How Firms’ Growth Dynamics Contribute to Latin American Stagnation: A Penrosian model in comparative perspective

This thesis argues that firms’ position and competition are critical to economic development, focusing on Latin America. It conducts micro, meso, and macro analyses to show how growth or stagnation in any nation-state depends on the size, resources, capacity, and interlinkages of its firms and the distribution of these elements between foreign- and domestically-owned firms. The model developed here emphasises how innovation enables firm development by expanding their resources resulting in a size change. But once they have established their place in national and even international markets, firms will strategically maintain their market power especially in the face of fundamental uncertainty. This inadvertently limits space for the development of new firms and new industries. The framework developed here builds on Edith Penrose's “Theory of the growth of the firm”. This perspective is extended to the case of developing economies by drawing on Stephen Hymer's work on the multinational corporation and insights from Latin American structuralism.