Uruguay has long been recognized as Latin America’s most stable economy with transparent institutions. For years, investors have enjoyed confidence in Uruguay’s democracy, rule of law, and prudent macroeconomic policies. Uruguay foreign direct investment has remained strong because it has stayed relatively insulated from regional turmoil and was able to diversify exports while simultaneously strengthening key sectors such as forestry through new investment.

Now investors decide where to locate new manufacturing facilities, distribution hubs, research centers, or digital operations by benchmarking countries on metrics such as productivity, labor supply, ease of doing business, infrastructure, tax competitiveness, and speed to market.

In many ways, Uruguay can no longer rely on its reputation alone. It needs to improve competitiveness while also better communicating its benefits to global investors, skilled professionals, and tourists. Smart policy reforms coupled with a robust strategy to promote the country will allow Uruguay to claim a greater share of the foreign direct investment flowing to the region as a result of nearshoring, digitalization, and supply chain diversification.

40 Years of Economic Change 

Uruguay’s open economy didn’t happen by accident.  It’s the result of deliberate policy choices made over decades that helped diversify the economy and instill confidence in the business environment.

Facilitating Investment Created Competitive Industries 

Unlike other countries with incentives that change from one political administration to the next, Uruguay has kept certain policies in place for decades, allowing businesses to make long-term plans when investing significant capital.

Uruguay foreign direct investment has benefited from the country’s long-standing commitment to reliable public policies that incentivize investment. Commercial forestry is one example.  Government incentives helped attract private investment to forestry, an industry that continues to grow and employ thousands of Uruguayans directly and indirectly. Related investments have expanded pulp mills, logistics and transportation, and associated industries.

Uruguay’s network of free trade zones has also attracted multinational companies offering services in logistics, manufacturing, pharma, technology services, and regional headquarters.

Thanks to investment-friendly policies, Uruguay has also been able to build an entirely new industry in software and IT services. Today, Uruguayan companies successfully compete on a global stage by offering digital services to clients around the world, proving that even small countries with small domestic markets can be competitive in knowledge industries.

Pension Reform Developed Capital Markets

Uruguay also modernized its pension system, which contributed to stronger capital markets. By adding private pension savings accounts to complement the public system, Uruguay began generating greater domestic capital.

These investment funds allowed greater access to capital for infrastructure, corporate investment, and government debt. Today, pension funds and other players in Uruguay’s capital markets continue to play an important role in developing domestic savings.

Coupled with responsible fiscal policies and debt management, these policy changes contributed to Uruguay’s investment-grade rating.

Integrating With Global Markets 

Uruguay used to rely primarily on regional trade partners, but over time, export products and destinations diversified. Rather than depending on the economic fortunes of neighbors, Uruguay now exports agricultural goods, forestry, software, pharmaceuticals, services, and manufactures to customers worldwide.

Monetary Stability

Over the past four decades, Uruguay has prioritized independent monetary policy and responsible fiscal policy. By depoliticizing economic governance, Uruguay has enjoyed financial stability that few countries in Latin America have been able to achieve.

Although Uruguay has an impeccable reputation when it comes to institutions and policies that promote investment, fierce competition now exists from countries around the world.

Countries are competing for sales while companies are choosing new locations for investment based on the total cost of doing business. Investors consider labor productivity, taxes, access to talent, financing costs, energy costs, logistics costs, and regulatory burden when they compare investment opportunities.

Labor and other production costs have risen dramatically over the past two decades, and productivity has not kept pace in many industries. Although Uruguay does not need to be the lowest-cost producer, it does need to demonstrate that it provides enough value to justify a premium. That value comes from higher productivity, infrastructure, workforce training, ease of doing business, and other institutional advantages.

Advantages such as stable democratic institutions are incredibly valuable, but countries must continue to improve other aspects of the investment climate to win bids for new investment. Streamlining regulations and administrative processes can help boost competitiveness just as much as tax incentives or financing subsidies.

Regulatory Reform 

Fortunately for Uruguay, government regulations have become simpler in recent years. From electronic permitting platforms to digitized government services, streamlined customs processes, and efforts to modernize bureaucratic requirements, Uruguay has made it easier to start and operate a business.

Reducing red tape not only improves competitiveness, but it also allows government to allocate resources towards higher-value services.

Workforce Development 

Perhaps most importantly, Uruguay needs to continue developing its workforce. Employers are demanding higher-skilled workers and, while education reform is a long-term effort, countries can take action by offering training in key areas that will prepare workers for the jobs of tomorrow. Vocational training, engineering, programming, AI, and advanced manufacturing should all be priorities.

Fostering an environment that protects workers while also encouraging job creation should help Uruguay attract companies looking to invest for the long-term.

Competing for Foreign Direct Investment 

No matter what industry is considered, companies from around the world are exploring new investment destinations.

Manufacturers are diversifying their supply chains while technology companies are looking to expand their footprint in the region. Medical device companies, electronics manufacturers, automotive suppliers, and business service providers are evaluating countries throughout Latin America.

Latin America is no different.  From Chile to Mexico, countries are offering investors tax breaks, streamlined permitting, access to financing, workforce training, and other incentives to persuade companies to select their country for the next major investment project.

While Uruguay foreign direct investment benefits from the country’s reputation for stability, investment decisions today are increasingly driven by execution. Speed, regulatory certainty, support for workforce development, and responsiveness are just a few areas where governments can demonstrate they are ready for business. Promoting free trade zones, investment centers, and other institutions that facilitate new investment will also be critical to assuring investors that Uruguay is open for business.

Although Uruguay has many competitive advantages, it needs to do a better job of telling the country’s story to international audiences.

Driving Tourism 

Tourism creates jobs.  From restaurants and hotels to airlines and taxi services, effective tourism promotion has a positive impact on the economy. International marketing campaigns can put more money in workers’ pockets while generating tax revenue that can be used to improve local communities.

All of this is beneficial for promoting Uruguay as a destination for business investment. Attracting tourists also gives more people from around the world the opportunity to discover Uruguay firsthand.

Attracting Investment 

When it comes to attracting investors, doing your best on Google is not enough. Successful investment promotion requires an active presence at industry events, trade shows, forums, conferences, and networking events.

Countries that win bids for large investments typically build relationships with companies years before a decision is made. That means talking to corporate decision-makers, working with site selection consultants, and engaging industry associations long before your country is ever considered.

Uruguay can and should expand its efforts to attract FDI by establishing a presence at the key events where multinational companies decide where to locate their next project. Uruguayana PYMES, Uruguay XXI, and other organizations are working to promote Uruguay abroad. Ensuring their efforts are coordinated will allow Uruguay to project a unified brand to the world.

Attracting Skilled Immigrants 

Another related challenge is population growth.  Uruguay faces an aging population and low birth rates, which will create labor shortages in the coming decades. Attracting skilled labor can not only fill jobs, but it also encourages entrepreneurship and innovation.

Uruguay is already a great place for families to live, but promoting that reality can help attract talent from around the world. Professionals are increasingly making decisions based on quality of life, which includes public safety, education, economic opportunity, and environmental factors. Uruguay ranks well in global indexes that measure these factors, but too few outsiders know about Uruguay.

Helping Uruguay Reach its Next Milestone 

But times have changed, and competition for Uruguay foreign direct investment has intensified as other countries aggressively pursue the same multinational companies, tourists, and skilled professionals. Uruguay can build on its successes by continuing to strengthen core fundamentals while also aggressively promoting itself on the world stage. Uruguay has enjoyed many successes that few countries in Latin America can claim. Established democracies, investment-grade ratings, and transparent institutions did not happen by chance. They are the result of years of sound policymaking and economic stewardship.

Uruguay can build on its successes by continuing to strengthen core fundamentals while also aggressively promoting itself on the world stage.

 

 

 

As multinational companies continue to diversify their global supply chains and pursue nearshoring opportunities, legal certainty has become one of the most important factors influencing foreign direct investment (FDI) decisions. Investors today are not simply comparing labor costs or tax incentives; they are also evaluating whether countries provide stable legal frameworks that protect long-term investments.

Against this backdrop, Honduras has taken an important step by officially rejoining the International Center for Settlement of Investment Disputes (ICSID). After depositing its instrument of ratification with the World Bank, the country’s renewed membership will become effective on August 16, 2026. The decision marks a significant policy shift, signaling Honduras’ intention to strengthen investor confidence and align with internationally recognized standards for investment protection.

While rejoining ICSID alone will not transform Honduras into the region’s leading investment destination, it represents a meaningful step toward improving the country’s investment climate. To fully capitalize on this decision, however, Honduras will also need to continue advancing broader economic, institutional, and infrastructure reforms that enhance its overall competitiveness.

What Is the International Center for Settlement of Investment Disputes and Why Does It Matter?

The International Center for Settlement of Investment Disputes (ICSID) is one of the world’s leading institutions for resolving legal disputes between foreign investors and sovereign governments. Established in 1966 under the auspices of the World Bank Group, ICSID provides an impartial framework for arbitration and conciliation when investment disagreements arise.

Its primary objective is to encourage international investment by offering investors and governments a trusted, rules-based mechanism for resolving disputes outside domestic court systems.

For multinational corporations, ICSID membership can significantly reduce perceived investment risk because it provides:

• Access to internationally recognized arbitration procedures.
• Greater confidence that contractual disputes can be resolved fairly.
• Reduced uncertainty regarding political or regulatory changes.
• Stronger protection for long-term capital investments.

Although companies evaluate many variables during the site selection process, ICSID membership often serves as an indicator that a country is committed to honoring international investment obligations.

Honduras Sends an Important Signal to International Investors

Honduras’ decision to deposit its instrument of ratification restores its participation in one of the world’s most respected investment dispute resolution systems. Beginning August 16, 2026, foreign investors covered by applicable investment treaties and agreements will once again have access to  International Center for Settlement of Investment Disputes arbitration involving Honduras.

This development sends a positive message to international markets.

It demonstrates that Honduras recognizes the importance of legal predictability and intends to strengthen the institutional framework supporting foreign investment.

As investors compare opportunities across Latin America, perceptions matter. Countries viewed as respecting international legal norms often enjoy a competitive advantage when companies are making long-term location decisions involving hundreds of millions of dollars in capital expenditures.

As many investment professionals observe:

“Legal certainty is one of the most important variables investors evaluate before committing long-term capital.”

Rejoining the International Center for Settlement of Investment Disputes reinforces Honduras’ commitment to providing a more predictable investment environment, an increasingly valuable asset in today’s competitive FDI landscape.

Why Legal Certainty Matters More Than Ever

The global investment environment has changed dramatically over the past several years.

Geopolitical tensions, supply chain disruptions, and the acceleration of nearshoring have prompted manufacturers to relocate production closer to North American markets. Latin America has become one of the primary beneficiaries of this shift, creating intense competition among countries seeking to attract new manufacturing projects.

As companies evaluate potential investment destinations, they increasingly prioritize countries that combine competitive operating costs with institutional reliability.

Key factors that investors typically consider include:

• Rule of law
• Reliable contract enforcement
• Independent dispute resolution mechanisms
• Regulatory transparency
• Protection of foreign investments

These considerations help companies reduce long-term operational risk. Manufacturers making investments that may remain in operation for decades need assurance that contracts will be honored and that legal disputes can be resolved fairly.

For industries such as automotive components, medical devices, electronics, aerospace, and renewable energy, legal certainty often carries nearly as much weight as labor costs or tax incentives.

The Competitive Landscape in Central America

Honduras is competing for investment within an increasingly sophisticated regional marketplace.

Neighboring countries have invested heavily in strengthening their investment ecosystems, each emphasizing different competitive advantages.

For example:

• Costa Rica has built a world-class reputation in advanced manufacturing, life sciences, and shared services through political stability, an educated workforce, and a highly successful free trade zone regime.
• Guatemala continues to leverage its large labor force, strategic location, and expanding industrial base to attract manufacturers serving North American markets.
• Panama remains one of the region’s premier logistics hubs, benefiting from the Panama Canal, world-class ports, and a highly developed financial services sector.
• The Dominican Republic has emerged as one of Latin America’s most successful free zone economies, particularly in medical devices, electronics, and apparel manufacturing.
• El Salvador has recently introduced reforms designed to strengthen its business climate while promoting technology investment, logistics, and manufacturing expansion.

Increasingly, companies compare countries across numerous dimensions simultaneously, including:

• Labor availability
• Transportation infrastructure
• Energy reliability
• Logistics efficiency
• Government investment incentives
• Institutional confidence

Legal certainty is becoming an increasingly important differentiator within this broader competitive framework.

ICSID Is Only One Piece of the Investment Puzzle

Although Honduras’ return to ICSID represents an important milestone, investors evaluate countries using a much broader set of criteria.

Successful investment promotion depends upon creating an ecosystem that supports long-term business success.

Companies typically examine factors such as:

• Macroeconomic stability
• Availability of skilled labor
• Transportation and logistics infrastructure
• Electricity costs and reliability
• Public security
• Competitive tax policy
• Ease of doing business
• Political stability

These factors complement legal certainty rather than replace it.

For example, a manufacturer may appreciate strong investment protections but still choose another country if transportation infrastructure is inadequate or skilled workers are unavailable.

Likewise, generous investment incentives are often less persuasive if investors perceive significant regulatory uncertainty.

The most successful FDI destinations are those that combine sound legal institutions with competitive operating conditions and effective public policies.

Opportunities for Honduras

If Honduras continues improving its investment climate, several industries could benefit from increased investor confidence resulting from its renewed ICSID membership.

Promising sectors include:

• Advanced manufacturing, particularly companies seeking nearshore production capacity.
• Automotive suppliers, as North American manufacturers diversify regional supply chains.
• Textiles and apparel, where Honduras already maintains a strong export platform.
• Electronics manufacturing, supported by regional demand for diversified production.
• Logistics and distribution, leveraging Honduras’ strategic geographic location within Central America.
• Renewable energy, as global companies pursue sustainability objectives.
• Mining, where long-term investment commitments require strong legal protections.
• Business services, including shared service centers supporting multinational operations.

Many of these sectors align closely with the broader nearshoring movement reshaping investment patterns throughout Latin America. Companies seeking resilient supply chains increasingly value locations that combine competitive costs, geographic proximity to the United States, and credible legal institutions.

By strengthening legal certainty while continuing to improve infrastructure, workforce development, and the overall business environment, Honduras can position itself more effectively within this evolving regional landscape.

Conclusion

Honduras’ decision to rejoin the International Center for Settlement of Investment Disputes represents an important milestone in the country’s efforts to strengthen its investment climate. Effective August 16, 2026, renewed ICSID membership sends a positive signal that Honduras is committed to internationally recognized standards for investor protection and dispute resolution.

In an era where nearshoring is reshaping global manufacturing strategies, legal certainty has become an increasingly valuable competitive advantage. Investors are looking for countries that offer predictable institutions, transparent regulations, and confidence that long-term investments will be protected.

Nevertheless, ICSID membership is only one component of a successful investment strategy. Sustainable foreign direct investment depends upon combining institutional credibility with modern infrastructure, skilled human capital, reliable energy, competitive operating costs, and pro-business public policies.

If Honduras continues to build on this foundation, its return to ICSID could be a key catalyst for attracting higher levels of foreign direct investment, supporting industrial expansion, creating quality employment opportunities, and fostering long-term economic growth.

Peugeot and Citroën to Benefit from Stellantis–Dongfeng Partnership

According to the president of Stellantis South America, the group’s French brands will be the primary beneficiaries of the company’s partnership with China’s Dongfeng.

During its global investor presentation outlining investment plans through 2030, Stellantis South America drew attention by making no mention of Peugeot or Citroën in its strategy for Brazil. The omission raised numerous questions about the future of the two French brands in the Brazilian market.

Speaking with journalists on Wednesday evening (July 8), Hernander Zola, President of Stellantis South America, stated that the company has plans for both Peugeot and Citroën in Brazil, particularly because both brands “remain very strong in other South American markets.” Their future is directly tied to a new agreement with Chinese automaker Dongfeng involving shared vehicle platforms and the joint development of new products tailored to the region.

Peugeot to Move Upmarket While Citroën Becomes a Niche Brand

During the interview, the executive acknowledged mistakes in the management of both brands and promised a complete repositioning. According to Zola, both Peugeot and Citroën will become “niche” brands in the Brazilian market. Peugeot, in particular, will move into a premium position, focusing on lower-volume, higher-value vehicles. Zola did not provide specific details regarding Citroën’s new strategic direction.

“When Stellantis was formed, we had to continue with many of the plans for Peugeot and Citroën that had already been established and could no longer be reversed, including major investments in new platforms and products. We made several adjustments, but at that time, the strategy was for both brands to compete with Fiat. Today, we recognize that this competition no longer makes sense. We are seeking a more complementary product portfolio,” explained Hernander Zola, President of Stellantis South America.

Existing Product Lines Will Be Gradually Phased Out

Zola’s comments make it clear that Peugeot and Citroën will gradually exit the entry-level vehicle segment. This signals the eventual phase-out of the current lineup produced in the region, including the Citroën C3, Aircross, and Basalt manufactured in Porto Real, Rio de Janeiro, as well as the Peugeot 208 and 2008 built in El Palomar, Argentina.

“Of course, this won’t happen overnight. It’s a process that will take several years. First, these products need to generate a return on the investments that have already been made,” he said.

Returning Peugeot Production to Brazil

According to Zola, one of the most critical decisions affecting Peugeot was the complete transfer of the brand’s production to Argentina.

“That decision was made under a very different market environment and a different trade relationship between Brazil and Argentina, but it ended up severely limiting our operation,” he explained.

One solution already under consideration is to resume production of at least one Peugeot model in Brazil. This is where Dongfeng enters the picture. In Brazil, the Chinese automaker will operate under the name DFM, as previously reported.

Dongfeng Platforms Will Underpin Future Peugeot and Citroën Models

The President of Stellantis South America was emphatic that the partnership between Stellantis and Dongfeng will lead to the development of new vehicles specifically for the Brazilian market, with Peugeot—and, to a lesser extent, Citroën—as the primary beneficiaries.

“I don’t yet know whether this cooperation will involve joint manufacturing in Brazil, but what I can state categorically is that we will have Peugeot and Citroën vehicles developed using Dongfeng platforms and engineering participation,” he emphasized.

These vehicles will not necessarily be based on the Peugeot Concept 6 and Concept 8 unveiled at the 2026 Beijing Auto Show. Instead, they will be products designed specifically for South America, built on Dongfeng platforms and likely manufactured locally.

Future Manufacturing Plans Under Evaluation

According to the website Autos Segredos, a next-generation Peugeot 3008 midsize SUV is currently under development for production at Stellantis’ Goiana, Pernambuco plant beginning in 2030. However, it remains unclear whether the model will use Dongfeng’s Chinese platform or Stellantis’ STLA Medium architecture, which will underpin the next-generation Jeep Renegade, Compass, and Commander.

An even more likely scenario is that the technical partnership between Stellantis and Dongfeng will result in entirely new vehicles being produced at the Porto Real, Rio de Janeiro plant, replacing the current low-cost Citroën models assembled there.

Zola also acknowledged that Stellantis is studying the possibility of manufacturing vehicles under the DFM brand at its Brazilian factories. While he did not provide additional details, it has recently been reported that Dongfeng is also negotiating the acquisition of the former Campo Largo, Paraná, engine plant.

Dongfeng’s Separate Talks with Nissan

In addition to its discussions with Stellantis, Dongfeng is reportedly negotiating a potential manufacturing partnership with Nissan. According to Zola, however, Stellantis has no intention of participating in a three-way arrangement.

“Either Dongfeng will manufacture with Nissan or with us. Producing with both companies simultaneously is, in my view, virtually impossible,” he concluded.

Stellantis’ Fastlane 2030 Strategy for Brazil

Beyond its plans for Peugeot and Citroën, Stellantis’ Fastlane 2030 strategic plan for Brazil includes:

• A next-generation Fiat Argo;
• Three new Fiat SUVs, including updated Pulse and Fastback models, plus an all-new seven-passenger SUV;
• Next-generation Jeep Renegade, Compass, and Commander SUVs;
• New generations of the Fiat Strada, Fiat Toro, and Ram Rampage pickups; and
• An all-new flex-fuel full hybrid (HEV) powertrain.

Published by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Latin America FDI 2025 report reveals that foreign direct investment (FDI) is still one of the most visible signs of business confidence in emerging markets. When multinationals open factories, service centers, infrastructure projects, or technology operations, they are placing their bets on a country’s future. At the same time, these capital investments can create jobs, transfer technology, build resilient supply chains, and enhance productivity in Latin American countries.

“Foreign direct investment is key for productive transformation and sustainable economic development in Latin America and the Caribbean.” – UN ECLAC

Latin America as a whole can celebrate an encouraging report from ECLAC, considering current global economic headwinds. Despite increasing at a modest rate of 1.7% during 2025, foreign direct investment in Latin America climbed to US$194.2 billion. Amid geopolitical conflict, shifting trade policies, and tighter financial conditions, that growth indicates international businesses are still keen to invest in Latin America for the long-term.

Steady Growth in the Face of Global Economic Uncertainty

Latin America FDI 2025 doesn’t reveal any dramatic increases in investment, but there wasn’t necessarily a downturn either. Global companies felt some hesitation amidst uncertainties about trade relations, interest rates, supply chain realignments, and geopolitical instability. Latin America experienced both positive and negative impacts as international businesses evaluated these macro factors before committing to future growth plans.

Latin America still experienced healthy foreign direct investment activity throughout the year. ECLAC found that foreign direct investment in Latin America:

* Contributed to roughly 14% of gross fixed capital formation

* Made up nearly 2.8% of regional GDP

* Supported ongoing technology transfer

* Contributed to job creation

* Helped nations improve competitiveness

Foreign capital will continue to play an important role in Latin America as countries work to modernize infrastructure, diversify their economies, and improve their competitiveness. Investments from abroad create additional benefits by linking domestic companies to advanced technologies, professional management, and international markets.

“In times of uncertainty, long- term foreign investors have the potential not only to maintain their investment projects but also to generate productive capacity, innovation, and better-paying jobs.”

Brazil and Mexico Lead the Region in Foreign Direct Investment

Brazil continues to lead the region by attracting approximately 40% of foreign direct investment in Latin America during 2025. Investors are still impressed with Brazil’s large consumer market, diversified industry, natural resources, and growing renewable energy sector.

Mexico secured its position as the second-largest recipient of foreign investment in Latin America once again. During the year, Mexico captured roughly 22% of total Latin American FDI. Much of Mexico’s success can be attributed to:

* Proximity to the United States

* Robust free trade agreements

* Mature manufacturing sector

* Nearshoring trends

Nearshoring has been a key benefit for Mexico as many companies look to reduce supply chain risks and increase responsiveness to North American markets. Mexican manufacturing has become an attractive alternative to lengthier and more expensive supply chains that extend across Asia.

Several other countries also attracted high levels of foreign direct investment in Latin America throughout the year. These notable performers include:

* Chile: Mining and renewable energy investments

* Peru: Mining, infrastructure, and manufacturing

* Colombia: Services, infrastructure, industrial investment

* Guyana: Energy sector continues to expand rapidly

Countries like Costa Rica and the Dominican Republic have also been improving their positions as destinations for higher-value investments. Both countries attracted significant investments in advanced manufacturing, medical devices, business services, tourism, and technology industries. Their success illustrates how small and medium-sized economies can attract knowledge-intensive industries by investing in human capital, improving their investment climates, and implementing targeted economic development strategies.

Where is Foreign Investment in Latin America Coming From?

Although United States headquartered companies contributed the majority of foreign direct investment in Latin America (approximately 35%), there are signs that investment is beginning to diversify. Total investment coming from European sources into Latin America rose during 2025, and companies are continuing to adjust supply chains. As international businesses prioritize resilience and sustainability, we can expect to see more diversified sources of foreign investment in the region.

“The diversification of investment sources can help economies reduce their vulnerability to international economic and geopolitical shocks.”

Services Expand Further While Manufacturing Investments Slip

Foreign direct investment in Latin America in the service industries has now surpassed manufacturing. Throughout 2025, more than half of all FDI went to service industries like financial services, digital technologies, logistics, telecommunications, and business process outsourcing (BPO). Strong investment activity in this sector isn’t going to slow down as companies continue to expand their digital transformation initiatives and invest in knowledge-based industries throughout Latin America. Latin America has a highly educated workforce that will allow many countries to support these types of business operations.

Global manufacturing investments slowed in Latin America during 2025. Some of the headwinds impacting this sector include:

* Increased cost of financing

* Weaker global industrial demand

* Uncertainty around international trade

* Delayed capital spending decisions

Many countries throughout Latin America are still prioritizing manufacturing within their investment promotion strategies. Nations like Mexico, Costa Rica, Brazil, and the Dominican Republic will continue to receive investment from companies looking for world-class manufacturing and distribution hubs.

Extractive industries experienced moderate growth during 2025. Mining, energy development, and other critical mineral projects will become increasingly important as demand ramps up for natural resources used in renewable energy, EVs, batteries, and other advanced technologies.

Preparing for the Future: How Latin American Countries Can Attract and Retain Investment

Although foreign direct investment in Latin America only grew by 1.7% this year, there are still actions governments can take to make their countries more attractive destinations for multinational corporations. Public policies should focus on:

* Aligning trade policy with investment promotion objectives

* Industrial diversification

* Encouraging workforce development

* Promoting regional economic integration

* Upgrading existing infrastructure

* Innovation and technology adoption

By aligning trade policy, industrial policy, and investment promotion, governments can help ensure that foreign capital benefits the economy for many years. For example, countries that successfully attract auto manufacturers should support policies that encourage parts production, workforce training, and technologies that improve competitiveness over the long-term.

Regional economic integration was another major theme discussed in Latin America FDI 2025. By strengthening commercial ties with neighboring countries, Latin American nations can stimulate regional demand while insulating themselves from geopolitical shocks.

Looking forward, countries that develop supportive policies, invest in their workforce, and upgrade infrastructure will be best suited to attract future foreign direct  investment in Latin America. If governments work to create a stable and transparent business environment that also promotes sustainable business practices, they will give themselves a major advantage over regional rivals.

“As international investment slows globally, countries that build strong brands around sustainable investment practices will enjoy first-mover advantages in the years ahead.”

Final Thoughts

While foreign direct investment in Latin American activities slowed due to global economic uncertainty, global businesses still invested nearly US$194 billion into the region. Brazil and Mexico will continue attracting the majority of foreign capital, but nations like Chile, Costa Rica, Colombia, Peru, the Dominican Republic, and Guyana are making meaningful strides of their own.

FAQs

FDI into Latin America grew by 1.7% during 2025. Throughout the year, almost US$194 billion in new foreign direct investment flowed into Latin America.

Brazil attracted 40% of foreign direct investment into Latin America during the year.

Approximately 22% of all FDI inflows going to Latin America were captured by Mexico.

While investment into manufacturing decreased in 2025, the services sector continues to experience strong growth in Latin America.

Latin America attracted diversified sources of foreign direct investment during 2025. While the United States still originated the most investment into Latin America, European investors increased their investments into the region.

 

 

 

 

 

FDI inflows in Mexico and Central America rebounded 30% to 42 billion dollars

The largest economy in the region, Mexico, recorded an increase in FDI of only 13%, to 32 billion dollars.  This made the country the second largest recipient in the subregion, behind Brazil.

However, the number of FDI greenfield projects announced in the country, an indicator of future investment plans, increased by 43% compared to 2020.

The greatest leap occurred in information and communication technologies. The Chinese giant Huawei, for example, announced that it would open a $4.5 billion cloud data center in Mexico.

With new investments in special economic zones, foreign direct investment to Costa Rica returned to pre-pandemic levels, nearly doubling to $3.2 billion.

In Guatemala, FDI reached a record level of 3.5 billion dollars.

FDI in the Caribbean increased by 39% to 3.8 billion dollars

The growth of external investment drove the rebound in FDI in the Caribbean economies. The Dominican Republic was the largest recipient of foreign direct investment to the region.

The island country saw its FDI increase by 21% to 3.1 billion dollars. Flows increased in mining, financial services, and special economic zones that contain manufacturing plants.

Main FDI trends by sector in the region

The Latin American and Caribbean region saw a general increase in cross-border mergers and acquisitions. Although the number increased by 49% to 244 operations, the total value of net sales (8 billion dollars) was practically unchanged from the previous year.

The services sector posted the largest increase in net sales, up 12%, to $6.4 billion, mainly in the financial and energy supply industries.

Announced regional investments increased by 16%, with most commitments going to the automotive, information and communication, and extractive industries.

The value of international project financing deals announced in the region doubled, exceeding pre-pandemic levels. Large transport infrastructure projects, especially in Brazil, and mining and renewable energy activities throughout the region were the biggest contributors to this rebound in levels of foreign direct investment.