Foreign investment in Latin America up 40% in 2010 – U.N.

Henriette Jacobsen, TheCostaRicaNews.com

The Latin American and Caribbean region showed great resilience to the international financial crisis according to a newly released U.N. report on foreign direct investment (FDI) in 2010. Costa Rica was the second largest recipient in Central America.

FDI inflows in the Latin American and Caribbean region were up by 40% with respect to 2009 and stood at a total of $113 billion. The region is now the fastest-growing in the world in terms of both inward and outward FDI. In absolute terms, Panama and Costa Rica are the largest recipients in this subregion. They received $2.363 billion and $1.412 billion, respectively in 2010.

However, the FDI flows in Mexico and the Central American countries grew slower than in South America, owing to the sluggish economic recovery in the United States, and fell short of the highs recorded in 2008.

Outward investments also rose considerably for the Central American countries in 2010 (119% up on 2009), to reach $119 million. Firms from El Salvador made the largest investments outside their home country in 2010, followed by firms in Guatemala and Costa Rica. Although no official figures are available for Panama, a number of sources indicate that the country makes hefty outward investments in financial services and transport.

China increases trading ties in Latin America

In terms of the origin of FDI flows, the United States remained the main investor in the region in 2010, accounting for 17%. The second biggest investor the Netherlands (13%) followed by China (9%), and Canada, Spain and the United Kingdom (4% a piece).

Chinese direct investment in Latin America gained significant momentum in 2010, when Chinese transnational corporations invested over $15 billion in the region, the vast majority in commodities. The main recipient countries were Brazil, Argentina and Peru, all of which have a close trading relationship with China.

The country is also sometimes an important source of investment for smaller economies, as has recently been seen in Ecuador and Guyana. With the exception of Costa Rica, Chinese investment has almost no relevance in Mexico and Central America,” the U.N. study said.

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