Despite the debilitating effects of the Covid-19 pandemic on investments around the world Latin America and the Caribbean may have fared better than expected according to the United Nations Conference on Trade and Development. (UNCTAD).
In its recently released World Investment Report 2022 UNCTAD states that foreign direct investment flows to Latin America and the Caribbean had recorded an encouraging increase from US$88 billion in 2020 to US$134 billion last year.
The figures released by UNCTAD point to a swift rise in foreign investment in the region on the back of the pandemic-driven shrinkage, which, having plunged by 45 per cent during the ‘dark days’ of the ravages of 2020 recorded a subsequent 56 per cent rebound. The report says that the region’s pandemic-driven investment slump that year represented the sharpest decline anywhere in the world.
Much of the 2021 foreign investment rebound, the report says, derived from a record 317 so-called Greenfield projects in information and communication technologies (ICT’s) across the region, a level of investment that represented a 61 per cent increase from the previous year.
Greenfield investments are investments in which a company creates a subsidiary in another country by investing in new facilities including offices, factories, staff and distribution hubs. They derive their name from the fact that the company launching the new venture commences with nothing but a “green field.”
UNCTAD’s Director of Investment and Enterprise, James Zhan is quoted as saying the “growth was also strong in traditional target industries, such as car manufacturing, electricity, financial and insurance services, as well as extractive industries.
While, according to the UNCTAD report FDI flows increased in each of the three sub-regions in Latin America and the Caribbean last year, some of the economies in those sub-regions actually experienced further considerable declines on account of the pandemic’s continued economic impact coupled with political instability in some instances.
As foreign investment began returning to the mining and investment sectors, particularly, all major recipient countries saw FDI rise, according to the report. It says that during that period foreign direct investment increased by 39 per cent to US$3.8 billion.
