Foreign direct investment (FDI) in Latin America and the Caribbean showed significant growth in 2022, according to a report from the Economic Commission for Latin America and the Caribbean (ECLAC). FDI in the region increased by 55% to reach a record value of $224 billion, a substantial uptick when compared to previous years. This occurred at a time when global FDI inflows faced a 12% decline relative to the previous year, totalling $1.29 trillion.
Key points from the report:
1. Leading Recipient Countries: Brazil led the region in attracting foreign investment, receiving 41% of the total FDI, positioning it as the fifth-largest location for global FDI. Mexico followed with 17%, with Chile at 9%, Colombia at 8%, Argentina at 7%, and Peru at 5%.
2. Attractive Sectors: The services sector attracted the largest share of FDI at 54%, with the manufacturing and natural resources sectors also experiencing a rebound. Other sectors that received significant investment included electricity, natural gas and water, information and communications, and transportation-related services.
3. Top Investor Countries: The United States was the largest source of foreign investment in the region, contributing 38% of total investments. The European Union followed with 17%. Notably, FDI originating from countries within the region increased from 9% to 14%.
This growth in FDI suggests that Latin America and the Caribbean offer appealing investment opportunities, particularly for foreign investors. The region is rich in resources, skilled labor, and strategic commodities, making it an attractive destination for capital and innovation.
For startups and established companies in the region, the increase in foreign investment presents opportunities for growth and expansion. However, it’s essential to approach these relationships with careful planning and due diligence to ensure that both parties benefit from the business relationship and potential risks are effectively managed.
The report highlights the region’s potential to be a leading area for innovation and growth as foreign investors recognise the opportunities presented by Latin America and the Caribbean.