Argentina received 27 percent more of the foreign direct investment (FDI) last year than in 2011, according to a report released by the United Nations Economic Commission for Latin America and the Caribbean (CEPAL in Spanish). However, it represents only 2.3 percent of the GDP or USD 12.551 billion.
The region's FDI expanded 6.7 percent last year from 2011 levels to a record $173.361billion, said in the report. But global economic uncertainty curtailing capital flows threatens to dampen investment in the region this year.
CEPAL predicts that this year's FDI inflows to the region will range between a fall of 3% and a rise of 7%.
According to the Executive Secretary of CEPAL, Alicia Bárcena "The foreign direct investment results attest to the good current performance of the Latin American economy. However, we see no clear signs of FDI making a relevant contribution to generating new sectors or creating activities with a high technology content - as changing the production structure is one of the main challenges facing the region".
The report describes FDI as increasingly focused on the exploitation of natural resources, particularly in South America. Manufacturing represents a fairly low proportion of inward FDI (except in Brazil and Mexico).
In addition, the profits of transnational enterprises operating in Latin America and the Caribbean (also known as FID income) grew fivefold in nine years, rising from 20.425 billion dollars in 2002 to 113.067 billion dollars in 2011. On average, transnational enterprises were repatriating a slightly higher proportion of profits to their parent companies (55%) than they were investing in the countries of the region where they were generated (45%).
