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Article

Resolving Conflict between Parties and Consequences for Foreign Direct Investment: The Repsol-YPF Case in Argentina

1
ERENEA- ECOBAS, Department of Applied Economics, Faculty of Economics, Campus As Lagoas-Marcosende, University of Vigo, 36310 Vigo, Spain
2
Defense University Center, 36920 Marin, Spain
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(21), 6012; https://doi.org/10.3390/su11216012
Received: 27 September 2019 / Revised: 21 October 2019 / Accepted: 24 October 2019 / Published: 29 October 2019
In 2012, the Argentine government expropriated 51% of the shares of Yacimientos Petrolíferos Fiscales S.A. (YPF) from the Spanish company Repsol S.A. The YPF was nationalized without prior compensation, violating Argentina’s own laws and, consequently, the institutional framework in force in the country. As a consequence, the country’s reputation deteriorated and, although there were several contacts with multinational enterprises to become YPF’s new partner, the investment climate was affected, making it really difficult to attract Foreign Direct Investment (FDI). In order to attract these investments after the expropriation, the Argentine government understands that it is necessary to settle the legal proceedings with Repsol. In order to avoid an imperfect judicial procedure of long duration and with high transaction costs, both parties reached a settlement agreement. This paper presents an institutional economic analysis of expropriation, contextualizing it within the Argentine institutional framework and studying the trajectory of the nationalization of YPF. In this way, it seeks to contextualize institutionally the Argentine government’s decision and the impact it has had on both the FDI and the credibility of the country’s institutional framework. It also analyzes how the resolution of the conflict occurs through an agreement between the parties that avoids the judicial process, given its high transaction costs. View Full-Text
Keywords: multinational enterprise; new institutional economics; agreement; foreign direct investment; YPF; Argentina multinational enterprise; new institutional economics; agreement; foreign direct investment; YPF; Argentina
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MDPI and ACS Style

Fernández González, R.; Arce Fariña, M.E.; Garza Gil, M.D. Resolving Conflict between Parties and Consequences for Foreign Direct Investment: The Repsol-YPF Case in Argentina. Sustainability 2019, 11, 6012. https://doi.org/10.3390/su11216012

AMA Style

Fernández González R, Arce Fariña ME, Garza Gil MD. Resolving Conflict between Parties and Consequences for Foreign Direct Investment: The Repsol-YPF Case in Argentina. Sustainability. 2019; 11(21):6012. https://doi.org/10.3390/su11216012

Chicago/Turabian Style

Fernández González, Raquel, María E. Arce Fariña, and María D. Garza Gil. 2019. "Resolving Conflict between Parties and Consequences for Foreign Direct Investment: The Repsol-YPF Case in Argentina" Sustainability 11, no. 21: 6012. https://doi.org/10.3390/su11216012

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