Foreign Direct Investment in Latin America

Abstract

Foreign direct investment (FDI) is external investment in productive assets that countries receive, and where the investor maintains control over those assets. However, despite the good reputation that FDI enjoys in Latin America, the effect that the tax planning of multinational companies and high net worth individuals has on the economies on FDI recipient countries is unknown.Countries have designed different strategies to attract FDI, which has taken on increasing importance over the last two decades, although with disparities in the inflows to the various countries of the region.A crucial element of the issue of the FDI stemming from IFFs is related to the so-called 'roundtripping' investment, which takes advantage of the benefits granted to foreign capital by host countries. In the case of the Latin American region, this is particularly relevant due to the importance of capital flight in certain countries.