CARIBBEAN-FDI investment in Latin America and the Caribbean rose by more than seven per centSANTIAGO, Chile, MC – The Economic Commission for Latin America and the Caribbean (ECLAC) reported on Thursday that inflows of Foreign Direct Investment (FDI) in Latin America and the Caribbean (LAC) totaled US$188.962 billion last year.
ECLAC stated that the figure represents a 7.1 percent increase over the previous year’s figure.
It stated that the 2024 figure represented, on average, 13.7 percent of the region’s gross fixed capital formation and 2.8 percent of gross domestic product (GDP), below the levels recorded in the 2010s, when it accounted for 16.8 percent and 3.3 percent, respectively.
“At ECLAC, we believe that Latin America and the Caribbean must harness foreign direct investment to achieve more productive, inclusive, and sustainable development. Using FDI as a strategic tool within productive development policies will be key to achieving this,” said ECLAC’s executive secretary, José Manuel Salazar-Xirinachs, at the launch of the annual report” Foreign Direct Investment in Latin America and the Caribbean 2025″.
“Fittingly, we include in this report a series of guidelines that can help improve the technical, operational, political, and prospective (TOPP) capabilities of countries and their territories about policies aimed at attracting investment and creating a positive impact on productive development,” Salazar-Xirinachs added.
ECLAC stated that an analysis of FDI by component reveals that growth in 2024 was driven by transnational firms already operating in the region, primarily due to increased reinvestment of earnings. Meanwhile, the contributions of capital remained stagnant, reflecting the limited interest of new companies in locating in the region.
The United Nations regional organisation stated that project announcements, meanwhile, increased due to a significant push from hydrocarbons investments. At the same time, renewable energy and more technology-intensive sectors lost ground in this area.
According to the annual publication, FDI inflows grew in 2024 in the Caribbean, Central America, and Mexico, while the results in South American countries were disparate.
In 2024, there was an increase in FDI inflows to the manufacturing sector and a decline in the services sector, resulting in these two sectors having a similar weight as a share of FDI, at 43.6 percent and 40.4 percent, respectively. The natural resources sector had a smaller share, notably 16 per cent of the regional total.
The United States consolidated its position as the largest investor in Latin America and the Caribbean, accounting for 38% of the total value invested in 2024. The share of the European Union, excluding Luxembourg and the Netherlands, fell to 15% of the regional total in 2024, the lowest figure since 2012.
The investments coming from within Latin America and the Caribbean represented 12 percent of FDI inflows, ranking third in place of origin. Meanwhile, Chinese FDI accounted for just two percent of total inflows in 2024.
ECLAC noted that it is worth considering that only a small proportion of FDI inflows from China are recorded in balance of payments statistics, as a significant number of Chinese investments pass through third countries. Another considerable amount has been in the form of asset purchases that already belonged to foreign companies or in modalities that do not involve FDI, for example, as concessions or construction contracts.
Regarding the behavior of Latin American transnational corporations, the report indicates that FDI outflows from the region increased by 47 percent in 2024, totaling US$53.033 billion.
Brazil was the largest investor abroad (46 percent of the total), despite experiencing a slight decline in FDI outflows (three percent), while investments from Mexico showed the most significant growth.
ECLAC also focused on FDI in the mining sector, especially in the segment of critical minerals for the energy transition. It said the region has a prominent global position in terms of reserves, production, and exportation of essential minerals, particularly copper and lithium, which poses an unprecedented opportunity to attract new FDI and simultaneously implement productive development policies.
Between 2005 and 2024, Latin America and the Caribbean will be a leading region in the global market for critical minerals, with 1,152 FDI project announcements in the minerals and metals sectors, totaling US$230.065 billion.
However, ECLAC contends that, in terms of production and attracting FDI, Latin America and the Caribbean have not managed to keep pace with other regions, except in the case of lithium, and that this leadership has not led to a greater diversification of the export basket.
According to trade data for the 2019-2023 period presented in the document, 62 per cent of the region’s critical mineral exports corresponded to products that were either unprocessed or subject to a basic refining process.
The meager productive diversification related to mining in Latin America and the Caribbean reveals that, in general, the region’s countries have not effectively articulated their tools for attracting FDI with their productive development policies.
Thus, despite having significant productive capacities in mining, generally, and in critical minerals in particular, the region has not yet been able to translate all that potential into greater value added and productive linkages related to essential minerals.
According to ECLAC, this weakness and other aspects can be resolved by developing and/or strengthening the previously mentioned TOPP capabilities in the area of mining management and productive development policies related to that endeavor.
With regards to digital transformation and foreign direct investment, trends, challenges and opportunities for Latin America and the Caribbean, ECLAC warns that while progress has been made on digitalization in the LAC countries, significant gaps remain in technology adoption and enabling conditions, which contribute to the region having a limited share of global FDI flows linked to the digital transformation, estimated at seven per cent of the total global value.
ECLAC noted that from a sectoral viewpoint, the most significant dollar amount of investment announcements has been in communications, which not only provides connectivity but also plays a central role in supporting critical infrastructure for artificial intelligence, such as data centers and high-speed networks.
Meanwhile, the software and computer services sector, with lower amounts of announced investment, accounts for 52 per cent of the total number of project announcements and represents an essential source of quality employment.
In this context, ECLAC analyzed the similarities and differences in institutional strategies and capacities for promoting, attracting, and facilitating FDI in key sectors for digital transformation, their articulation with other policies, and their governance mechanisms, proposing 10 guidelines that can contribute to strengthening policies to attract FDI for this transformation.
It stated that aligning investment promotion strategies with digital and productive development policies is key to enhancing the coherence and effectiveness of these measures.
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