FDI environment and regulation

of Latin American Countries

Submitted by
Sreenath
Karthik
Sindhuri
Akhil T.U
Manivannan.R
Chinnu Elizabeth
Krithi Rajadurai
Foreign Direct Investment
 FDI IN LATIN AMERICA
 Foreign direct investment in 2009 was 77 billion
dollars.
 Brazil was the top recipient of FDI with 26 billion

dollars.
 Chile came second with 12.7 billion dollars.
 Mexico came third with 11.4 billion dollars.
Key Facts
 USA is the largest investor in Latin
America(37%) followed by Spain(9%) and
Canada(7%).
 Agribusiness, mining and petroleum are the

priority areas for all the companies.

 Investment in these sectors will have access to

edible oil, pulses, wheat, sugar, minerals and

crude oil which are going to be needed more and
more by the developed markets.
FDI OF VARIOUS LATIN AMERICAN COUNTRIES
Country FDI
Brazil 25.95
Chile 12.70
Mexico 11.42
Colombia 7.20
Argentina 4.90
Peru 4.76
Dominican Republic 2.16
Panama 1.77
Costa Rica 1.32
Uruguay 1.14
Guatemala 0.57
Honduras 0.50
Nicaragua 0.43
El Salvador 0.43
Bolivia 0.42
Ecuador 0.31
Paraguay 0.18
Haiti 0.02
Venezuela -3.20
Graphical Representation of FDI in Latin
American Countries
 FDI in Brazil
Foreign Direct Investments have played an essential role
in the development of the Brazilian economy.
Itslarge domestic market and favorable government
policies have attracted investors.
The Brazilian economy has emerged over the years as a
strong third world economy mainly due to government
FDI policies that directed Brazil investments into
industrialization, capital flows, technology and services.
FDI regulations have encouraged inward investment.
The investment regime of Brazil shifted from import
substitution to economic liberalization that enabled
industrialization.
Policy formulation
 The reason for increase in FDI in Brazil is due to
the fact that at the time of its policy formulation,
the Brazilian FDI regime didn’t discriminate
investments.
 Tariffs and non tariff restrictions on imports were

liberalized.
FDI Movement in Brazil
 FDI in Mexico
 Mexico is the populous Latin American nation.
 It possesses an open trade regime thanks to the North

American Free Trade Agreement (NAFTA).

 Foreign direct investment in Mexico increased by

21% in the year 2007.

 It amounted to US$23.2 billion or €15.7 billion.
 Most of the FDI came from USA followed by

Holland and Spain.

 The year 2008 has seen a considerable drop in the

FDI in Mexico because of the recession in the

United States since Mexico is largely dependent on
USA.
Policy formulation
 Prime among them was the countrywide
implementation of privatization policies and
programs of debt conversion
 Some other important policy changes that were

introduced are trade able sector liberalization repeal

of restrictive FDI regulations regarding issues like
profit repatriation, need for prior authorization for
investments and various sectoral regulations.
 Fairly good performance of various macroeconomic

stabilization measures for the Mexican economy

boosted the confidence of foreign companies.
FDI Movement in Mexico
 FDI in Argentina
Argentina was the third biggest recipient of the FDI in
Latin America in 1997.
Argentina's foreign direct investment flow recorded a

substantial increment in the 1990 to 1996 time period.

The annual average for this period stood at US$2.8

billion. This was 4 times greater than the comparable

figure for the 1980s.
Some factors contributed to the rapid increase in FDI

inflows into Argentina in the 1990s.

Mercosur membership
Macroeconomic stability
Special incentive scheme for foreign investment
Incentives for the automotive sector
In 1990, Argentina's FDI inflow accounted for 22% of

Latin America's foreign investment inflow.

Policy formulation
 The regulation and policy changes that facilitated the increase
in FDI inflows are
 The policy changes primarily revolved round the participation
of private investment in an economy's natural resource sector
which attracts huge inflows from foreign business firms.
 The massive upsurge in commodity prices led some Latin
American governments to go in for a modification of their
prevalent tax regimes.
 Formulated newly devised investment promotion regimes
targeted at attracting investments for industrial activities
FDI Movement in Argentina
FINAL ANALYSIS
 

The Brazilian economy offers a convenient investment

environment for our company because of the following
factors.
◦Brazilian economy is growing on a large and continuous
basis as compared to other developing markets in Latin
America.
◦The huge market potential backed with the purchasing
power of the people has attracted the investors from all
over the world.
◦Further the Brazilian markets differs from the other
emerging markets in the fact that it is a full blown
democracy.
 
 ◦ The macro economic factors such as the political
and legal environment has been very stable as when
compared to other Latin American countries.
◦ The other Latin American countries have been
considered to be more risky when compared with
Brazil.
 Hence Brazil has been established as a destined
location for the foreign companies
Thank U