8510)*

Chile 23.324035 0.074796 21.877308

(26.2985)* (3.7787)* (23.7866)*

Colombia 21.159262 20.529472 0.02082

(232.4349)* (216.1870)* (5.3701)*

Costa Rica 21.78575 21.438735 0.050177

(24.6364)* (22.7974)* (1.8230)

Ecuadorc 0.015663 20.142053

(2.0766) (22.5668)*

El Salvador 20.989435 20.425961 0.004799

(232.8097)* (216.8899)* (2.3435)*

Honduras 22.046403 20.922649 0.059636

(25.7255)* (2.5553)* (3.9410)*

Mexico 21.477221 0.012239 20.743438

(217.3952)* (3.3425)* (211.8446)*

Nicaragua 21.549071 20.898360 0.024009

(218.4384)* (210.9968)* (3.8995)*

Panama 20.872699 20.279726 0.066988

(22.2788)* (20.9049) (2.1745)*

Paraguay 21.015926 20.411409 0.126524

(25.1807)* (22.3987)* (3.1776)*

Perud 0.006240
(2.7126)*
|

(Continues)
695
TA B LE 5 (Continued)
696
|

Ln Ln Ln Ln DLn DLn DLn

Country c Ln M&A M&A21 M&A22 Ln W/Y Ln W/Y21 Ln W/Y22 ACM&A ACM&A22 ACM&A21 ACM&A22 ACM&A23

Uruguay 21.509724 0.023753 20.635749

(211.4621)* (3.7910)* (24.7967)*

Venezuelae 21.249141 20.468596 0.017727

(212.8027)* (211.0795)* (2.1510)*

Latin 21.402631 20.735814 0.063275

America (213.7391)* (27.5761)* (2.1355)*
Period
profit margin,
2
Country AR(1) AR(2) MA(1) MA(2) R F-stat DW-stat W/Y, M&A

Argentina 0.8480 61.3557 1.2037 1990–2014

a
Bolivia 0.4774 5.1772 1.7555 1993–2014
b
Brazil 0.999952 (9.3166)* 0.8740 32.9418 1.8547 1991–2014

Chile 1.207159 (17.4709)* 0.862657 (14.6353)* 0.8740 32.9492 1.6090 1991–2014

Colombia 0.412263 (2.1344)* 0.951111 (39.3440)* 0.9598 95.4234 1.2815 1994–2014

Costa Rica 0.793948 (11.0166)* 0.999943 (7.3032)* 0.6371 6.1444 2.1241 1996–2014
c
Ecuador 1.128685 (5.8710)* 20.585907 0.8064 16.6629 1.9077 1994–2014
(23.3715)*

El Salvador 0.184467 (0.7947) 0.999698 0.9813 157.2200 1.9186 1998–2014

(3.6677)*

Honduras 0.953512 (24.7645)* 0.7987 26.4471 1.8384 1991–2014

Mexico 0.915223 (3.5740)* 20.511311 0.901028 0.9712 101.3339 1.9758 1994–2014

(22.0778) (7.6217)*

Nicaragua 0.168273 1.093245 0.999968 0.9911 268.1022 2.2489 199722014

(0.8427) (3.9701)* (19.4302)*

Panama 0.514392 1.207852 0.671425 0.9161 30.5875 2.3126 199522014

(2.6596)* (7.0269)* (3.4684)*
(Continues)
ALARCO
 ALARCO

TA B LE 5 (Continued)
Period
profit margin,
2
Country AR(1) AR(2) MA(1) MA(2) R F-stat DW-stat W/Y, M&A

Paraguay 0.999985 0.6584 11.5635 1.3247 1993–2014

(9.9404)*

Perud 1.010838 (599.6491)* 20.999867 0.8888 50.6119 1.7776 1992–2014

(24.7785)*

Uruguay 0.6799 16.9959 1.7693 1994–2014

e
Venezuela 0.366240 (3.1882)* 0.9211 49.6068 1.8630 1993–2014

Latin America 0.6498 0.8508 32.3254 0.9043 1994–2014

(3.3051)*

Notes. *Non-zero coefficient at 5% level of significance.

a
This includes as a variable the logarithm of claims on the private sector as a percentage of GDP with two lags, which has an estimated coefficient of 20.118478 (t-stat 5 23.8633).
b
This includes a dummy for 2014, with an estimated coefficient of 0.096285 (t-stat 5 2.8976).
c
This includes as a variable the logarithm of claims on the private sector as a percentage of GDP, which has an estimated coefficient of 0.523959 (t-stat 5 8.8562).
d
This includes the price exportations index (1994 5 100), with an estimated coefficient of 0.00023 (t-stat 5 3.4767).
e
This includes a dummy for 2014, with an estimated coefficient of 20.073355 (t-stat 5 24.1067).
Source. Banco Central de Chile, Banco Central de Ecuador, Banco Central de Uruguay, CEPAL (several years), DANE, INEGI, Instituto Brasileiro de Geografia e Estatística, Instituto Nacional de
Estadística de Bolivia, Manuelito and Jim
enez (2013), Ministerio de Hacienda de Costa Rica, Ministerio de Planificaci
on Nacional y Política Econ

omica de Costa Rica, OBELA-UNAM, Tapia (2013),
Thomson Reuters, UCA, Urgiles et al. (2006), and World Bank.
|
697
698
| ALARCO

TA B LE 6 Variables and M&A transactions effect on real GDP

Average variables
Mergers and Gross domestic
acquisitions at product at
Profit share 2005 constant 2005 constant prices M&A transactions
Country (%) prices (US$million) (US$million) effect on real GDP

Argentina 50.06 8,776.4 191,266.2 21.42

Bolivia 52.80 255.4 9,228.4 21.21

Brazil 42.51 36,533.5 851,428.3 21.13

Chile 43.11 6,606.8 112,551.2 22.78

Colombiaa 56.29 3,735.2 143,333.3 21.80

Costa Rica a
40.44 155.0 18,470.0 214.75

Ecuador 61.23 302.4 39,245.1 21.60

El Salvadora 61.33 314.4 15,553.4 28.72

Honduras a
41.21 141.4 8,727.7 222.68

Mexico 64.02 17,796.4 812,083.8 21.51

Nicaraguaa 52.57 59.4 6,007.9 279.24

Panama a
54.90 694.1 15,897.9 22.57

Paraguaya 59.15 42.2 8,921.3 250.35

Peru 60.78 2,724.3 73,171.4 20.39

Uruguay 44.72 297.9 18,212.5 26.29

Venezuelaa 58.59 2,109.8 144,355.1 21.81

Latin Americaa 53.16 80,775.6 2,464,767.8 24.26

a
These results are obtained by taking the cumulative value of M&A trades under different treatments.
Source. CEPAL, Thomson Reuters, World Bank and other domestic data by country.

2 years, given that the M&A transactions may not have immediate economic impacts. It is relevant to
mention that this variable was evaluated both as the logarithm of the value of transactions and as the
quotient of the accumulated value of M&A at time t divided by the accumulated value of M&A at
time t – 1.9
The highest elasticities of the profit share with respect to M&A transactions in the same time
period and with one or two-time lags are for Chile, followed by Argentina, Uruguay, Brazil, Ecuador,
Mexico, Bolivia and Peru. When we work with the ratio of the cumulative variations in period t
divided by those in period t 2 1, the highest elasticities, in descending order, are for Paraguay, Panama,
Honduras, Costa Rica, Nicaragua, Colombia, Venezuela and El Salvador. These two sets of elasticities

9
The final variable is equivalent to Pt21
M&A
“ i
M&At ”
ALARCO
| 699

reflect the direct impact of M&A transactions on the profit share, although they are not precisely
comparable.
Table 6 includes the variable averages and the results explained by a change in the real value of
M&A transactions on GDP. The parameters selected from Tables 4 and 5 are considered without deter-
mining whether these parameters correspond to the same time period or include various time lags. The
last column shows the results by country, which are not perfectly comparable, as noted in the previous
paragraph. In the first column, an asterisk differentiates countries where the quotient of the cumulative
variations was applied.
The results are negative for all economies and for the region as a whole but with differing magni-
tudes, depending on the values of the parameters and the variable averages considered. An increase in
M&A transactions raises the profit share and therefore decreases the wage share, redistributing income
from wage earners to profit makers. Moreover, due to this income redistribution, the impact on aggre-
gate demand and output, holding other demand variables constant, is negative. The hypothesis that
M&A transactions decrease GDP cannot be rejected.
In contrast to neoclassical theory, where the immediate effect of M&A transactions is on consumer
or intermediate prices, in the Post-Keynesian approach, the effect works through the factorial distribu-
tion of income. The rise in the profit share depends on the ratio p 2p c. In this regard, we consider four
ways of increasing the profit share: (a) all the advantages go to profit makers, that is, Dp, rc; (b) costs
c do not fall, but there is a rise in price Dp; (c) prices p are constant, but greater efficiencies are gener-
ated by rc; and (d) costs decrease more than prices rc > rp.
The model includes only the effects of M&A transactions on private consumption that are negative.
However, as with the growth regime models proposed by Bhaduri and Marglin (1990) and Boyer
(1988) and later developed by Stockhammer (2011), the final result also depends on the effects of
M&A transactions on private investment and net exports. A negative result with respect to private con-
sumption as well as uncertainty with respect to private investment and net exports would be expected.
It is likely that M&A transactions have a positive direct relationship with private investment and an
ambiguous relationship with net exports. However, these statistical relationships do not imply causa-
tion. It is important to highlight that this type of model, which determines the kind of regime that pre-
vails at a given time—wage-led, profit-led, finance-led or export-led—faces various criticisms (Palley,
2014). Likewise, econometric analyses that capture historical trends are unhelpful in a regime that
changes due to endogenous and exogenous forces over time (Alarco, 2016).

6 | CONCLUSIONS

M&A activity is an important phenomenon in Latin America, although it still has not achieved the
magnitude that it has obtained in the United States. The transaction data differ depending on the source
of information used. The Competition Authorities of most countries still do not issue consolidated sta-
tistical reports on these transactions for their respective economies. There are also countries where ex
ante evaluations of these operations are still not compulsory above predetermined thresholds or
amounts.
The causes of these transactions vary. Within standard economics, the focus is on evaluating their
effects on prices and analyzing market conditions with respect to concentration and competition.
Recently, standard economics has focused on the effects of M&A transactions on technological
change, small firms, possibilities for negotiation between providers of goods and services and buyers
and quality. Additionally, some observers are concerned about the effects of M&A transactions on the
concentration of economic power in the hands of the few, affecting democracy.
700
| ALARCO

Under the Post-Keynesian approach, we can focus on the effects of M&A on the price/cost ratio,
the factorial distribution of income, demand and output. This approach provides a perspective in which,
in contrast to neoclassical economics, the effects of M&A can be evaluated stage by stage. The analy-
sis focuses on what occurs to the profit share and the wage share; in this case, socio-political, economic
and technical factors are found to play roles, affecting the price/cost ratio. Likewise, under this
approach, the effects of M&A on GDP are directly determined. Additionally, from this point of view,
M&A transactions lead to increased factorial inequality and thus affect the distribution of income and
wealth. Such developments may have socio-economic effects, affecting social cohesion and possibly
leading to violence, undermining the equilibrium inherent in democracy (Ostry, Berg, & Tsangarides,
2014; Piketty, 2014).
In 2010, the volume of M&A transactions in the region peaked. Brazil, Mexico, Argentina and
Chile are the economies that exhibited the highest values of M&A transactions from 1990 to 2014, fol-
lowed by Colombia and Peru. Over time, the sectorial composition has changed. In the period under
review, transactions in the energy sector, telecommunications, finance and raw materials predominated.
M&A transactions involving private investment were more important in Chile, followed by Bolivia,
Brazil, Argentina, Panama, Venezuela and Peru. Nevertheless, there are countries where these transac-
tions are concentrated in specific years. Chile also has the largest accumulated real value of M&A rela-
tive to real GDP. Graphically, we observe a positive correlation between the real value of M&A and
the profit share. Likewise, the various Granger causality tests do not reject the influence of the value of
M&A transactions on the profit share for the region as a whole or for certain countries. In some cases,
it was not possible to establish a link through this test.
The conditions that led M&A transactions to redistribute income toward the profit share and away
from the wage share and have negative effects on demand and output are clear. Specifically, the pro-
pensity of profit makers to save must exceed that of wage earners, and prices must exceed the costs of
production. We consider a one-sector model, but the analysis could be extended to a multisector model
that includes extractive industries, such as mining, the hydrocarbon industry, the forest industry and
fishing, which are important in some Latin American economies. Other sectors, in which output is
determined by supply, include the agricultural and financial sectors. Under these conditions, the profit
share depends on various factors, including international prices of raw materials and interest rate
spreads.
In view of the empirical evidence, we cannot reject a link between the real value of M&A transac-
tions and the profit share, a decline in demand or a decline in GDP at the regional level or among all
economies analyzed. However, the effects on individual economies are not comparable, and it is not
possible to create a general ranking of them given the two different specifications of the linkage
between M&A transactions and the profit share cited in Table 6. These results are preliminary, as the
econometric technique applied can be improved. Moreover, the assessment of the effects of M&A on
GDP can be improved through an evaluation of the effects of M&A on private investment and net
exports.

AC KN O WLED G M EN TS
I would like to thank Cesar Castillo and Martin Astocondor for their support as general assistants
on this project, Luis Cruz for his initial statistical support, Patricia del Hierro for her commentary
and Nicolas Oberrath of PricewaterhouseCoopers for providing initial access to sources of informa-
tion on M&A. I would also like to thank two anonymous referees for their helpful comments and
suggestions. Any remaining errors are my own.
ALARCO
| 701

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How to cite this article: Alarco G. Mergers and acquisitions in Latin America 1990–2014: Fac-
torial distribution and contractionary impacts. Metroeconomica. 2018;69:681–706. https://doi.
org/10.1111/meca.12208
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APPENDIX

T AB L E A 1 Value of M&A transactions (constant 2005 US$million)

Costa El Latin
Year Argentina Bolivia Brazil Chile Colombia Rica Ecuador Salvador Guatemala Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela America

1990 8,718.2 1,372.9 584.8 484.2 3.6 4.3 – 3.9 – 34,801.4 – 5.6 – – 178.7 46,157.7

1991 7,768.2 18.7 5,449.5 691.6 56.3 3.3 90.5 20,657.9 44.0 29.5 21.8 5,018.1 39,849.5

1992 11,838.3 6.6 4,080.6 765.0 47.5 20.9 119.8 – – 13,429.6 21.7 – 509.0 7.8 192.4 31,039.2

1993 3,783.8 29.1 4,571.3 1,384.4 665.4 3.0 71.8 36.9 8,920.1 2.2 24.2 504.7 5.8 1,589.9 21,592.6

1994 3,258.2 3,398.6 1,090.0 2,330.7 20.6 55.1 – – 1.6 7,324.6 187.2 – 8,436.9 49.7 472.8 26,626.1

1995 3,560.2 1,168.2 6,419.4 4,207.6 580.1 239.6 56.0 48.9 – 1.4 8,105.4 – 26.3 3,480.4 24.5 471.5 28,389.5

1996 7,494.7 1,267.1 13,970.9 4,471.4 3,673.7 201.2 419.2 31.5 0.0 9,777.4 27.5 38.4 34.8 3,285.4 2,365.0 47,058.3

1997 27,182.9 196.6 34,209.4 4,654.9 6,197.7 36.1 150.7 59.1 665.7 432.3 16,937.4 49.6 806.5 43.9 1,536.0 4,461.8 97,620.9

1998 19,381.1 242.9 60,869.4 4,447.8 5,259.5 28.6 147.9 1,143.3 1,893.5 0.2 10,881.6 – 823.4 35.9 963.2 211.1 1,771.6 108,101.0

1999 29,093.7 672.6 22,946.8 21,225.5 525.0 110.8 512.4 225.5 11.5 6,580.1 12.7 415.3 75.3 1,650.8 344.7 1,129.7 85,532.5

2000 20,062.9 106.0 60,046.7 9,541.6 2,411.0 408.8 186.1 359.1 522.7 352.7 31,894.7 337.7 814.8 3,323.0 341.5 3,905.9 134,615.1

2001 4,914.2 265.3 26,844.1 5,053.0 1,103.5 76.9 20.6 292.8 1,138.9 22,446.4 91.3 418.6 73.2 542.0 39.4 3,064.8 66,385.1

2002 4,386.9 44.6 18,572.4 4,413.4 1,334.1 272.7 390.3 16.2 0.4 15,988.1 58.3 337.6 2,058.7 95.7 205.7 48,175.1

2003 1,407.9 5.2 18,109.7 3,079.5 111.8 5.4 154.1 442.3 – 52.6 3,555.1 52.6 169.1 4.2 423.2 12.7 231.8 27,817.3

2004 3,246.1 288.6 17,676.8 3,651.2 2,098.3 344.7 892.7 1,303.2 181.9 9,727.0 175.1 774.6 16.5 1,144.2 65.7 2,348.8 43,935.3

2005 2,763.8 3.1 11,678.4 4,199.8 9,594.0 59.3 1,495.6 232.2 41.4 6,186.7 547.4 2,673.5 208.4 214.3 39,898.0

2006 5,303.5 618.5 37,010.8 4,642.1 10,680.7 768.4 61.2 2,467.0 105.8 42,157.3 17.8 2,097.0 24.1 1,893.5 634.0 3,044.0 111,525.7

2007 8,283.3 203.8 43,055.0 12,850.5 4,288.3 223.2 374.2 315.4 9.3 132.3 31,033.0 2.8 291.6 183.8 2,375.3 230.9 4,201.3 108,054.2

2008 15,759.3 126.4 96,091.2 10,773.3 3,284.9 407.5 109.4 3.7 234.3 0.3 11,425.1 19.9 120.0 59.6 1,523.9 277.6 2,414.7 142,631.1

(Continues)
ALARCO
 ALARCO

TA B LE A1 (Continued)
Costa El Latin
Year Argentina Bolivia Brazil Chile Colombia Rica Ecuador Salvador Guatemala Honduras Mexico Nicaragua Panama Paraguay Peru Uruguay Venezuela America

2009 2,631.5 81.1 57,689.9 8,943.6 7,933.8 27.6 64.8 64.4 1,338.3 11.7 8,106.7 19.0 421.8 1,903.0 2,669.0 4,297.0 96,203.2

2010 14,095.8 60.1 137,830.4 9,178.0 5,957.1 6.7 360.0 151.0 1,053.4 0.8 45,433.0 13.3 3,394.7 2.7 3,042.2 408.3 6,898.4 227,885.8

2011 3,630.9 1.5 82,918.0 14,048.9 8,904.5 77.4 573.0 89.2 551.2 65.4 22,704.3 125.8 418.8 5.4 2,285.6 1,148.9 3,088.2 140,636.9

2012 6,877.4 53.6 54,863.7 10,617.8 9,041.7 305.4 282.6 701.3 402.6 0.2 26,931.6 16.2 1,327.9 161.7 3,754.7 529.5 680.3 116,548.4

2013 1,441.4 21.5 50,110.8 6,814.3 4,369.9 53.7 138.7 794.6 262.9 16,041.5 179.2 2,698.6 45.2 11,130.2 50.8 16.2 94,169.5

2014 2,526.1 394.2 43,551.8 13,839.2 2,446.2 17.0 617.8 237.2 49.0 0.9 13,864.6 45.6 1,127.1 5.1 9,646.1 91.4 483.1 88,942.4

Total 219,410.5 5,875.3 913,338.5 165,169.3 93,380.0 3,719.2 7,258.1 7,858.8 8,224.0 2,544.8 444,910.6 1,246.8 17,352.3 801.0 68,107.5 7,447.4 52,746.2 2,019,390.4

Source. Thomson Reuters and U.S. Bureau of Economic Analysis (U.S. prices).
|
705
706
| ALARCO

FIGURE A1 Value of the M&A transactions (constant 2005 US$million) and profit share (%)
Source. Thomson Reuters, World Bank, Bureau of Economic Analysis, CEPAL and various sources.