Foreign investment in Latin America

"The region of Latin America and the Caribbean received in 2012 a new record amount of Foreign Direct Investment (FDI) of 173,361 million dollars," according to a report released Tuesday (5/14/2013) by the Economic Commission for Latin America and the Caribbean (ECLAC), a technical agency of United Nations with headquarters in Santiago.

The positive figure recorded for the third consecutive year, encouraged the good momentum of the economies of Latin America.

In 2012, global FDI flows, which fell 13%, totaled 1.39 trillion, "barely higher than that recorded in 2010 (1.37 trillion), when the world economy was still affected by the financial crisis," according to ECLAC.

Investment figures in Latin America "are explained by the sustained economic growth of the region, high commodity prices and high investment returns associated with the exploitation of natural resources," said the agency in its report "The Foreign direct investment in Latin America and the Caribbean 2012 ", presented in Santiago.

The result reflects the growing interest in natural resources, especially in South American countries such as Chile and Peru, as well as to domestic markets of the countries of Latin America and the Caribbean, where they have grown investments in telecommunications, trade and financial services.

Latin American and Caribbean countries in 2012 received a record foreign direct investment (FDI) of U.S. $ 173,361 million, 6.7% more than in 2011, more oriented to the extraction of natural resources and raw materials than productive tasks, according to ECLAC.

Brazil continued to be the largest recipient of FDI in the region, with a share of 41% of the total investment equivalent to 65,272 million, but with a drop of 2% from the previous year.

Peru, with investments of 12,240 million dollars, and Chile, with 30,323 million dollars (which became the second largest recipient in the region) are the countries where FDI grew the most in absolute terms (49% and 32% expansion , respectively). In Argentina, with investments of U.S. $ 12,551 million, the rate grew by 27%. In Venezuela, meanwhile, there was a drop of 15%, to 3,216 million dollars, while Colombia increased its flow by 18% to 15,823 million.

In Central America stand out increases in El Salvador (34%), Guatemala (18%), Costa Rica (5%), Honduras (4%) and Panama (10%), which remains the largest recipient in the subregion.

In Mexico, meanwhile, was recorded the most significant drop of 35% compared to 2011, with investments of U.S. $ 12,659 million, the lowest figure of FDI since 1999.

Mexico fell from third to fourth position in attracting Foreign Direct Investment (FDI) in 2012, after Brazil, Chile and Colombia, said the Economic Commission for Latin America (ECLAC).

The last time Mexico led the attraction of FDI in Latin America was in 2006. The following year it was surpassed by Brazil (since then it has remained at the top) and in 2011 was moved from the second position by Chile.

With the result, Mexico received only 7.3% of total entries of FDI in Latin America and the Caribbean, its worst performance since 1990.

"Mexico experienced a significant drop compared to 2011, which is explained largely by the IPO of 25% of the subsidiary of Banco Santander of Spain for 4,100 million dollars," said ECLAC.

United States and European Union continued during 2012 the main investors in Latin America, although "greatly increased the importance of the investments made by companies of Latin American countries, giving rise to 14% of total FDI attracted by the region," said ECLAC's report.

A high percentage of investments received has not been assigned to any national economy for the practice of transnational companies of taking their investments to subsidiaries in third countries, the agency warned.

On the other hand, direct investment from the economies of Latin America and the Caribbean abroad grew 17%, reaching 48,704 million dollars.

"This figure is 2% higher than the record high of 2010," ECLAC noted.

Mexico was the country of the region that invested the most abroad in 2012, with 25,597 million dollars, a record high. America Movil expanded into Europe, with an outlay of U.S. $ 4,483 million.

Mexico Group invested $ 134 million in its mining operations in Peru; Bimbo opened a plant in Brazil and another in Argentina, Gruma opened a factory in the United States, and Cinepolis announced the opening of 350 cinemas in Brazil, Colombia, United States and India.

Chilean companies invested 21,090 million abroad in 2012, while FDI flows abroad from Brazil were negative, for 2,821 million dollars.

For this year, the United Nations agency projected that FDI to the region will be located in a range between a decline of 3% and an increase of 7%.

Last April, ECLAC had estimated that Latin American economies will grow 3.5% in 2013, supported in part by a higher growth in Brazil and Argentina.

However, the Executive Secretary of ECLAC, Alicia Barcenas, warned that "we do not see clear indications of a significant contribution from FDI to the creation of new industries or the creation of high-tech activities, considering that one of the main challenges facing the region is a change in the productive structure."

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