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Latin America: Record FDI

FDI doubles in Brazil, Mexico and Chile and declines in Argentina and Venezuela.


Foreign direct investment in Latin America reached a record $126 billion last year, according to the United Nations Conference on Trade and Development (UNCTAD). That twice the level of 2006.

"This strong FDI growth was driven by greenfield investments (new investments and expansion) rather than cross-border M&As," UNCTAD said in a statement last week. "This pattern was the result of strong regional economic growth and elevated corporate profits on the back of high commodity prices. Resource-based manufacturing explained a large part of incoming FDI to Brazil."

Brazil passed Mexico as Latin America's largest FDI recipient, garnering a $37.4 billion, a 99.3 percent increase from 2006, UNCTAD reports. Despite losing the top spot to Brazil, Mexico did exceptionally well, too. FDI to Mexico grew by 92.9 percent to $36.7 billion. Combined the two countries - the largest economies in Latin America - accounted for nearly 60 percent of all FDI to the region.

Brazil and Mexico also compare favorably to other countries worldwide. The two received more FDI than countries like Italy and India. Brazil's FDI was slightly higher than the FDI of Singapore, which was only slightly higher than that of Mexico. And combined, Brazil and Mexico received more FDI than China.

Chile, the third-largest FDI recipient in Latin America despite only having the sixth-largest economy in the region, also managed to double foreign investments - $15.3 billion, an increase of 92.2 percent.

Colombia, the fourth-largest recipient of FDI, had another good year. Total FDI grew by 30.5 percent to $8.2 billion.

Argentina, once the third-largest recipient behind Brazil and Mexico, ended up in fifth place, thanks to garnering $2.9 billion in FDI last year, a decline of 39.6 percent.

Venezuela again had the lowest FDI levels of Latin America's top six economies - a mere $400 million. However, that was an improvement over the negative FDI outflow of $500 million in 2006.

Nevertheless, that means Venezuela posted lower FDI than Guatemala, which has an economy that is seven times smaller. FDI to Guatemala last year reached $535.8 million, more than twice the 2006 level, according to a Bloomberg report earlier this month.

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