Latin America receives major financial investments, but does it work both ways?
Latin America FDI Increases 31% to $150 Billion Are These Investments Being Reciprocated to the US?
Despite global economic uncertainty, foreign investments are once again flowing into Latin America. In 2011, Latin America and the Caribbean received $153.4 billion in foreign direct investment (FDI). But while foreign investors bet on Latin Americas future economic success, the region is slow to reciprocate investments overseas. FDI outflows from Latin America and the Caribbean dropped to $22.6 billion, a 49.6 percent slump from 2010.
What motivates foreign Hispanic business investments and why are these investments not being reciprocated?
According to Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Latin American and Caribbean economies remain attractive investment opportunities despite global financial uncertainty.
Bárcena predicts that FDI will remain high in 2012. Latin America and the Caribbean received 10 percent of global FDI in 2011. Nearly half of all investments went to Brazil, with the country receiving $66.6 billion or 43.8 percent. Mexico ($19.4 billion), Chile ($17.29 billion) and Colombia ($13.23 billion) round out the top four. Brazil, Chile, Colombia, Peru and Uruguay all experienced record highs in FDI.
The repatriation of profits from foreign transnational corporations is a major source for Latin American investments. FDI revenue transferred back to country of origin increased from $20 billion per year in 2003 to $84 billion per year in 2010.
Hispanic Business Opportunities in Latin America
In response to this increased capital, Latin American countries are strengthening the capacity of national innovation systems. Hispanic markets including Brazil, Chile, Mexico and Colombia are all working to foster entrepreneurial development while strengthening supply chain infrastructure.
Mexico, Brazil, Argentina, Chile are considered strength countries for FDI by many companies. These countries are the most politically stable, bring the largest return on investment and offer the greatest opportunities for expansion.