State-owned and multinational enterprises partnership as an import substitution strategy: A narrative ARDL approach to the case of oil contracts in Argentina (1958–1962)

To avoid balance of payments crises, two Argentine presidents tried to make deals (‘oil contracts’) with multinationals to transfer technology and know-how to YPF, which is a state-owned company in the oil sector. The aim was to substitute imports. The ‘oil nationalism’ doctrine opposed these agreements, arguing that multinational companies threaten national security. In both cases, the story ended in a coup d’état, first in the period 1954/1955 (against President Juan Domingo Perón) and the second in 1962/1963 (against President Arturo Frondizi). Based on a demand-led growth model in small open economies, we show that the process of import substitution led by government agreements with multinational firms can increase national production. Using an original dataset, we corroborate this theoretical result by applying a narrative ARDL approach to the Argentine experience (1958-1962), where a government policy to promote technological transfer from multinational firms to YPF, to substitute imports was in place. We conclude that the oil contracts were successful.