How is Latin America beating the U.S., China and Europe in FDI?
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7th November 2017

Ingo Ploger, President, Strategic Council, CEAL
Latin America’s reputation remains shaken and is under fire. In Brazil, the presidency passed a vote of confidence in Congress, confirming its permanence. In Mexico, NAFTA negotiations are facing a lot of stress, causing insecurity. Chile has already launched presidential campaigns, with no clear frontrunner. Ecuador arrested its vice president involved in corruption. Venezuela is on the verge of collapse and the regime goes beyond the limits of democratic tolerance. And several other countries are facing compliance as a new reality of doing politics and business.
In this spirit of volatility, uncertainty, complexity and ambiguities (VUCA) investors don’t necessarily have the motivation to seek the region as the first option for their investments. It is to be expected that as this scenario develops, capital will wait for better times.
However, the surprise is big when we analyze the performance of foreign direct investment (FDI) as a percentage of GDP in Latin America over the last few years compared to other regions such as the U.S., the EU and China. Evaluating the last 6 years, we can see that FDI-GDP in Latin America remains constant at 3.3 percent, while that of U.S., EU and China are below 3 percent.

Many evaluations can be made on this aspect. The first is that Latin America has been attracting FDI for its infrastructure, and that it is paying the capital satisfactorily. China doesn’t allow foreign capital in …

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