FOREIGN DIRECT INVESTMENT INTO LATIN AMERICA AND THE CARIBBEAN REMAINED STRONG IN 1998, INFLOWS FROM EUROPEAN UNION RISING
Press Release
TAD/1881
FOREIGN DIRECT INVESTMENT INTO LATIN AMERICA AND THE CARIBBEAN REMAINED STRONG IN 1998, INFLOWS FROM EUROPEAN UNION RISING
19990624(Reissued as received.)
GENEVA, 24 June (UNCTAD) -- In 1998, a year of turbulence for emerging markets, foreign direct investment (FDI) inflows into Latin America and the Caribbean exceeded $71 billion, according to estimates of the United Nations Conference on Trade and Development (UNCTAD) estimates released today. This marked a five per cent increase over the previous record, set in 1997. Seventy per cent of the total FDI went to South American countries. Most striking was a substantial (53 per cent) increase in flows to Brazil, to $29 billion.
The surge in FDI into Brazil was mainly due to mergers and acquisitions involving new foreign investors and transnational corporations (TNCs) already established in the country. Privatizations, including that of Telebras, the telecommunications giant partly sold to foreign investors, also contributed.
FDI flows to a number of medium-sized, resource-rich Andean countries, Caribbean and other countries with export-oriented industries as well as off-shore financial centres also increased in 1998.
The United States continued to be the largest single investor country with outward flows amounting to about $24 billion in 1997. A strong increase in inflows from the European Union (EU) since 1995 has, however, started to challenge the traditional dominance of United States TNCs in the region.
Investment relations are on the agenda of the EU-MERCOSUR summit in Rio de Janeiro on 28-29 June.
In 1997, the most recent year for which detailed data are available, investment by EU companies almost matched that from the United States. Investment from Japan to the region, at $2 billion, continued to be low.
A similar picture emerges from a breakdown of foreign companies operating in Latin America and the Caribbean: in 1997, among the largest
- 2 - Press Release TAD/1881 24 June 1999
100 foreign affiliates (ranked by sales) 44 were from the United States, 37 from the EU, five from Switzerland and three from Japan.
In 1997, Spain was the main EU investor in the region, responsible for about a third of the total. Spanish TNCs have acquired controlling stakes in important companies in the electricity industry in Chile and the oil and gas industries in Argentina. The second largest EU investor (over 20 per cent) was the United Kingdom, followed by France and Germany (both accounting for around 15 per cent).
For more information, contact Masataka Fujita, TNCs Affairs Officer, Division on Investment, Technology and Enterprise Development, UNCTAD, on telephone: +41 22 907 62 17, fax: +41 22 907 01 94, or e-mail: masataka.fujita@unctad.org or Carine Richard-Van Maele, Chief, Press Unit, UNCTAD, on telephone 41 22 907 58 16/28, fax 41 22 907 00 43; or e-mail: press@unctad.org.
* *** *