Foreign Direct Investment Falls In Latin America And The Caribbean in 2023

• Latin America and the Caribbean recorded a second consecutive year of decline in the flow of global foreign direct investment (FDI), receiving US$184.304 billion last year. This is 9.9% lower than that registered in 2022 but remains above the average of the last decade, the Economic Commission for Latin America and the Caribbean (ECLAC).
• The weight of foreign direct investment inflows in the region's GDP also decreased since in 2023, it represented 2.8%. However, the region's participation in total global FDI flows (14%) was higher than the average percentage in the 2010s (11%).
• The decrease in FDI flows received by Brazil (-14%) and Mexico (-23%), the two countries with the largest participation in total inflows, explains the result of the region. In South America, Peru also saw a fairly sharp decline in FDI inflows (-65%), while Argentina and Chile saw an increase (57% and 19%, respectively).
• However, Central America and the Caribbean received more investments than in 2022 (12% and 28%, respectively). In Central America, nearly all the countries received more FDI, with notable growth in Costa Rica (28%) and Honduras (33%), while the increase in the Caribbean is due mainly to greater inflows in Guyana (64%) and the Dominican Republic (7%).
• FDI inflows into Jamaica were 18% higher in 2023 than in 2022. However, the total amount, US$ 377 million, was below the average of the last decade, and the momentum of the pre-pandemic period has never been regained. Inflows were mainly concentrated in the service sector, which accounted for 85% of the total and registered its largest inflows since 2016. The attractiveness of the service sector in Jamaica was also reflected in project announcements, which, in the case of business services, amounted to some US$ 10 million, 82% higher than the amount announced in 2022.
• “Foreign Direct Investment can help tackle, in particular, the first of the three development traps in which Latin America and the Caribbean is caught: the trap of low capacity for growth. To this end, we need policies to attract investments that put emphasis not only on attracting them but also on what happens once they are established, and that connect these policies with the productive development policies of countries and their territories. All of this requires strengthening the technical, operational, political and prospective (TOPP) capabilities in this area,” ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, said.

(Source: United Nations)