Introduction to FDI in Latin America
The Foreign Direct Investment (FDI) in Latin America reached a record high of 188,962 million US dollars in 2024, marking a 7.1% increase from the previous year, according to the ECLAC (Comisión Económica para América Latina y el Caribe). This growth was primarily due to the reinversion of multinational companies already established in the region.
Concerns Over New Investors
However, the ECLAC report presented in Santiago highlighted a concerning trend: low interest from new companies to enter the region. Consequently, capital contributions, one component of FDI that measures this interest, decreased by 12% in 2024.
Key Contributors to FDI Growth
The growth in FDI was largely driven by Brazil and Mexico, the two largest economies in Latin America. Together, they accounted for 61.6% of the total FDI inflows.
- Brazil: Received approximately 71,070 million US dollars in FDI in 2024, a 14% increase from the previous year.
- Mexico: Secured 45,337 million US dollars in FDI in 2024, a 48% increase compared to 2023.
Colombia, Chile, and Argentina, which followed as countries with the most FDI inflows in the region, experienced a decrease in their inflows compared to 2023.
Principal Investors and Regional Trends
The United States solidified its position as the primary source of FDI in Latin America, accounting for 38% of the total in 2024. Meanwhile, investment from the European Union (excluding the Netherlands and Luxembourg) dropped to 15% of the total, the lowest since 2012.
Impact of Policy Changes
Marco Llinás, Director of Productive Development at ECLAC, stated in a press conference that it is “still too early to determine the true impact of changes in U.S. trade policy,” referring to tariffs announced by Donald Trump.
Chinese Investment in Latin America
The Chinese investment in the region remained at 2% of the total. However, this figure might be lower due to a significant number of Chinese investments entering through third countries. Additionally, China’s acquisition of assets previously owned by foreign companies or access to concessions and construction contracts, like the megaport of Chancay in Peru, are not considered FDI.
Key Questions and Answers
- Q: What is the main reason for the increase in FDI in Latin America?
A: The growth was primarily due to the reinversion of multinational companies already established in the region, with Brazil and Mexico being the key contributors.
- Q: Which countries showed a decrease in FDI inflows?
A: Colombia, Chile, and Argentina experienced a decrease in FDI inflows compared to 2023.
- Q: What is the primary source of FDI in Latin America?
A: The United States is the main source of FDI in Latin America, accounting for 38% of the total.
- Q: How has Chinese investment in Latin America been affected by recent trends?
A: Despite remaining at 2% of the total, Chinese investments might be lower due to entries through third countries and acquisitions of assets previously owned by foreign companies.
