Narayan AmmachchiChile’s investment promotion agency, InvestChile, received investment commitments worth US$33.5 billion in 2023, with global services ranking among the top draws for foreign capital.
The foreign inflow already created nearly 6,000 jobs, with more expected in the coming months as projects move forward.
Ongoing investments accounted for US$14.7 billion. Of the projects in this stage, 103 generated 5,936 permament jobs, according to InvestChile’s data.
FDI flows in 2023 jumped 18% compared to the year prior. Foreign capital concentrated mainly in three sectors: energy, mining and global services.
“Our traditional sectors (such as minerals and KPO) continue to bolster the country’s development,” said Karla Flores, Director of the agency, in a press release.
The energy sector saw the most investment, with US$15.9 billion committed to projects in renewable energy, transmission lines and energy efficiency.
Mining also saw significant investment, with US$8.2 billion committed to projects in copper, lithium and other minerals. Chile is the world’s second-largest producer of copper and has large reserves of lithium, a key ingredient in electric vehicle batteries.
The global services sector also saw strong investment, with US$5.9 billion committed to projects in knowledge-based services such as information technology, software development and business process outsourcing.
A top draw
The global services sector has for several years remained among the top three draws for FDI in Chile. It ranked second in 2021 and 2022, with US$5.7 billion and US$7.1 billion worth of foreign projects, respectively, surpassing even the mining industry in both years.
Chile remains a favorite of US firms like Amazon and Google for setting up data centers. Also, it frequently ranks as one of the most socially developed countries in Latin America, with high scores for education, R&D and technological development.
Chile has positioned itself in the mind of foreign businesses as a reliable source of experts in niche technologies, such as cloud, data architecture and, lately, AI.
In spite of its positioning, Chile has yet to reach the heights of global popularity achieved by the regional giants: Brazil, Mexico and Argentina.
Tighter with Brazil
Chile’s FDI flows in 2023 were dominated by the US (US$9.9 billion), Canada (US$5.3 billion) and China (US$4.3 billion). Nevertheless, InvestChile noted a stronger participation by Brazilian companies.
Investment commitments from Brazilian businesses reached US$2.2 billion by the close of the year, according to the IPA’s data. Brazil was the fourth largest foreign investor in Chile for the year and the only Latin American country to crack the top ten.
Latin America is not known for regional cohesion when it comes to trade. However, there seems to be growing interest for interregional investment in tech-related enterprises.
Globant has important investment plans in the region, with most of its efforts focused in Brazil, where it has been shopping for smaller tech companies for years now. There has also been quite a bit of movement by tech companies between Argentina and Uruguay. And it’s not uncommon for South American IT firms to set offices in Mexico, and viceversa.
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