The Duality of Latin America’s Foreign Direct Investments
A concentration on mega-infrastructure projects masks a 34% drop in Latin America's foreign direct investment project pipeline. Read the analysis. The post The Duality of Latin America’s Foreign Direct Investments appeared first on Global Finance Magazine .
The article titled "The Duality of Latin America’s Foreign Direct Investments" discusses the decline in foreign direct investment (FDI) in Latin America and the Caribbean in 2025. According to the United Nations Economic Commission for Latin America and the Caribbean report, the share of fixed capital in FDI projects fell to 14%, with a 34.3% drop in announced project value compared to 2024.
Investors are increasingly focusing on mega-infrastructure projects, such as energy sustainability, lithium mining, and data center development, which demand substantial capital but are limited in number.
Eric Molino Ferrer, managing partner of EMF Consulting, notes that the decline in announced project value may foreshadow a decrease in actual FDI flows for 2027 and 2028. Transnational companies prefer investing in existing assets or large-scale projects with proven profitability rather than diversifying across new ventures.
While the region remains attractive to investors due to its natural resources and strategic location, delays in project execution stem from bureaucratic hurdles, fragmented environmental permitting processes, and inadequate logistics infrastructure. Structural bottlenecks in the execution phase rather than a lack of capital contribute to the underperformance of projects.
Some countries, like Peru, have made progress with large-scale infrastructure projects, such as the completion of the $1.3 billion Chancay port in three-and-a-half years with Chinese assistance. However, other nations, particularly in Central America, have faced challenges in attracting FDI due to issues like administrative discontinuity and a lack of focus on multilateral finance.
Guatemala, despite being a founding member of the Central American Development Bank (CABEI), relies primarily on local borrowing or international debt markets, missing out on the benefits of concessional terms, longer maturities, technical assistance, and rigorous supervision provided by multilateral banks.
Experts recommend diversifying exports, implementing integrated regional policies, coordinating investment efforts, and strengthening institutions to improve project execution. Harmonizing regulatory frameworks and enhancing investment promotion agencies are also crucial steps to overcome existing obstacles and attract foreign capital.
Written by urgent.news from Global Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
