Foreign Direct Investment in Latin America and the Caribbean 2017

Foreign Direct Investment in Latin America and the Caribbean • 2017
Contents
3
CONTENTS
Executive summary.................................................................................................................................................... 9
Chapter I
Foreign direct investment in Latin America and the Caribbean....................................................................... 21
A. 2016: a turning point in globalization.............................................................................................................. 23
B. Global FDI flows are returning to advanced economies................................................................................. 25
1. The United States and European Union are the main receiving countries.............................................. 27
2. China’s growing influence is consolidating the globalization triad......................................................... 29
C. The region’s complex scenario........................................................................................................................ 33
1. FDI fell by 7.8% in Latin America and the Caribbean in 2016................................................................. 33
2. Rising star: non-conventional energy ...................................................................................................... 36
3. Lack of diversification among countries of origin.................................................................................... 40
4. FDI remains the most stable component of capital inflows..................................................................... 43
5. Decreasing FDI profitability is damaging investment prospects.............................................................. 45
D. A weak year for trans-Latin firms.................................................................................................................... 48
E. It is essential to rethink strategies to attract FDI............................................................................................ 52
F. Country analysis: instances of FDI growth are few and far between............................................................. 54
1. Investment in Brazil remains resilient despite the recession.................................................................. 56
2. The rest of South America has yet to recover.......................................................................................... 59
3. Mexico: end of the growth run? .............................................................................................................. 64
4. Central America: Panama performs well ................................................................................................. 66
5. The Dominican Republic still leads in the Caribbean............................................................................... 70
Bibliography............................................................................................................................................................ 76
Annex I.A1.............................................................................................................................................................. 78
Chapter II
Disruptive change in a leading sector: relocation, business models and technological revolution
in the global automotive industry........................................................................................................................... 87
A. An industry in constant change ...................................................................................................................... 89
B. The new geography: the rise of East Asia....................................................................................................... 89
1. Redefining the global oligopoly: a new triad of regions.......................................................................... 90
2. Stability among the dominant enterprise group ...................................................................................... 94
3. International trade continues to be intrafirm and intraregional............................................................ 100
C. Newcomers are challenging the traditional players..................................................................................... 103
1. Competition among the top manufacturers............................................................................................ 103
2. The increasing power of suppliers......................................................................................................... 108
D. Production models based on advanced technologies................................................................................... 110
1. The new production platforms................................................................................................................ 110
2. Investments in innovation....................................................................................................................... 111
E. Disruptive changes on the short-term horizon.............................................................................................. 117
1. The digitization of the industry............................................................................................................... 119
2. Mobility, connectivity and new patterns of consumption...................................................................... 129
3. A regulatory context for sustainability................................................................................................... 131
F. An industry between technological upheaval and the redefinition of global leadership............................. 136
Bibliography.......................................................................................................................................................... 138
Anexo II.A1........................................................................................................................................................... 146