FDI Surges in Latin America and the Caribbean

Latin America and the Caribbean saw a Foreign Direct Investment (FDI) rebound that reached record levels in 2022. A total of US$224.579 billion in FDI entered the region, 55.2% more than in 2021 and the highest value since records have been kept. FDI inflows to the region had not exceeded US$200 billion since 2013, making the 2022 recovery an important milestone for investment in the last decade. 

In 2022, FDI inflows to Mexico increased for the third consecutive year and US$38.932 billion were received, 16% more than in 2021. The main components of this investment were capital inflows and reinvestment of profits, which accounted for 46% and 42% of the total, respectively.

According to ECLAC’s "Foreign Direct Investment in Latin America and the Caribbean 2023" report, recovery was noted in the main recipient economies and was characterized by a marked interest in investments in services, a renewed interest in hydrocarbon investments and the continuity of investments in manufacturing in countries where greater capacities have been accumulated. With this increase, the weight of FDI inflows in the region's GDP also increased, reaching 4.0%. Brazil was the main recipient country in the region (with 41% of the total), followed by Mexico (17%). Both countries received more FDI than in 2021, although the increase in FDI inflows to Brazil was higher and explained 56% of the year-on-year variation for the entire region. Thus, South America was the sub-region with the largest increase in FDI inflows compared to 2021.

Within Mexico, since 2017, services have surpassed manufacturing as the main destination for FDI and this trend was maintained in 2022. Services accounted for 56% of total inflows, the highest share since 2010, and received a higher investment than in 2021. Manufacturing inflows had a smaller increase (9%) and represented 38% of the total. 

In 2022, investments in the film and video industry stood out. In the case of the film industry, the merger between Mexico’s Grupo Televisa and the US’s Univision took the spotlight. The air transport sector stood out due to the restructuring of Aeroméxico. Investments in financial and insurance services represented 13% of the total, while investment in transportation equipment manufacturing represented 12% of the total. However, in both cases, less investment was received than in 2021 (5% and 21% less, respectively). Other notable activities were in basic metal industries (which represented 6%), mining (5%), transportation-related services (4%), construction of civil engineering works (4%), food industry (4%), and temporary accommodation and food and beverage preparation services (4%). 

The US was the main source of FDI to Mexico in 2022, contributing 57% to the total. Canada and Argentina represented 10% and 6% of FDI, respectively. In contrast, lower investments were received from Spain, which went from being the second largest investor in previous years to occupying sixth place in 2022, with 4% of FDI.