Latin America and Foreign Direct Investment

I was just going to make this ECLAC report a link in the upcoming LINKS post, but I can’t trust you to click a seventy page pdf can I? There’s some interesting stuff in here, so it wouldn’t hurt to share. Before we go any further, it’s important to know what FDI is. Now that we have that covered, lets get to the meat of this post.

In 2011, US$ 153.448 billion in foreign direct investment (FDI) flowed into Latin America and the Caribbean —31% more than in 2010. It was the second year of growth after the decline triggered by the 2009 financial crisis.

Coo’.

In Latin America and the Caribbean, all of the subregions and most of the countries received more investment than in 2010 (see figure 1). Brazil accounted for most of the increase, reaching US$ 66.66 billion —nearly half the region’s total.

When you’re almost half a region’s total FDI, I think your place in the BRICs is well deserved.

As for the origin of FDI, the Netherlands was the leading investor in the region, basically because it is a conduit for investments from third countries. It is followed by the United States, at 18% of received FDI, Spain (14%) and Japan (8%).

After all the talk of China buddying up and being the developing world’s banker, how interesting is this? Of course, sometimes China makes deals that wouldn’t necessarily count as FDI, but the numbers are still shocking. Makes me wonder what it looks like in Africa.

Over the past decade, the European Union sent an average of US$ 30 billion per year in FDI to Latin America and the Caribbean. At nearly 40% of total FDI in the region, this makes the European Union the leading origin of inward FDI to Latin America and the Caribbean (see figure 4).

I would assume this is from strong ties to former colonial powers, not going to say if this is a good or bad thing because it’s obviously more complex than that. This is why Spain is so disappointed(outraged) by Argentina’s recent nationalization of YPF.

Operations in Latin America have become essential for these companies’ worldwide business —especially for Spanish companies. With the current situation in Europe, operations in Latin America considerably help parent companies balance their consolidated balance sheets and weather adverse circumstances.

Big-time gulp and collar tug for Spain’s poor ass.

There’s a section on banks I’m not going to touch because it’s basically about how primitive Latin America is as far as banking, which may have been a blessing in disguise.

Companies specializing in renewable and non-conventional energies such as wind and solar power have ventured into the sector in recent years. This is the fastest-growing segment, both worldwide and in the region; while its share of power generation is still marginal (in the area of 1%), in Brazil it now accounts for 10% of all greenfield power generation investment. Wind power has soared in the past two years

Would obviously like to see this pay off.

The uncertainty that has prevailed for nearly five years now has not eased, but the countries of Latin America and the Caribbean have continued to show responsible macroeconomic management and resistance to external turbulence. If sovereign debt problems and drastic fiscal adjustments do not lead to any further worsening of conditions in Europe, and if the robust pattern of growth in China does not diminish,the countries of the region should see no significant deterioration in their current position.It is thus highly likely that FDI flows will remain high in 2012.

Assuming Europe doesn’t completely collapse and fall into what would be an infinitely entertaining dark age, everything should be okay!

At this point(bout pg 28) in the PDF, things start to get more specific, and less share-worthy. If you had a particular country in mind, do yourself the favor and ctrl-f it.

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