Foreign Direct Investment in Latin America

Abstract

Historically, foreign direct investment (FDI) has had an ambivalent role in terms of its contribution to development, especially how it shaped the productive sector in Latin America, such that it became a recurrent theme in the region's economic literature. FDI flows to Latin America have soared since the 1990s, converting it into an even more important variable. More recently, there has been a smaller but equally unprecedented rise in outward direct investment by Latin American foreign investors. This creates new policy challenges for productive development in the region. This chapter provides an overview of inward and outward FDI patterns in Latin America since the mid-1990s. The second section looks at inward FDI and the third section deals with outward FDI over this period. The fourth section briefly summarizes the main findings and contemplates policy challenges.