The UNCTAD report highlights the momentum of the extraction of minerals for the energy transition in the region, particularly in Chile, and also emphasizes Chile’s green hydrogen and solar and wind power projects.
Foreign direct investment remained almost flat in Latin America (-1%) last year, totaling US$193 billion, making it the developing region that was least affected by the trend toward lower investment, according to the World Investment Report 2024 released by the United Nations Conference on Trade and Development (UNCTAD).
The report published by the UN body notes that several Latin American countries have benefited from sustained demand for commodities and minerals critical for clean energy technologies.
As occurred globally, there were considerable differences between countries in the region, with Mexico and Brazil remaining the largest magnets for foreign investment, while Chile has maintained its role as an increasingly interesting investment destination.
FDI flows in 2023
According to Central Bank data, Chile received US$21.7 billion last year in foreign direct investment (FDI), 19.2% more than in 2022. According to InvestChile’s analysis, this is the highest figure since 2015.
In South America, Argentina, Chile, and Guyana saw the highest growth in foreign direct investment last year, offsetting lower values in Peru and Brazil, with Brazil remaining the largest FDI recipient in this sub-region, according to the report.
In the rest of the region, Mexico stood out with stable foreign investment flows, while in the Caribbean the Dominican Republic saw a 7% increase compared to the previous year.
At the presentation of the report, Secretary-General of UNCTAD, Rebeca Grynspan—who was one of the keynote speakers at the 7th International InvestChile Forum last May—discussed international efforts to «decentralize» the supply chain following the vulnerability that was made evident during the pandemic, and how some Latin American countries are benefiting from this situation.
She also noted that Mexico and Costa Rica in Latin America, Vietnam in Asia, and certain West African countries are strengthening their role in a more decentralized global supply chain, although this trend is still not strong enough.
According to Grynspan, the region has shown significant resilience in greenfield projects (construction of new facilities, in which renewable energy plays an essential role), an area where global growth slowed last year.
In that regard, she highlighted major foreign investment project announcements in Brazil and Chile, «which are due to the huge potential that Latin America has in renewable energy.»
«New technologies and sectors will require the intensive use of renewable energy, and Africa and Latin American have a comparative advantage in this area,» she said during a press conference reported by news agency EFE.
The report also highlights the momentum of the extraction of minerals critical for the energy transition, particularly in Chile, in addition to Chile’s green hydrogen and solar and wind power projects.
Investments in this sector originate primarily from China, the United States, Canada, and Australia.
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