NEW YORK: Foreign direct investment in Latin America and the Caribbean fell 16 percent in 2014, reversing a decade-long growth trend as the region’s economies slowed, a UN panel said Wednesday. Foreign investment in the region fell to $158.8 billion last year from a record $190 billion in 2013, said the Economic Commission for Latin America and the Caribbean.
It was the first drop since 2009 and a sharp reversal in a trend that saw foreign investment expand rapidly over the course of a decade, from $46.9 billion in 2003. “Inflows were affected by the region’s economic deceleration and lower prices for its raw material exports,” the commission said in a report. It predicted another decline in foreign investment in 2015.
Latin America’s economies, which boomed in the 2000s, are feeling the pinch of falling commodities prices. ECLAC’s executive secretary Alicia Barcena urged Latin American policymakers to use the slowdown as an opportunity to diversify away from the raw materials the region’s economies rely heavily on. “Policies should not be oriented towards recovering the amounts of foreign direct investment achieved in the last decade, but rather towards attracting the FDI that contributes to productive diversification,” she told a press conference. “This means articulating FDI with industrial policies and national development strategies based on equality and environmental sustainability.”
Brazil attracted the most foreign investment, $62.5 billion – two percent less than 2013. Mexico was next with $22.8 billion, but that was a 49-percent drop from 2013.
ECLAC said Mexico’s sharp decline was due to an unusually large deal made in 2013 – Belgium-based Anheuser-Busch InBev’s purchase of the Modelo brewery for $13.2 billion – and the disinvestment of US telecoms giant AT&T in 2014, which totalled $5.6 billion. Chile attracted $22 billion in foreign investment last year, Colombia $16.1 billion and Peru $7.6 billion.