Foreign Direct Investment on the Rise in Latin America | Foley & Lardner LLP (2024)

FAQs

Where did the U.S. invest the most money in Latin America? ›

Brazil is leading the pack, with the report showing the country received 41% of the total foreign investment, ranking it as the number five location for global FDI. Following Brazil are Mexico (17%), Chile (9%), Colombia (8%), Argentina (7%), and Peru (5%).

FDI can also lead to a direct increase in the host economy's capital stock in greenfield investments or capacity expansions. In the latter case, FDI can be expected to impact economic growth and job creation positively.

The United States (38% of the total) and the European Union (17%, excluding the Netherlands and Luxembourg) were the main investors in the region, while FDI coming from countries within the Latin America and Caribbean region experienced a significant increase, rising from 9% to 14% of the total.

The top sources of FDI outflows worldwide in Q3 2023 were the United States (USD 110 billion), Japan (USD 60 billion) and China (USD 53 billion).

Source: OECD International Direct Investment Statistics database. The top recipients of FDI inflows worldwide in Q3 2023 were the United States (USD 73 billion), and Ireland (USD 26 billion); Canada and Brazil both equally ranked as third largest FDI recipient (USD 15 billion).

In 2022, Mexico ranked as the country with the best economic performance amongst the seven Latin American nations included in the ranking, with a index score of 56.61 in a scale from 0 to 100. Venezuela obtained the worst score in this macro-economic evaluation of the domestic economy, at merely 1.16 index points.

FDI can also lead to a loss of control over strategic industries and resources and a potential for cultural and social impacts. Furthermore, there is a risk of economic instability, dependency on foreign investments, and the potential for conflicts and disputes between the investing company and the host country.

What are the pros and cons of foreign direct investment? ›

In conclusion, foreign direct investment can benefit host nations greatly by fostering economic expansion, creating new jobs, and transferring knowledge. It also presents difficulties, such as the possibility of losing power, rivalry for resources, and susceptibility to global economic trends.

The PRC owns two of the five largest copper mines in Peru – the Las Bambas Project, which produced an estimated 263 thousand tonnes of copper in 2020, and the Toromocho Project, which produced an estimated 190 thousand tonnes of copper in 2020. Both projects are set to operate until 2038 and 2056, respectively.

China has also taken an interest in the region's renewable energy sector. The China Development Bank has funded major solar and wind projects, such as Latin America's largest solar plant in Jujuy, Argentina, and the Punta Sierra wind farm in Coquimbo, Chile. Infrastructure.

As the bulk of trade between the Atlantic and Pacific Oceans, the Panama Canal is highly strategic. Chinese companies have invested billions of dollars in this area and today already have two ports on both sides of the canal: the Port of Colón and the Port of Balboa.

U.S.-LAC Investment

total U.S. FDI abroad. According to the U.S. Bureau of Economic Analysis, U.S. FDI stock in LAC stood at $1.04 trillion in 2022 (on a historical-cost basis), concentrated primarily in the British Overseas Territories (BOTs) of the Caribbean, including Bermuda (61%), Mexico (13%), and Brazil (8%).

In 2022, the U.S. investments made in Central and South America were valued at approximately 311.03 billion U.S. dollars. The total direct position of the United States abroad amounted to 6.58 trillion U.S. dollars in that year.

The result was the Spanish–American War of 1898, in which United States acquired Puerto Rico and set up a protectorate over Cuba under the Platt Amendment rule passed as part of the 1901 Army Appropriations Bill.

The participation of the United States in regime change in Latin America involved US-backed coup d'états which were aimed at replacing left-wing leaders with right-wing leaders, military juntas, or authoritarian regimes. Intervention of an economic and military variety was prevalent during the Cold War.