Against global trend, LatAm and Caribbean foreign investments grow

Posted by Investt

Foreign direct investment in LatAm and the Caribbean proved resilient in 2012 with sharp declines around the world amid questions about global economic stability.

The UN's Global Investment Trends Monitor, released last Wednesday, reports that worldwide FDI flows declined by 18 percent in 2012, to a total of about US$1.3 trillion. The declines weren't universal, however, and the real story lies in the year's trend-bucking successes: for the first time, developing countries enjoyed the bulk of foreign investment, accounting for a considerable 52 percent of global FDI. Running contrary to global trends, Latin America and the Caribbean saw FDI growth, as did Africa.

Santiago, ChileAccording to James Zhan, Director of the UN Council on Trade and Growth’s enterprise and investment division,“For the first time in history, developing countries have attracted more investment than developed countries.” The UNCTG pegs reduced flow in Europe and North America to uncertainties over Eurozone stability, U.S. “fiscal cliff” negotiations, and numerous changes of government across the world. 

As for LatAm and the Caribbean’s stand-out growth? The UN report pointed to the general vibrancy of the region’s economies and the robustness of its extractive industries, such as oil and natural gas in Trinidad and Tobago. In conjunction with a strong manufacturing sector, low energy costs, competitive corporate tax rates (25% for companies not in the energy sector, 35% for those that are), and close proximity to both North America and the South American mainland, these resources continue to bolster Trinidad and Tobago as an attractive prospect for investment. 

The UNCTG’s report confirmed that these competitive advantages have created a strong and growing flow of FDI in T&T. Buoyed in large part by growth in developing regions like the Caribbean and LatAm, the Global Investment Trends Monitor projects global FDI growth to US$1.4 trillion in 2013 and 2014, albeit warily. 

"FDI recovery is on a bumpy road,” said Dr. Supachai Panitchpakdi, Secretary-General of UNCTAD. ”While FDI in developing countries remained resilient, more investment in sectors that can contribute to job creation and enhance local productive capacity is still badly needed.”

With the government of Trinidad and Tobago putting its weight behind initiatives to diversify the country’s economy, the region presents a powerful opportunity for job-creating investments to grow.

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