Intra-Regional Investment Seen as Counterbalance to Global Trade

Latin America’s outbound investment is surging, and a majority of that capital is staying within the region. In 2024, 65% of all outward FDI projects (by value) were directed toward other Latin American countries.

Data from the Economic Commission for Latin America and the Caribbean (ECLAC) reveals that regional firms, often called “Trans-Latinas,” invested more than $47 billion abroad in 2024.

Brazil led the charge, unleashing US$24.319 billion, which is 46% of the entire region’s total. Mexico followed with US$13.301 billion, posting its fastest growth ever among the countries tracked. Colombia claimed third with US$4.576 billion, while Chile (US$3.592 billion) and Argentina (US$2.757 billion) added smaller, but still weighty, amounts. Together, these five nations accounted for an overwhelming 92% of all Latin American FDI outflows.

“The intra-regional investment remains strong,” says Irina Tsulerman, President of Scarab Rising, Inc. Cultural ties and a shared language, she explains, make managerial integration smoother, while geographic closeness keeps logistics tight and supply chains efficient.

The spending spree is bold. Argentina’s Mercado Libre alone funneled US$5.8 billion into Brazil. Mexico’s América Móvil — a telecom giant — and fintech upstarts like Ulala and Rappi are also on relentless regional expansion runs.

Chile’s CPMC made headlines with the year’s largest deal: a $4.6 billion plant in Brazil. Mexican firms like Grupo PISA, Grupo Bimbo, and Arca Continental are also rolling out bold expansion plans. In consumer products, the momentum is fueled by Chile’s Falabella, which is deepening its presence in regional markets.

If the momentum continues, ECLAC says, trans-Latin expansion could send even greater rewards back to home countries. The payoffs wouldn’t just come from foreign currency inflows via repatriated profits — they could also come from opening fresh markets and building distribution networks that other local companies could tap into.

Gaining Regional Dominance

Intra-regional investments often act as a preemptive measure against competition from global firms, Tsulerman noted.

In recent years, Brazilian mining giant Vale, for example, locked up both upstream materials and downstream processing capacity in Chile and Peru. Owning both ends of the chain lets Vale slash logistical costs, stabilize prices, skip expensive third-party tolling, and avoid dependence on global refiners — securing economies of scale, controlling prices, and protecting margins.

A similar example is the 2023 acquisition of IGL Limited in Jamaica by Trinidad and Tobago-based Massy Holdings for approximately $140 million. This move significantly boosted its industrial and medical gases business across the Caribbean, and its revenue jumped nearly 30% in the following years.

Barriers blocking investments

While most Latin American countries do not generally sanction foreign companies, Argentina is an exception, sanctioning firms with operations in the Falkland Islands. However, few Latin American firms operate in this British territory.

More commonly, some countries prohibit or restrict foreign investment in specific sectors to protect domestic industries. Tsulerman points out that Argentina and Peru have tightened foreign investment reviews in strategic sectors like energy and telecommunications. These obstacles can lead to slower approvals, local partnership requirements, and domestic ownership mandates.

To navigate these challenges, according to Tsulerman, some companies are structuring deals with convertible instruments or minority stakes, which allow them to secure financial upside while sidestepping political friction.

In the view of Fergus Hodgson, Director at Econ Americas and author of The Latin America Red Pill, preferential treatment for regional corporations is a misguided policy.

He contends that such actions would be counterproductive, effectively returning countries to their starting point in terms of competition.

Hodgson asserts that the path to progress lies in open markets and a rejection of protectionism, particularly because many Latin American countries lack the discretionary income and capital necessary to foster growth without foreign investment.