Foreign Direct Investment in Latin America and the Caribbean 2015

Introduction
Foreign direct investment (FDI) in Latin America and the Caribbean fell by 16% in 2014 to US$ 158.803 billion, 1
reversing a growth trend that had lasted more than a decade (aside from brief dips in 2006 and 2009). Business
conditions deteriorated and the profits of transnational corporations did not reach the heights of previous years. FDI
outflows (or foreign investments by trans-Latin corporations) were also down in 2014, totalling US$ 29.162 billion.
As a proportion of the size of the regional economy, FDI inflows in 2014 were in line with the previous decade’s
average of 2.6% of GDP. This indicator shows that, after a short spell of very high inflows around the turn of the
century, FDI has stabilized in relation to GDP, despite growing significantly in nominal terms, peaking at a record
high of US$ 189.951 billion in 2013 (see figure I.1).
Figure I.1
Latin America and the Caribbean: foreign direct investment inflows and FDI inflows
as a proportion of GDP, 1990-2014 a
(Billions of current dollars and percentages of GDP)
200
5.0
180
4.5
160
4.0
Billions of dollars
140
120
100
80
60
3.5
3.0
2.5
2.0
1.5
Percentages
40
1.0
20
0.5
0
0.0
Chapter I
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
FDI inflows (left scale)
FDI inflows as percentages of GDP (right scale)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures as of 18 May 2015.
a
Figures do not include flows into the main financial centres of the Caribbean. FDI figures indicate inflows of foreign direct investment, minus disinvestments
(repatriation of capital) by foreign investors. These figures differ from those set out in the 2014 editions of the Economic Survey of Latin America and the Caribbean
and the Preliminary Overview of the Economies of Latin America and the Caribbean because they show the net balance of foreign investment, that is, direct
investment in the reporting economy (FDI) minus outward FDI.
In 2014, FDI inflows suffered from sluggish economic growth across the region and lower export commodity
prices. The same factors were in play in 2013, but a single exceptionally large transaction (the acquisition of the
Mexican brewer Grupo Modelo for US$ 13.249 billion) inflated the FDI figures for that year, masking the effects of
the two factors. The drop in FDI outflows is attributable to the same factors since trans-Latin corporations tend to
invest mainly within Latin America and the Caribbean, where the investment conditions were unfavourable.
The adverse conditions hit the natural resources sector hardest, in particular mining. The lower profits recorded
by this sector were partially responsible for the overall drop in FDI inflows, as the value of reinvested earnings fell.
Even though the returns on FDI declined across the region, FDI income remains the largest negative item in the current
account and is therefore a source of concern for many countries with large current account deficits.
1
The Central Bank of Brazil recently changed its accounting methodology from that prescribed by the fifth edition of the IMF Balance of
Payments Manual to that of the sixth edition. This has resulted in a substantial increase (55%) in its recorded FDI inflows. However, at
the time of publication, only the 2014 figures are available under the sixth edition methodology, meaning that changes in the data over
time cannot be identified. For that reason, in this chapter, all data concerning Brazil are represented by the fifth edition methodology
unless otherwise specified. The subsection specifically on Brazil includes and compared the results from both methodologies.
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