Foreign Direct Investment in Latin America and the Caribbean 2015

Foreign Direct Investment in Latin America and the Caribbean • 2015
Outward direct investments by companies in Latin America and the Caribbean are still largely concentrated within
the region, but as companies grow and develop a significant number of them are starting to invest in other regions. Most
of the largest trans-Latin companies from Mexico invest in the United States, as do some of the largest corporations
from Brazil and Colombia. In recent years many companies have also been increasing their investments in Europe.
According to data from the European countries, FDI from Latin American countries has increased notably since 2009
(see figure I.16), reflecting the more readily available financial resources of Latin American companies relative to
their European counterparts. The first reflection of this shift was the divestment by European companies of valuable
assets in Latin America in order to improve cash flows, but as the situation develops Latin American companies are
also entering the European market. Investment by trans-Latin corporations in other developing regions remains rare.
Figure I.16 shows the nearly continuous increase of FDI inflows into European Union member States. Only
between 2008 and 2009 was there a significant drop in inflows from Latin America, but this was consistent with the
downturn in global flows. Since 2003, approximately 31% of the incoming investment from Latin America went to
Spain, while Belgium and Luxemburg accounted for another 25% and 15%, respectively. The most important remitting
countries are Brazil and Mexico, although this differs significantly between host economies.
Figure I.16
European Union: a foreign direct investment inflows from Latin America and the Caribbean, 2003-2012
(Billions of dollars)
20
10
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-10
FDI flow from Latin America
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from the Organization for Economic Cooperation and Development
(OECD).
a
Data are unavailable for Bulgaria, Croatia, Cyprus, Latvia, Lithuania and Romania.
D. Foreign direct investment inflows by country
In Latin America, as in the Caribbean, just over half of all countries saw decreases in their inflows of FDI, while the rest
experienced increases of varying degrees. The largest increases occurred in El Salvador, and Chile, while the sharpest
contractions took place in the Bolivarian Republic of Venezuela, Mexico and Argentina. These two sets of countries
epitomize the cyclical nature of FDI, with two of the three main risers belonging to last year’s largest fallers, and this
year’s sharpest fallers making up last year’s fastest risers. In other words, at the country level, extreme swings are common
and often counteracted immediately. Table I.6 shows total FDI inflows by country and by subregion from 2004 to 2014.
Brazil’s share in total FDI inflows increased to 38%, 10 somewhat above the long-run average of one third. Mexico
and Chile ranked second and third, with approximately 14% each. FDI inflows in Latin America and the Caribbean
were even more concentrated than in 2013, with just five economies receiving some 80% of total FDI in 2014. That
top five include Colombia, which continues to receive large amounts of FDI, and Peru, where FDI inflows have
dropped off somewhat from previously high levels.
10
Under the methodology of the sixth edition of the Balance of Payments Manual, Brazil’s share is even larger: approximately half of
total inflows for the region.
Chapter I
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