FDI in Latin America and Caribbean sink to 11-year lowThursday, August 05, 2021
KINGSTON, Jamaica — Amid the severe health, economic and social crisis prompted by the COVID-19 pandemic, Latin America and the Caribbean received $105.48 billion dollars in foreign direct investment (FDI) in 2020 — 34.7 per cent less than in 2019.
According to the Economic Commission for Latin America and the Caribbean (ECLAC), this is 51 per cent less than the record high achieved in 2012, and is also the lowest amount since 2010.
The body was presenting its annual study entitled, “Foreign Direct Investment in Latin America and the Caribbean 2021”.
It noted that globally, FDI dropped by 35 per cent in 2020 to approximately $1 trillion dollars, which represents the lowest value since 2005.
Latin America and the Caribbean has experienced a downward trend since 2013, which has spotlighted the relationship between FDI flows and commodity price cycles, mainly in South America, according to the report launched at a virtual press conference held by Alicia Bárcena, the United Nations regional organisation's executive secretary.
The international context suggests that global FDI flows will recover slowly, the report said while warning that the pursuit of assets in sectors that are strategic for the international reactivation and for public plans to transform the productive structure (infrastructure, the health industry, the digital economy) indicates that most of these operations will be centred on Europe, North America and some countries in Asia.
In Latin America and the Caribbean, FDI projects experienced a rebound between September 2020 and February 2021, however up to May 2021, a new drop occurred in the value of the announcements made.
“In this scenario, it is difficult to imagine that FDI inflows into the region could increase by more than five per cent in 2021,” ECLAC's report stated.
“FDI has made relevant contributions in Latin America and the Caribbean, but there are no elements indicating that in the last decade it has contributed to significant changes in the region's productive structure or that it has served as a catalyst for transforming the productive development model. Today, the challenge is greater due to the characteristics and magnitude of the crisis. We need to channel FDI towards activities that generate greater productivity, innovation and technology,” Alicia Bárcena said.
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