The Eco­nom­ic Com­mis­sion for Latin Amer­i­ca and the Caribbean (ECLAC) has re­vealed that in 2022, Latin Amer­i­ca and the Caribbean re­ceived US$224.579 bil­lion in For­eign Di­rect In­vest­ment (FDI), a fig­ure that is 55.2 per cent above 2021 lev­els which marks the high­est val­ue on record. Ac­cord­ing to the ECLAC re­port en­ti­tled ‘For­eign Di­rect In­vest­ment in Latin Amer­i­ca and the Caribbean 2023,’ which was re­leased yes­ter­day in Chile, it said this re­sult is main­ly at­trib­ut­able to the in­crease in FDI in some coun­tries, par­tic­u­lar­ly in Brazil; to growth in all the com­po­nents of FDI, es­pe­cial­ly earn­ings rein­vest­ment; and to the in­crease in FDI in the ser­vices sec­tor.

“This dy­nam­ic is con­sis­tent with the post-pan­dem­ic re­cov­ery and it is un­clear whether it will stay at sim­i­lar lev­els in 2023. FDI in­flows to Latin Amer­i­can and Caribbean coun­tries had not topped $200 bil­lion since 2013. These flows al­so in­creased as a share of re­gion­al GDP in 2022, ac­count­ing for 4.0 per cent, the doc­u­ment states,” the re­port dis­closed.
ECLAC’s Ex­ec­u­tive Sec­re­tary, José Manuel Salazar-Xiri­nachs said the chal­lenge of at­tract­ing and re­tain­ing For­eign Di­rect In­vest­ment that con­tributes ef­fec­tive­ly to the re­gion’s sus­tain­able and in­clu­sive pro­duc­tive de­vel­op­ment is more rel­e­vant than ever.
He not­ed there are new op­por­tu­ni­ties in an era of re­con­fig­u­ra­tion of glob­al val­ue chains and ge­o­graph­ic re­lo­ca­tion of pro­duc­tion in the face of chang­ing glob­al­i­sa­tion.
The se­nior Unit­ed Na­tions of­fi­cial em­pha­sised that “the chal­lenge is not on­ly to at­tract and re­tain, but al­so to max­imise FDI’s con­tri­bu­tion to de­vel­op­ment, and to this end coun­tries must fo­cus on post-es­tab­lish­ment pro­duc­tive de­vel­op­ment poli­cies, which in­clude the pro­mo­tion of pro­duc­tive link­ages, poli­cies for adding val­ue and mov­ing up val­ue chains, for hu­man re­sources de­vel­op­ment, in­fra­struc­ture and lo­gis­tics, and build­ing lo­cal ca­pac­i­ties.”

Ac­cord­ing to the re­port, near­ly all the coun­tries of Latin Amer­i­ca and the Caribbean re­ceived more For­eign Di­rect In­vest­ment in 2022. Lead­ing the list were Brazil (which re­ceived 41 per cent of the re­gion­al to­tal and ranks as the No. 5 des­ti­na­tion for glob­al FDI), fol­lowed by Mex­i­co (17 per cent), Chile (9 per cent), Colom­bia (8 per cent), Ar­genti­na (7 per cent) and Pe­ru (5 per cent).
It stat­ed that Cos­ta Ri­ca was the main For­eign Di­rect In­vest­ment re­cip­i­ent in Cen­tral Amer­i­ca and in Guatemala, these flows showed a sig­nif­i­cant de­cline due to an ex­tra­or­di­nary val­ue record­ed in 2021, but they re­turned to their his­tor­i­cal av­er­age.
There was al­so a pos­i­tive change in FDI in­flows to the Caribbean, fu­eled main­ly by greater in­vest­ment in the Do­mini­can Re­pub­lic, which was the sec­ond-largest re­cip­i­ent coun­try af­ter Guyana.
“At a re­gion­al lev­el, 54 per cent of For­eign Di­rect In­vest­ment went in­to the ser­vices sec­tor, al­though both the man­u­fac­tur­ing and nat­ur­al re­sources sec­tors al­so re­bound­ed.

Fi­nan­cial ser­vices; elec­tric­i­ty, nat­ur­al gas, and wa­ter; in­for­ma­tion and com­mu­ni­ca­tions; and trans­porta­tion-re­lat­ed ser­vices had the largest share of in­vest­ments in the ser­vices sec­tor as a whole.

The doc­u­ment points to a more than 80 per cent in­crease in FDI from Latin Amer­i­ca and the Caribbean to des­ti­na­tions both in­side and out­side the re­gion. In 2022, the amount in­vest­ed abroad by transna­tion­al Latin Amer­i­can com­pa­nies, known as trans­lati­nas, reached a his­toric high: US$74.677 bil­lion, which is the high­est fig­ure record­ed since this se­ries be­gan to be com­piled in the 1990s,” ECLAC men­tioned.
Fur­ther­more, the re­port said the amount of FDI project an­nounce­ments in Latin Amer­i­ca and the Caribbean grew by 93 per cent in 2022, to­tal­ing near­ly US$100 bil­lion. For the first time since 2010, the hy­dro­car­bons sec­tor (coal, oil and gas) led the an­nounce­ments, with 24 per cent of the to­tal, fol­lowed by the au­to­mo­tive sec­tor (13 per cent) and re­new­able en­er­gies (11 per cent).
Nonethe­less, ECLAC al­so warns that in this process, con­sid­er­a­tion must be giv­en to the im­por­tance that the non-re­new­able en­er­gy sec­tor still has for some coun­tries in the re­gion, es­pe­cial­ly in terms of gen­er­at­ing rev­enue to ad­dress so­cial de­mands, those re­lat­ed to pro­duc­tive de­vel­op­ment and en­er­gy se­cu­ri­ty.