Nearshore Americas
FDI

FDI in Latin America Rebounded Sharply in 2021: UN Report

Foreign direct investment (FDI) in Latin America rebounded sharply in 2021, as foreign companies poured a large sum of money into the region’s ICT and renewable energy projects in the hope of mopping up high dividends years down the road.

The region received US$134 billion during the 12 months period, up from $88 billion in 2020, according to the United Nations Conference on Trade and Development (UNCTAD).

Brazil won the lion’s share, having received $50 billion. Chile, Brazil and Colombia were the biggest recipients of investment in renewable energy sectors, while Mexico and Costa Rica saw a sharp surge in ICT investment.

Mexico’s FDI flows received a strong push from Chinese telecom giant Huawei, which announced the opening of a US$4.5 billion cloud data center in the country. For Costa Rica, FDI returned to pre-pandemic levels, as foreign firms went on establishing operations in the country’s special economic zones.

“Growth was also strong in traditional target industries, such as car manufacturing, electricity, financial and insurance services, as well as extractive industries,” said James Zhan, director of UNCTAD’s investment and enterprise division.

The report points out that higher global demand for commodities and green minerals helped drive strong FDI growth in South American economies.

US automaker Bravo Motor announced that it would invest US$4.4 billion in Brazil to manufacture electric vehicles, batteries and other components. Meanwhile, Spanish energy supplier Ocean Winds began constructing an offshore wind farm with an investment of US$5.9 billion.

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In Chile, a consortium of investors agreed to build an ammonia plant at a cost of US$3 billion. Unlike other countries, Colombia drew FDI for its manufacturing, transport and communications sectors.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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