FDI in Latin America falls for third year in a row: UN agency

The foreign direct investment (FDI) in Latin America overall dropped in 2017 for the third straight year despite the stronger global growth, according to a United Nations agency in Mexico city on Thursday.

Acccording to the report by the Economic Commission for Latin America and the Caribbean, FDI in the region amounted to 161.673 billion US dollars in 2017, down 3.6 per cent compared to the year before, and 20 per cent compared to 2011, reports Xinhua.

The study "calls on governments to incentivise quality FDI that is compatible with sustainable development, above all to promote a change in countries' productive structures" so they can meet United Nations development goals by 2030.

"It's not simply about creating the conditions for foreign capital to enter, it's about attracting investments that become sources of technological, productive and employment-related overflow, and that are oriented toward sustained, inclusive and sustainable economic growth," ECLAC Executive Secretary Alicia Barcena told reporters.

Sectors such as renewable energies, telecommunications and automobile manufacturing are examples of how FDI can help diversify the productive structure, improve local capacities and create quality employment, the report said.

The agency attributed the falling FDI since 2011 to "lower prices for basic export products, which have significantly reduced investment in extractive industries, and to the economic recession experienced in 2015 and 2016, mainly in Brazil."

While Latin America resumed growth in 2017 and the prices of oil and metals picked up, total FDI has continued to dip, though not across the board.

In 2017, FDI rose in most regional countries, but dropped in Brazil (-9.7 per cent), Chile (-48 per cent) and Mexico (-8.8 per cent).

A regional breakdown shows FDI rose for the eighth straight year in Central America (to 13.083 billion dollars), "with a particularly notable increase in Panama," which reached 6.066 billion dollars in 2017.

In the Caribbean, investment flows grew 20 per cent to 5.835 billion dollars, with over 60 per cent going to the Dominican Republic.

"In these countries, increased investment in the area of tourism has been very significant, but flows to the natural resources sector have also grown in Jamaica and Guyana," said the report.

Most FDI in the region in 2017 came from the European Union and the United States, with Europe heavily investing in South America, and the United States continuing to be the main investor in Mexico and Central America.

Current global uncertainty and policies "that could be characterized as protectionist" point towards a trend of greater domestic investment in leading countries, said Barcena.