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US in Latin America: An Overview

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BY CHRONICLE STAFF

Despite the apparent rise of Hugo Chavez and the lack of a Free Trade Area of the Americas, the U.S. economic impact in Latin America has never been stronger.

Trade with the region set a new record last year, investments were expected to reach new records and U.S. companies in the region are doing better than ever, contributing to the local economies bottom line through tax payments and job creation.  U.S. companies in Latin America typically add between 2.1 percent and 4.7 percent of GDP, according to data from the Association of American Chambers of Commerce in Latin America (AACCLA), an organization that represents more than 20,000 companies and over 80 percent of U.S. investment in the region.

"The role of the US private sector in Latin America is tremendous," Charles Shapiro, principal deputy assistant secretary for Western Hemisphere Affairs at the U.S. Department of State, told a group of U.S. executives in Miami last month organized by AACCLA.

REMITTANCES AND US AID

Added to that are the impact of remittances from Latin American workers in the United States, official aid through USAID and the results of private, civic and religious groups providing assistance in everything from building schools and roads to providing free medicine and check-ups to remote areas not normally served by local governments.  U.S. remittances to Latin America reached an estimated total of $45 billion last year, according to the Inter-American Development Bank. USAID provided a total of $852.3 million in aid to Latin America in fiscal year 2006, which ran from October 2005 to September 2006.

The combination of U.S. investment in Latin America, the regions exports to the United States and U.S. remittances to Latin America generate some two million jobs in the region, according to U.S. National Security Advisor Steve Hadley. U.S. companies are especially impacting the region. The Latin America affiliates of U.S. multinationals have generated nearly 690,000 jobs in 13 countries alone, according to a Latin Business Chronicle analysis of data from AACCLA. The 13 countries, which include Brazil and Argentina, did not include Mexico. But according to the local American Chamber of Commerce, its 2,000 members there account for a whopping 40 percent of all direct and indirect jobs in the country.  

US COMPANIES AND SOCIAL PROGRAMS

The U.S. companies are also significant providers of training and education assistance. In Brazil, for example, Eli Lilly offers 50 percent economic support for college and post-graduate degrees for its 600 employees.  And often the companies work with public or private non-profit entities on social programs mostly focused on education and training. "It is these kinds of private and public partnerships that effectively tell the story of how U.S. investment is having a material impact on GDP, employment, and corporate citizenship practices," says Adrean Rothkopf, executive director of AACCLA.

Total U.S. trade with Latin America reached $555.1 billion last year, a 14.3 percent increase from 2005, according to fresh data from the U.S. Census Bureau (See Record US-Latin Trade). Meanwhile, U.S. investments were expected to have grown strongly as well. 2006 figures are not yet available. But as of 2005, U.S. direct investments in Latin America on a historical cost basis reached a total of $353.0 billion, according to the U.S. Bureau of Economic Analysis.

Here is a country-by country overview of the U.S. economic impact.

ARGENTINA

U.S. trade with Argentina reached $8.7 billion last year, an increase of 0.4 percent from 2005. U.S. exports grew by 15.8 percent to $4.7 billion, while imports from Argentina fell by 13.3 percent to $4.0 billion. U.S. direct investment in Argentina stood at $13.2 billion in 2005, of which $888 million was invested during that year alone.

U.S. companies in Argentina employ an estimated total of 84,000 people and added the equivalent to 4.6 percent of GDP, according to AACCLA data for 2003.  Among other things, U.S. companies are contributing in the fight against corruption. Merck, Sharp and Dohme - along with other companies and the US Embassy in Argentina has the past three years supported the post-graduate course in international rules against corruption at the Universidad Catolica in which more than180 civil servants and public functionaries have been participating.

BOLIVIA

U.S. trade with Bolivia reached $477.6 million last year, a decline of 6.8 percent from 2005. US exports fell by 1.9 percent to $215.3 million, while imports from Bolivia fell by 10.5 percent to $262.3 million. USAID provided $99 million in aid to Bolivia in fiscal year 2006.

Cargill Bolivia joined forces with Habitat for Humanity in 2001 to work in house construction in Bolivia and has so far invested a total of $45,600 in the project, benefiting 12 low-income families. Meanwhile, Empresa Minera Inti Raymi (owned by US mining giant Newmont) has enabled the Chuquiña Village in Oruro to develop a large housing, administrative, educational, handicraft and religious infrastructure project. Beyond Chuquiña village, the company has also contributed to the development of 24 communities surrounding its Kori Kollo mine, which include preventive health programs; an education program covering 1,300 children ages 4 -14, and a loan program through the National Investment Plan. Inti Raymi has also established a fund of $100,000 for loans to the people in the surrounding community. And the Coca-Cola Foundation of Bolivia, in alliance with Universidad Católica Boliviana provides college scholarships for economically disadvantaged students who have outstanding academic records.

BRAZIL

U.S. trade with Brazil reached $45.6 billion last year, an increase of 0.4 percent from 2005. U.S. exports grew by 25.1 percent to $19.3 billion last year, while imports increased 8.0 percent to $26.4 billion. Brazilian exports have been helped by Wal-Mart, which last year sold an estimated $300 million in Brazilian goods in its stores in North America, Argentina, Europe and Asia. 

U.S. direct investment in Brazil reached $2.3 billion last year, according to the Central Bank of Brazil. That means the United States is the top foreign investor in Brazil, followed by Spain. All in all, total U.S. direct investment stood at $32.4 billion in 2005, according to the U.S. Bureau of Economic Analysis. USAID provided $17.1 million in aid to Brazil in fiscal year 2006.

U.S. companies in Brazil generate 349,000 jobs and contribute to 3.0 percent of GDP, according to AACCLA data for 2003.

Becton, Dickinson & Company (BD) invests $150,000 each year in its formal tuition program in Brazil, which helps illiterate associates achieve elementary and high school education. Merck Sharp & Dohme, which employed 928 people in Brazil in 2005, is working with the Brazilian Competitiveness Movement (Movimiento Brasil Competitivo, MBC) to encourage innovation in the life sciences. The company has invested about $19 million in the last three years in clinical trials in Brazil and has thus helped transfer knowledge and experience to thousands of Brazilian physicians and researchers.

CHILE

U.S. trade with Chile reached $6.8 billion, a 30.0 percent increase compared with 2005.  U.S. exports reached $6.8 billion, a 30.0 percent increase compared with 2005.  Imports from Chile grew by 43.4 percent to $9.6 billion. U.S. direct investment in Chile stood at $9.8 billion in 2005.

U.S. companies in Chile generate 53,000 jobs and contribute to 3.5 percent of GDP, according to data for 2003 from AACCLA.

For the last five years, Citigroup Chile has provided financial support for low-income students, while the Coca-Cola Foundation focuses its work in Chile on improving access to better living standards for over 300,000 young students who come from low-income families.

COLOMBIA

U.S. trade with Colombia reached $16.0 billion, which was 11.6 percent more than during 2005. U.S. exports grew by 22.8 percent to $6.7 billion, while imports from Colombia expanded by 4.7 percent to $9.3 billion.

U.S. direct investment in Colombia stood at $3.4 billion in 2005, of which $513 million was invested during that year alone. USAID provided $124.8 million in aid to Colombia in fiscal year 2006.

Colombia has not yet released remittance data for 2006, but in 2005 they reached $4.1 billion in 2005, according to the Inter-American Development Bank. Around 45 percent of remittances to Colombia come from the United States, says Enrique Montes Uribe, chief of the external sector division of the Colombian Central Bank.

U.S. companies in Colombia generate 49,400 jobs and contribute to 3.2 percent of GDP, according to data for 2003 from AACCLA.

Pfizer has contributed financial and human resources an education project that has benefited over 100,000 children in more than 140 public schools in Bogota and Cali. The company has also provided $450,000 to another project which encourages and supports the education of children from all over the country who have been displaced by violence. Pfizers contribution has benefited over 150 displaced children, providing them with adequate housing and living conditions, as well as technical education in farming and cattle-raising. Meanwhile, Chevron is supporting a project to help Wayuu women to produce, diversify and commercialize their handicraft.

COSTA RICA

U.S. trade with Costa Rica reached $8.0 billion last year, an increase of 13.7 percent from 2005. U.S. exports grew by 14.8 percent to $4.1 billion, while imports from Costa Rica increased by 12.6 percent to $3.8 billion.

U.S. direct investment in Costa Rica stood at $1.3 billion in 2005, of which $259 million was invested during that year alone.

Costa Rica is the only Central American country that has yet to ratify the free trade agreement with the United States known as CAFTA, but it is expected to do so in the coming months. 

DOMINICAN REPUBLIC

U.S. trade with the Dominican Republic reached $9.9 billion last year, an increase of 5.9 percent from 2005. U.S. exports grew by 13.3 percent to $5.3 billion, while imports from the Dominican Republic fell by 1.6 percent to $4.5 billion. U.S. direct investment in the Dominican Republic stood at $758 million in 2005. USAID provided $22.6 million in aid to the Dominican Republic in fiscal year 2006.

Dominican officials expect the implementation of CAFTA on March 1 to help boost trade and direct investments. Eddy Martinez, who heads up the investment agency CEI-RD, forecasts that that exports from the Dominican Republic this year will grow by more than 40 percent, while foreign investment should increase by 50 percent to $1.5 billion. He points to the success El Salvador has had in boosting its overall exports and believes the Dominican Republic should fare just as well.  

Remittances the Dominican Republic reached $2.7 billion in 2005. Most of that came from workers in the United States.

U.S. companies in the Dominican Republic generate 18,000 jobs, according to data for 2003 from AACCLA. U.S. companies are active in several social projects in the Dominican Republic. Bristol-Myers Squibb, for example, has partnered with Project Hope to support a community health clinic in the city of Herrera provide health education. And Merck has provided Project Hope with $20 million in donated medicines and vaccines during the last 10 years.

ECUADOR

U.S. trade with Ecuador reached $9.8 billion last year, an increase of 27.2 percent from 2005. US exports grew by 38.9 percent to $2.7 billion, while imports from Ecuador grew by 23.2 percent to $7.1 billion.

U.S. direct investment in Ecuador stood at $760 million in 2005, of which $61 million was invested during that year alone.

USAID provided $28.0 million in aid to Ecuador in fiscal year 2006.

EL SALVADOR

U.S. trade with El Salvador reached $4.0 billion last year, an increase of 4.4 percent from 2005. U.S. exports grew by 16.3 percent to $2.2 billion, while imports from El Salvador fell by 6.7 percent to $1.8 billion.

On March 1st, the free trade agreement between El Salvador and the United States (CAFTA) celebrated its first anniversary.  "During this year we have increased by 20 percent all our exports....and our economy has doubled in size," Salvadoran president Antonio Saca said during a visit to the White House last week. "So theres no doubt that free trade has allowed this to become true."

Remittances to El Salvador reached $3.3 billion last year, an increase of 17.1 percent from 2005, according to the Salvadorian Central Bank. Most of that came from workers in the United States.  USAID provided $25.3 million in aid to El Salvador in fiscal year 2006.

In El Salvador, U.S. companies are also a major source of jobs.  Dell alone employs 1,400 people in the country. 

GUATEMALA

U.S. trade with Guatemala reached $6.6 billion last year, an increase of 10.8 percent from 2005. U.S. exports grew by 24.1 percent to $3.5 billion, while imports from Guatemala fell by 1.2 percent to $3.1 billion.

USAID provided $39.9 million in aid to Guatemala in fiscal year 2006.  Remittances to Honduras reached $1.7 billion in 2005. Most of that came from workers in the United States.

HAITI

U.S. trade with Haiti reached $1.3 billion last year, an increase of 12.8 percent from 2005. US exports grew by 14.1 percent to $809.4 million, while imports from Haiti fell by 10.9 percent to $496.1 million.

USAID provided $131.8 million in aid to Haiti in fiscal year 2006. Remittances to Haiti reached $1.7 billion in 2005. Most of that came from workers in the United States.

HONDURAS

U.S. trade with Honduras reached $7.4 billion last year, an increase of 5.8 percent from 2005. U.S. exports grew by 13.5 percent to $3.7 billion, while imports from Honduras fell by 0.8 percent to $3.7 billion. U.S. direct investment in Honduras stood at $402 million in 2005, of which $87 million was invested during that year alone.

Remittances to Honduras reached $1.7 billion in 2005. Most of that came from workers in the United States. USAID provided $45.0 million in aid to Honduras in fiscal year 2006.

MEXICO

U.S. trade with Mexico reached $332.4 billion last year, an increase of 14.4 percent from 2005. U.S. exports to Mexico increased by 11.5 percent to $134.2 billion, while U.S. imports expanded by 16.5 percent to $198.3 billion.

U.S. direct investment in Mexico stood at $71.4 billion in 2005, of which $6.8 billion was invested during that year alone.

Remittances to Mexico reached a record $23.0 billion last year, according to Bank of Mexico data. Most of that came from Mexican workers in the United States.

USAID provided $30.9 million in aid to Mexico in fiscal year 2006.

According to the American Chamber of Commerce in Mexico, its 2,000 members represent 42 percent of direct and indirect jobs in the 44.5 million labor pool in Mexico.

NICARAGUA

U.S. trade with Nicaragua reached $2.3 billion last year, an increase of 26.3 percent from 2005. US exports grew by 20.7 percent to $755.2 million, while imports from Nicaragua increased by 29.2 percent to $1.5 billion.

USAID provided $41.4 million in aid to Nicaragua in fiscal year 2006.

U.S. companies are a major source of jobs in Nicaragua. Three companies alone (Wal-Mart, Airpak and Gran Pacifica) generate more 2,822  jobs. And according to the state investment agency ProNicaragua, CAFTA has attracted more than a dozen companies that are considering investing $240 million in Nicaragua, creating 13,350 new jobs.

Meanwhile, companies like Pizza Hut are actively supporting several social programs. The company has partnered with several Nicaraguan foundations helping young burn victims, children with cancer, children recovering from open-heart surgery, and children with haemophilia. Pizza Hut is also supporting education programs, which so far have benefited more than 6,000 Nicaraguan children.

PANAMA

U.S. trade with Panama reached $3.1 billion last year, an increase of 2.3 percent from 2005. U..S exports grew by 25.2 percent to $2.7 billion, while imports from Panama increased by 15.6 percent to $378.3 million.

U.S. direct investment in Panama stood at $5.2 billion in 2005. USAID provided $8.6 million in aid to Panama in fiscal year 2006.

U.S. companies in Panama generate 11,700 jobs, according to data for 2003 from AACCLA. U.S. companies are active in several social programs in Panama. AES, for example, provides scholarships, housing relocation, health, access roads, bridges, electricity and potable water for people in rural and indigenous communities. It also sponsors an interactive education center and several local civic agencies.  Meanwhile, Manzanillo International Terminal (SSA’s subsidiary in Panama) has invested over $3 million in social projects in the Province of Colón since mid-2005. And Citibanks Panama branch supports Fundamujer (a non-profit private organization providing educational, economic and entrepreneurial development for women and micro-credits for women-run SMEs) and Operation Smile (a volunteer medical service program carrying out reconstructive surgery, medical and educational programs for rural areas of Panama).

PARAGUAY

U.S. trade with Paraguay reached $969.2 million last year, an increase of 2.3percent from 2005. U.S. exports grew by 1.7 percent to $910.8 million, while imports from Paraguay increased by 13.2 percent to $58.4 million. USAID provided $10.8 million in aid to Paraguay in fiscal year 2006.

In Paraguay, U.S. companies are also a major source of jobs.  Esso alone employs 300 people in the country. Esso is also active in social programs. It helped Operation Smile carry out 300 free operations the past two years.

PERU

U.S. trade with Peru reached $8.8 billion last year, an increase of 18.5 percent from 2005. U.S. exports grew by 26.7 percent to $2.9 billion, while imports from Peru increased by 14.8 percent to $5.9 billion.

U.S. direct investment in Peru stood at $3.9 billion in 2005, of which $584 million was invested during that year alone. USAID provided $93.5 million in aid to Peru in fiscal year 2006. 

URUGUAY

U.S. trade with Uruguay reached $994.8 million last year, a decrease of 8.6 percent from 2005. U.S. exports grew by 35.2 percent to $482.4 million, while imports from Uruguay fell by 42.9 percent to $512.4 million.

U.S. companies like Sabre and McDonalds employ a total of 1,700 people in Uruguay.

McDonalds also supports social programs, including helping Fundación Peluffo Giguens in its mission against childrens cancer.  Meanwhile, Abbott is helping support State School 330, an impoverished school located in Abbott’s neighborhood of Ituzaingó. Abbot has helped the school combat high student absenteeism and has provided workshops on personal care for the students and their families.

VENEZUELA

U.S. trade with Venezuela reached $46.2 billion last year, an increase of 14.3 percent from 2005. U.S. exports to Venezuela grew by 40.3 percent to $9.0 billion, , while imports increased by 9.4 percent to $37.2 billion. U.S. direct investment in Venezuela stood at $9.6 billion in 2005, of which $1.7 billion was invested during that year alone.

U.S. companies in Venezuela generate 60,700 jobs and contribute to 4.7 percent of GDP, according to data for 2003 from AACCLA. Long before President Hugo Chavez assumed office in 1999, U.S. companies have been active in social programs in Venezuela. More recently, Kraft, for example, has been helping more than 100,000 people thanks to its support for the Popular Markets program to promote food commercialization. Popular Markets are small stores created by members of very economically depressed communities that do not have easy access to basic food products. And Chevron has been spending $12 million on social programs the past two years. Meanwhile, Procter & Gamble spend half a million dollars yearly on several educational programs in Venezuela.   

  

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