Foreign direct investment in Mexico could exceed $36 billion this year, surpassing the “historic” figure of the previous year, Mexico’s Treasury Secretary Rogelio Ramírez de la O recently said.

“Preliminary data on investment announcements indicate that this figure may be exceeded this year. In the future, these new investments will lead to the consolidation and emergence of new industries in the country. We have witnessed an increase in Mexico’s share of US imports, thus becoming the main trading partner. As Mexico positions itself in the global environment, we recognize the existence of areas of opportunity that the government is actively addressing,” said the Treasure Secretary.

He also added that in the last year, the boost to public investment attracted greater private investment since, in 2023 alone, private investment grew around 20% annually, the highest growth rate since 1996.

In 2023, a record flow of foreign direct investment in Mexico was recorded for 36.058 billion dollars; However, new investments had their second-worst performance since 2006, when the Ministry of Economy began to publish records of this data.

A large portion of recent foreign direct investment in Mexico is reinvestment

According to agency data directed by Raquel Buenrostro, at the end of 2023, 4.817 billion dollars was reported for new foreign direct investment in Mexico, representing 13% of the total FDI captured in 2023.

The arrival of FDI to Mexico means there are positive expectations and confidence in the country on the part of national and foreign investors despite the current electoral situation.

In 2024, Mexico and the United States will hold presidential elections, often generating uncertainty for companies and investors.

For this year, it is estimated that around 38 billion dollars of foreign investment will arrive in the country. “If it were not an election year, the figure of foreign direct investment in Mexico could rise to 41,000 million,” says Gabriela Siller, director of financial economic analysis at Banco Base.

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Where foreign direct investment in Mexico is landing

Mexico’s vibrant economy and strategic location in North America make it a prime foreign direct investment (FDI) target. But where exactly is this foreign money flowing? Let’s dive into the sectors that consistently capture the most FDI in Mexico.

The Manufacturing Powerhouse

The undisputed champion is the manufacturing sector, boasting a staggering 47.6% share of Mexico’s total foreign direct investment. The country’s free trade agreements, like the USMCA, grant manufacturers easy access to massive markets like the United States and Canada. This, coupled with a skilled workforce and competitive labor costs, makes Mexico a dream location for companies looking to establish or expand production facilities. Mexico’s manufacturing sector is a magnet for foreign direct investment, but within this broad category, there are specific industries that stand out:

Automotive: This is the undisputed champion, with major international car manufacturers setting up shop to produce vehicles, parts, and accessories. Mexico’s free trade agreements and competitive labor costs make it an ideal location for auto production.

Aerospace:  The Mexican aerospace industry is experiencing significant growth, attracting FDI in aircraft parts manufacturing and maintenance facilities. The skilled workforce and proximity to the US market contribute to this sector’s attractiveness.

Electronics:  Foreign companies invest in manufacturing electronic components, devices, and appliances in Mexico. This industry benefits from a skilled workforce and established supply chains.

Medical Devices:  The growing healthcare sector in Mexico and globally fuels FDI in medical device manufacturing. The cost advantages and proximity to the US market attract companies.

Machinery and Equipment:  Foreign investment flows into producing machinery and equipment used in various industries,  taking advantage of Mexico’s manufacturing infrastructure and skilled labor pool.

These are just some of the leading manufacturing sub-sectors attracting foreign direct investment in Mexico. The specific mix of industries can vary depending on factors like global economic trends and technological advancements.

Financial Services on the Rise

The financial services sector is coming in second, attracting a solid 14.6% of foreign direct investment in Mexico. The country’s growing middle class and expanding economy present a lucrative opportunity for foreign banks, insurance companies, and investment firms to grow their businesses internationally. The government’s recent efforts to modernize the financial sector by easing regulations have further spurred foreign investment. The Mexican government has implemented several measures to make the financial services sector more attractive to foreign investors:

Streamlined Licensing:  The process for obtaining licenses to operate in the financial sector has been streamlined, reducing bureaucracy and expediting entry for foreign firms.

Relaxed Ownership Restrictions:  In some areas, the government has loosened restrictions on foreign ownership of financial institutions. This allows foreign companies to have a more significant stake in Mexican banks, insurance companies, and investment firms.

Focus on Fintech:  The government recognizes the potential of financial technology (fintech) and has implemented regulations that encourage innovation in this space. This creates an environment where foreign fintech companies can thrive.

Promoting Competition:  Measures have been taken to increase competition within the financial sector. This benefits foreign investors by creating a more level playing field and offering a more comprehensive range of opportunities.

Harmonization with International Standards:  Mexico is working towards aligning its financial regulations with international standards. This fosters greater transparency and predictability for foreign investors.

Trade: A Gateway to the Americas

Mexico’s strong trade infrastructure positions it as a crucial gateway to the Americas. This is reflected in the trade sector’s 7.5% share of FDI. Foreign companies are drawn to Mexico’s network of free trade zones and its strategic location bordering the United States. This allows them to efficiently import raw materials, manufacture goods, and export them to major markets with minimal trade barriers.

Mining Unearths Investment Potential for Foreign Direct Investment in Mexico

Mexico’s rich endowment of natural resources makes the mining sector a magnet for FDI, capturing 5.9% of the total. Foreign companies invest in extracting minerals like silver, copper, and gold, contributing significantly to Mexico’s export revenue.

While Mexican mining giants like Grupo Mexico and Industrias Peñoles are prominent players, a significant portion of investment in Mexico in the mining sector comes from foreign companies. Here’s a breakdown of the major foreign players:

Dominant Source: Canada

Canada is the undisputed leader in foreign investment for Mexico’s mining sector. Statistics show that around 75% of total foreign investment and 79% of exploration projects are from Canadian companies.

Some prominent examples include companies like First Majestic Silver Corp., Fortuna Silver Mines Inc., and Torex Gold Resources Inc., all heavily invested in exploring and extracting precious metals like silver and gold.

Other Major Players

United States: While less dominant than Canada, the United States holds a solid presence with companies like Freeport-McMoRan Inc., a leading producer of copper and gold, actively participating in Mexican mining projects.

Global Players: Several multinational corporations worldwide invest in Mexican mining. Some examples include Switzerland’s Glencore, a diversified mining and commodities trading company, and Mitsubishi Corporation from Japan, which has interests in various mining projects across Mexico.

Beyond the Leaders: Other Attractive Sectors for Foreign Direct Investment in Mexico

While these four sectors reign supreme, others are attracting growing interest. The tourism industry is a prime target with its beautiful beaches and rich cultural heritage. The government’s push to modernize infrastructure, including transportation networks, is also attracting foreign direct investment in Mexico’s construction and engineering sectors. Telecommunications, aerospace, and even renewable energy are areas with significant potential for future foreign investment.

Investing in Mexico’s Future

Mexico’s FDI landscape constantly evolves, with the government actively seeking to attract investments in sectors like advanced manufacturing, clean technology, and healthcare. By fostering a business-friendly environment and addressing concerns around policy stability, Mexico can solidify its position as a top destination for foreign direct investment.

Are you looking to invest in Mexico? LATAM FDI can conduct thorough research on your chosen sector to help you understand the regulatory landscape and seek guidance from local experts. With its strategic location, skilled workforce, and growing economy, Mexico presents a compelling opportunity for investors seeking a foothold in a dynamic and promising market.

In conclusion, Mexico is a beacon of opportunity for foreign direct investment across various sectors, driven by its vibrant economy, strategic location, and government initiatives to foster a conducive business environment. From the manufacturing powerhouse to the burgeoning financial services sector and trade to mining, Mexico offers diverse investment avenues with promising returns. As the country modernizes its infrastructure, embraces technological advancements, and prioritizes sectors like advanced manufacturing and clean technology, it further solidifies its position as a top destination for investors seeking long-term growth prospects. With expert guidance and a thorough understanding of the regulatory landscape, investors can confidently explore Mexico’s opportunities, contributing to its continued economic growth and development.

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In industrial site selection, few locations boast the dynamic mix of opportunities and challenges, like São Paulo, Brazil. As the largest city in Brazil and one of the most populous urban areas in the world, São Paulo serves as a central hub of commerce, industry, and culture. However, navigating the complexities of industrial site selection in São Paulo requires a nuanced understanding of various factors, ranging from accessibility and infrastructure to labor force availability and quality of life.

Accessibility and Proximity to Transportation

Situated in the southeastern region of Brazil, São Paulo enjoys a strategic location with access to major transportation networks, including highways, railways, ports, and airports. The city serves as a crucial transportation hub, connecting various regions within Brazil and facilitating international trade.

The Guarulhos International Airport, located in the Greater São Paulo area, is the busiest in Latin America, offering extensive air cargo services and facilitating the movement of goods to and from the city. Additionally, São Paulo’s well-developed highway system provides efficient connectivity to neighboring states and regions, enabling seamless industry logistics operations.

Proximity to transportation infrastructure is a critical factor in industrial site selection in São Paulo, as it influences the efficiency of supply chain operations, reduces transportation costs, and enhances accessibility to domestic and international markets. When evaluating potential industrial sites in São Paulo, businesses must prioritize locations with convenient access to transportation networks to optimize their logistical capabilities and streamline operations.

Labor Force Availability and Skills

With a population exceeding 12 million inhabitants, São Paulo boasts a vast and diverse labor pool, offering a wide range of skills and expertise across various industries. The city’s robust and developed education system, which includes prestigious universities and technical institutes, contributes to developing a skilled workforce capable of meeting the demands of modern industries.

However, despite the abundance of labor, businesses in São Paulo often face challenges related to skill shortages and mismatches between available talent and industry requirements. In specific specialized sectors, such as technology and engineering, recruiting qualified professionals can be competitive, necessitating strategic workforce planning and talent development initiatives.

When selecting an industrial site in São Paulo, businesses should assess the local labor market dynamics, identify skill gaps, and implement strategies to attract, retain, and develop talent effectively. Collaboration with educational institutions, vocational training programs, and workforce development agencies can help address skill shortages and cultivate a skilled workforce tailored to specific industry needs.

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Infrastructure for Industry

São Paulo boasts a robust infrastructure network supporting diverse industries, including manufacturing, technology, finance, and services. The city has numerous industrial parks, business districts, and specialized zones designed to accommodate different types of businesses and facilitate their operations.

Critical infrastructure assets in industrial site selection in São Paulo include industrial clusters, logistics centers, and technology parks, each offering unique advantages for businesses seeking to establish a presence in the city. These infrastructure developments are supported by modern utilities, telecommunications networks, and advanced facilities, ensuring reliable access to essential services and amenities.

When evaluating potential industrial sites in São Paulo, businesses should consider the availability and quality of infrastructure, including utilities, transportation facilities, and telecommunications infrastructure. Investing in locations with well-developed infrastructure can enhance operational efficiency, reduce costs, and support long-term growth and competitiveness.

Costs and Tax Regime for Foreign Direct Investors

Cost considerations are crucial in industrial site selection, particularly for foreign direct investors seeking to establish or expand their presence in São Paulo. While the city offers numerous opportunities for business growth and expansion, it is also known for its high operating costs, including real estate, labor, utilities, and taxes.

Brazil’s complex tax regime, characterized by multiple layers of taxation and bureaucratic procedures, presents challenges for foreign investors navigating the regulatory landscape. Understanding the local tax laws, incentives, and exemptions is essential for businesses looking to optimize their financial performance and mitigate tax liabilities effectively.

The Brazilian government has recently implemented various initiatives to attract foreign investment and foster economic development, including tax incentives for specific industries, special economic zones, and streamlined regulatory processes. Businesses evaluating industrial sites in São Paulo should explore these incentives and engage with local authorities to leverage available opportunities and minimize costs.

Market Access

As the economic powerhouse of Brazil, São Paulo offers unparalleled access to domestic and international markets, making it an attractive destination for businesses seeking to expand their market presence. The city is a major commercial center, hosting headquarters of multinational corporations, financial institutions, and leading industry players across various sectors.

Moreover, São Paulo benefits from its proximity to other major cities and industrial hubs in Brazil, facilitating interregional trade and collaboration. The city’s strategic location within South America further enhances its market access, providing connectivity to neighboring countries and global markets through established trade routes and transportation networks.

When selecting an industrial site in São Paulo, businesses should assess the potential for market expansion and growth, considering factors such as proximity to target markets, distribution channels, and competitive landscape. Establishing a presence in São Paulo can give businesses access to a vast consumer market, diverse customer base, and lucrative business opportunities.

Supply Chain Integration

Given the city’s major manufacturing and distribution hub role, efficient supply chain management is critical for businesses operating in São Paulo. The seamless integration of supply chain activities, including procurement, production, warehousing, and distribution, is essential for optimizing operational efficiency and meeting customer demands effectively.

São Paulo offers a well-developed logistics infrastructure, including transportation networks, warehousing facilities, and distribution centers, supporting the smooth flow of goods and materials throughout the supply chain. Businesses can leverage these infrastructure assets to enhance supply chain visibility, reduce lead times, and minimize inventory costs.

When selecting an industrial site in São Paulo, businesses should consider proximity to suppliers, customers, and transportation hubs to optimize supply chain performance. Collaborating with logistics partners and adopting innovative technologies, such as predictive analytics and automation, can further improve supply chain resilience and agility in the dynamic business environment of industrial site selection in São Paulo.

Quality of Life

Beyond business considerations, the quality of life in São Paulo plays a significant role in industrial site selection, influencing employee satisfaction, retention, and productivity. As one of the world’s largest and most populous cities, São Paulo offers a vibrant urban lifestyle characterized by cultural diversity, entertainment options, and recreational activities.

However, São Paulo also faces challenges that can impact residents’ and workers’ overall quality of life. Businesses must balance proximity to urban amenities and the availability of green spaces, recreational facilities, and quality housing options when selecting industrial sites in São Paulo.

Investing in employee well-being and work-life balance can increase employee morale, engagement, and performance, ultimately driving business success and competitiveness. Businesses should consider factors such as access to healthcare, education, and cultural amenities when evaluating potential industrial sites in São Paulo to create a conducive work environment for their employees.

Conclusion

In conclusion, industrial site selection in São Paulo, Brazil, demands a multifaceted approach considering various factors, including accessibility, labor force availability, infrastructure, costs, market access, supply chain integration, and quality of life. By carefully evaluating these variables and identifying optimal locations that align with their business objectives, companies can position themselves for success in one of Latin America’s most dynamic and competitive markets. With its strategic location, robust infrastructure, and vibrant economy, São Paulo offers abundant opportunities for businesses seeking to thrive in the global marketplace.

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Chile, a land of diverse landscapes and rich natural resources, has become a magnet for foreign direct investment (FDI) across various sectors. With a stable economy, favorable business climate, and strategic geographical location, Chile offers lucrative opportunities for investors seeking to capitalize on its potential. In this blog post, we’ll explore the key sectors driving foreign investment in Chile and review the countries contributing to this investment influx.

Mining Industry: The Backbone of Chile’s Economy

The mining sector has long been the cornerstone of Chile’s economy, contributing significantly to its GDP and export earnings. Chile is the world’s leading producer of copper, accounting for a substantial portion of global production. Foreign investment in Chilean mining primarily targets copper extraction but extends to other minerals such as lithium, gold, and silver.

Chile is home to several major mining companies, each specializing in extracting and producing various minerals. Some of the key foreign mining companies operating in Chile include:

• BHP: BHP, formerly known as BHP Billiton, is one of the largest mining companies globally and has significant operations in Chile. BHP’s operations in Chile include the Escondida copper mine, the world’s largest copper-producing mine, and the Spence and Cerro Colorado copper mines. BHP primarily produces copper but also extracts by-products such as silver and gold.
• Anglo American: Anglo American is a multinational mining company with operations across the globe, including Chile. In Chile, Anglo-American operates the Los Bronces and El Soldado copper mines. Los Bronces is one of the largest copper mines in Chile, producing copper concentrate and cathodes.
• Freeport-McMoRan: Freeport-McMoRan is another major player in the global mining industry with operations in Chile. The company’s principal asset in Chile is the El Abra copper mine in the Antofagasta region. El Abra produces copper cathodes through solvent extraction and electrowinning.
• Glencore: Glencore is a diversified mining company operating in multiple commodities, including copper. It operates various mining enterprises worldwide. In Chile, Glencore owns and operates the Collahuasi copper mine, one of the largest copper mines in the world. Collahuasi produces copper concentrate, cathodes, and by-products like molybdenum and silver.

These major foreign mining companies play a crucial role in Chile’s economy, contributing significantly to the country’s GDP and export earnings by extracting and producing copper and other minerals.

Renewable Energy: Tapping into Sustainable Resources

Chile boasts abundant renewable energy resources, including solar, wind, and hydroelectric power. The government has actively promoted foreign investment in Chile in renewable energy to diversify the country’s energy mix and reduce dependence on fossil fuels. Foreign investors, drawn by Chile’s vast renewable energy potential and supportive regulatory framework, have been pouring capital into solar and wind energy projects nationwide. European countries like Spain and Germany, as well as the United States and China, are among Chile’s leading renewable energy investors.

Chile has seen significant growth in its renewable energy sector in recent years, attracting foreign investment from domestic and international companies. Here are some of the foreign companies in the renewable energy industry in Chile, along with the types of energy they produce:

• Enel Green Power Chile: Enel Green Power is a subsidiary of Enel, an Italian multinational energy company. It is one of the largest renewable energy producers in the country. The company produces electricity from various renewable sources, including solar, wind, and hydroelectric power. It operates several solar and wind farms across Chile, contributing to its renewable energy capacity.
• AES Gener: AES Gener is a subsidiary of AES Corporation, a global energy company headquartered in the United States. It is one of the largest power generators in Chile, focusing on renewable energy and natural gas. The company operates hydropower plants and wind farms in Chile, contributing to the country’s renewable energy mix.
• Mainstream Renewable Power: Mainstream Renewable Power is an international renewable energy company that operates in Chile. The company develops and operates renewable energy projects, including wind farms and solar parks. Mainstream Renewable Power has invested in several renewable energy projects in Chile, contributing to the country’s clean energy transition.
• SunPower: SunPower is a global solar energy company based in Chile. The company designs, manufactures, and installs solar panels and systems. SunPower has completed several solar projects in Chile, harnessing the country’s abundant sunlight to generate clean electricity.
• Enercon: Enercon is a German wind turbine manufacturer and renewable energy developer based in Chile. The company has supplied wind turbines for various wind farms nationwide and contributes to Chile’s wind energy sector by providing reliable wind power technology and expertise.

These companies, among others, are driving the growth of the renewable energy industry in Chile, contributing to the country’s efforts to increase its share of clean and sustainable energy in the national electricity grid.

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Agriculture: Cultivating Growth Opportunities

Chile’s diverse climate and fertile soils make it an ideal destination for agricultural investment. The country is a major exporter of fruits, vegetables, wine, and seafood and has a reputation for high-quality agricultural products. Foreign investors from Europe and North America have invested in Chilean agriculture, establishing large-scale farms, vineyards, and agribusiness ventures. These investments contribute to agricultural productivity and exports and drive innovation and technology adoption in the sector.

Several foreign companies have made significant investments in Chile’s agricultural sector, capitalizing on the country’s favorable climate, fertile soils, and export-oriented agriculture industry. Here are some foreign companies that have invested in Chile’s agricultural sector:

• Driscoll’s: Driscoll’s is a leading American berry company with substantial investments in Chile’s industry. The company grows strawberries, blueberries, raspberries, and blackberries in Chile for domestic and international markets.
• Dole Food Company: Dole Food Company, headquartered in the United States, operates in Chile’s fruit industry. The company produces and exports a variety of fruits, including bananas, pineapples, and citrus fruits, from its farms in Chile.
• Fresh Del Monte Produce: Fresh Del Monte Produce, another American multinational company, invests in Chile’s fruit production sector. The company cultivates and exports a range of fresh fruits, including pineapples, grapes, and melons, from its farms in Chile.
• Hass Avocado Board: The Hass Avocado Board, representing avocado growers and importers in the United States, has facilitated investments in Chile’s avocado industry. American companies have established avocado orchards in Chile to meet the growing demand for Hass avocados in international markets.
• Arysta LifeScience: Arysta LifeScience, a Japanese agrochemical company, has invested in Chile’s agricultural inputs sector. The company provides crop protection products, seeds, and bio-stimulants to Chilean farmers, supporting the country’s agricultural production.
• Netafim: Netafim, an Israeli company specializing in drip irrigation systems, has invested in Chile’s irrigation technology sector. The company provides advanced irrigation solutions to improve Chilean agriculture’s water efficiency and crop yields.
• AgriNurture Inc. (ANI): AgriNurture Inc., a Filipino agribusiness company, has invested in Chile’s fruit and vegetable export industry. The company sources fresh produce from Chilean farmers and exports them to international markets, including Asia and the Middle East.

These foreign companies, among others, have played a significant role in developing and expanding Chile’s agricultural sector, contributing to the country’s position as a leading exporter of fresh fruits, berries, and other agricultural products on the global stage.

Technology: Fostering Innovation and Entrepreneurship

Chile has emerged as a regional hub for technology and innovation, attracting startups, venture capital, and multinational tech companies. Santiago, the capital city, is home to a thriving tech ecosystem fueled by government support, entrepreneurial talent, and access to capital. Foreign investment in Chile’s technology sector primarily targets startups, software development, fintech, and e-commerce ventures. Countries like the United States, Israel, and Spain are vital contributors to Chile’s tech ecosystem, providing funding, expertise, and market access to local startups.

Chile’s technology startup ecosystem has been increasing, attracting innovative companies worldwide. While many startups in Chile are homegrown, several crucial foreign-based technology startups operate in the country. Here are some of them:

• Rappi: Rappi, a Colombian on-demand delivery startup, has expanded its operations to Chile and other Latin American countries. The platform offers delivery services for groceries, meals, medications, and other goods, providing convenience and accessibility to users in Chilean cities.
• Nubank: Nubank, a Brazilian fintech company, has entered the Chilean market with its digital banking and financial services offerings. Nubank provides credit cards, banking accounts, and financial management tools through its mobile app, catering to the needs of consumers in Chile.
• Cabify: Cabify, a Spanish ride-hailing company, operates in Chile and offers transportation services through its platform. Cabify provides ridesharing and private hire vehicle services, allowing users to book rides conveniently and securely in Chilean cities.
• Cornershop: Cornershop, a Chilean-founded grocery delivery startup, was acquired by Uber in 2020 but continues to operate independently in several Latin American countries, including Chile. Cornershop connects users with personal shoppers who fulfill and deliver grocery orders from local stores and supermarkets.
• Beat: Beat, a Greek ride-hailing company, expanded its operations to Chile and other Latin American markets. The platform offers transportation services through its mobile app, providing users with options for ridesharing, taxis, and private hire vehicles in Chilean cities.

These foreign-based technology startups and local counterparts contribute to Chile’s vibrant and dynamic startup ecosystem, driving innovation, entrepreneurship, and digital transformation across various sectors.

Tourism: Exploring Chile’s Natural Wonders

Chile’s breathtaking landscapes, including the Atacama Desert, Patagonia, and Easter Island, draw millions of tourists worldwide each year. The tourism sector has witnessed growing foreign investment, particularly in hospitality infrastructure, tour operators, and adventure tourism ventures. Foreign investors, attracted by Chile’s tourism potential and increasing visitor numbers, invest in hotels, resorts, and ecotourism projects nationwide. European countries, the United States, and neighboring Latin American nations are among the top sources of foreign investment in Chilean tourism.

Several foreign companies have made significant investments in Chile’s tourism sector, capitalizing on the country’s diverse natural landscapes, cultural attractions, and growing tourism industry. Here are some foreign companies that have invested in Chile’s tourism sector:

• Accor: Accor, a French multinational hospitality company, has invested in Chile’s hotel and resort industry. The company operates several hotels and resorts in Chile under various brands, including Novotel, Ibis, and Pullman, catering to business and leisure travelers.
• Hilton: Hilton Worldwide Holdings Inc., an American multinational hospitality company, is in Chile’s hospitality sector. The company operates luxury and upscale hotels in Santiago and other key tourist destinations, offering accommodations and services to travelers.
• Marriott International: Marriott International, an American hospitality company, has invested in Chile’s hotel market. The company operates hotels and resorts in Chile under its brands, such as Marriott Hotels, Sheraton, and Courtyard by Marriott, providing lodging options for tourists and business travelers.
• InterContinental Hotels Group (IHG): IHG is a British multinational hospitality company in Chile’s hospitality industry. The company operates hotels in Santiago and other cities under its brands, such as InterContinental, Holiday Inn, and Crowne Plaza, offering accommodation and services to visitors.
• Wyndham Hotels & Resorts: Wyndham Hotels & Resorts, an American hospitality company, has investments in Chile’s hotel sector. The company operates hotels and resorts in Chile under brands such as Wyndham Grand, Ramada, and Howard Johnson, providing lodging options for tourists and travelers.
• AccorInvest: AccorInvest, a subsidiary of Accor, is a leading hotel investor and operator with properties in Chile. The company owns and manages hotels across different segments, including economy, midscale, and upscale, contributing to Chile’s hospitality industry.
• Best Western Hotels & Resorts: Best Western Hotels & Resorts, an American hotel brand, has a presence in Chile’s hotel market. The company operates hotels in Santiago and other cities in Chile under its brand, offering accommodation and services to tourists and travelers.
• Radisson Hotel Group: Radisson Hotel Group, a global hospitality company, invests in Chile’s hotel sector. The company operates hotels in Santiago and other cities under its brands, such as Radisson Blu, Radisson RED, and Park Inn by Radisson, catering to the needs of business and leisure travelers.

These foreign companies, among others, have significantly invested in Chile’s tourism sector, contributing to developing infrastructure, accommodation, and services to support the country’s growing tourism industry.

Review of Sources of Foreign Investment in Chile

While Chile attracts investment from diverse countries, certain nations stand out as primary sources of FDI. The United States, as a longstanding economic partner, plays a significant role in foreign investment in Chile’s FDI landscape, particularly in sectors such as mining, technology, and finance. European countries, including Spain, Germany, and the United Kingdom, are also prominent investors in Chile, with interests spanning renewable energy, agriculture, and tourism. Additionally, neighboring Latin American countries, such as Brazil and Argentina, contribute to Chile’s FDI inflows, driven by regional integration efforts and market synergies.

In conclusion, Chile offers a compelling investment destination across multiple sectors, driven by its abundant natural resources, supportive business environment, and strategic location. With foreign investment flowing into crucial industries such as mining, renewable energy, agriculture, technology, and tourism, foreign investment in Chile is poised for sustained economic growth and development in the years to come.

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In the dynamic global trade landscape, South American ports serve as pivotal points connecting continents and facilitating the movement of goods essential for economies worldwide. With their diverse geography and abundant natural resources, South American ports boast several ports that play crucial roles in international trade. Among the busiest South American ports are Itaqui, Tubarão, Santos, Callao, Cartagena, San Lorenzo-San Martin, and Paranaguá. These South American ports stand out as vital gateways shaping the region’s economic landscape.

Itaqui Port, Brazil: Gateway to Northern Brazil

Located in the state of Maranhão, Itaqui Port serves as a crucial gateway for Northern Brazil’s economic activities. With a staggering throughput of approximately 200 million tons annually, Itaqui handles a diverse range of commodities, including iron ore, soybeans, grains, and petroleum products. Its extensive wharf infrastructure and advanced container handling facilities ensure efficient operations, driving regional growth and fostering international trade relationships.

Tubarão Port, Brazil: A Hub for Iron Ore

Tubarão Port, situated in Vitória, Espírito Santo, has emerged as a global hub for iron ore exports. Handling over 100 million tons annually, Tubarão’s extensive wharf infrastructure accommodates large vessels, while its advanced container handling technology streamlines operations. Apart from iron ore, Tubarão also handles coal and grains. This contributes significantly to Brazil’s export-driven economy and strengthens its position in the global market.

San Lorenzo-San Martin Port, located in Santa Fe Province, Argentina, emerges as a prominent grain export powerhouse among South American ports. Handling approximately 40 million tons of cargo annually, San Lorenzo-San Martin facilitates the export of grains, soybeans, and petroleum products. Its modern infrastructure and efficient container handling facilities support Argentina’s agricultural exports, contributing to economic prosperity and global competitiveness.

Paranaguá Port, Brazil: Gateway to Southern Brazil

Paranaguá Port, situated in the state of Paraná, Brazil, serves as a vital gateway to Southern Brazil’s economic activities. With an annual throughput exceeding 50 million tons, Paranaguá handles a diverse range of commodities, including grains, soybeans, sugar, and containerized goods. Its extensive wharf infrastructure and advanced container handling equipment ensure efficient operations, driving regional development and enhancing Brazil’s connectivity with global markets.

South American ports are indispensable in the global trade network, serving as vital conduits for exchanging goods and commodities. From the bustling terminals of Itaqui to the iron ore hubs of Tubarão and from Callao’s maritime gateway to Cartagena’s strategic hub, these South American ports are linchpins in their respective countries’ economies. They facilitate exporting agricultural products, minerals, and manufactured goods, driving economic growth and fostering international partnerships. Grain export powerhouses, such as San Lorenzo-San Martin and Paranaguá, contribute to the region’s agricultural prosperity. These South American ports collectively form a diverse and interconnected network that enhances the continent’s global competitiveness and integration. Their continued development and efficiency are paramount for sustaining economic momentum and ensuring South American ports’ prominence in the ever-evolving landscape of international trade.

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Callao Port, Peru: Gateway to the Pacific

Located in Callao, Lima, Callao Port is one of the most important South American ports and serves as Peru’s primary maritime gateway to the Pacific Ocean. Callao, which handles approximately 25 million tons of cargo annually, is crucial in facilitating Peru’s trade with the world. Its modern infrastructure and efficient container-handling facilities support handling minerals, agricultural products, and containerized cargo, contributing to Peru’s economic development and global integration.

Cartagena Port, Colombia: Strategic Maritime Hub

Situated in Cartagena, Bolívar, Colombia, Cartagena Port emerges as a strategic maritime hub in Colombia’s trade network. With an annual throughput exceeding 50 million tons, Cartagena handles diverse commodities such as petroleum, coal, coffee, and containerized goods. Its extensive wharf infrastructure and advanced container handling equipment ensure smooth operations, driving economic growth and bolstering Colombia’s position as a key player in international trade.

San Lorenzo-San Martin Port, Argentina: Grain Export Powerhouse

San Lorenzo-San Martin Port, located in Santa Fe Province, Argentina, emerges as a prominent grain export powerhouse among South American ports. Handling approximately 40 million tons of cargo annually, San Lorenzo-San Martin facilitates the export of grains, soybeans, and petroleum products. Its modern infrastructure and efficient container handling facilities support Argentina’s agricultural exports, contributing to economic prosperity and global competitiveness.

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Paranaguá Port, Brazil: Gateway to Southern Brazil

Paranaguá Port, situated in the state of Paraná, Brazil, serves as a vital gateway to Southern Brazil’s economic activities. With an annual throughput exceeding 50 million tons, Paranaguá handles a diverse range of commodities, including grains, soybeans, sugar, and containerized goods. Its extensive wharf infrastructure and advanced container handling equipment ensure efficient operations, driving regional development and enhancing Brazil’s connectivity with global markets.

South American ports are indispensable in the global trade network, serving as vital conduits for exchanging goods and commodities. From the bustling terminals of Itaqui to the iron ore hubs of Tubarão and from Callao’s maritime gateway to Cartagena’s strategic hub, these South American ports are linchpins in their respective countries’ economies. They facilitate exporting agricultural products, minerals, and manufactured goods, driving economic growth and fostering international partnerships. Grain export powerhouses, such as San Lorenzo-San Martin and Paranaguá, contribute to the region’s agricultural prosperity. These South American ports collectively form a diverse and interconnected network that enhances the continent’s global competitiveness and integration. Their continued development and efficiency are paramount for sustaining economic momentum and ensuring South American ports’ prominence in the ever-evolving landscape of international trade.

The Brazilian economic studies center Getúlio Vargas Foundation (FGV) released the results of the Economic Climate Index (ICE) of Latin America, which positions Paraguay as South America’s most favorable business climate.

The study indicates that, in general, the business climate in Latin America reached its best level in the last 11 years in the first quarter of 2024, according to the EFE news agency.

This is its best level since the first quarter of 2013 (109.8 points). Furthermore, this was the first time since 2018 that the Index remained within the so-called favorable zone (more than 100 points) for two consecutive quarters.

Brazilian numbers improve, but Paraguay boasts the best business climate in South America

According to the FGV, the improvement in the first quarter was driven by the good evaluation of Brazil, the largest regional economy, whose indicator rose from 100 points in the last quarter of 2023 to 114.6 in the first quarter of 2024.

The business climate improved in all countries in the region except Mexico, where it fell 27.5 units to 114 points, and Chile, where it fell 7.9 units to 72.7 points.

Paraguay tops the list with (154.6 points), followed by Uruguay (139.4 points) and Brazil (114.6 points).

The Index highlights that the other countries are in the zone considered unfavorable (below 100 points) despite the increase in their indicators: Peru, with 85.3 points; Colombia, with 72.8 points; Chile, with 72.7 points; and Ecuador, with 42.2 points.

Argentina’s indicator rose from 26.1 to 41.7 points with President Javier Milei’s first economic measures, and Bolivia’s indicator remained in last place, with 20.8 points.

The study points out the improvement in indicators. It reflects the upward revision of the projections for GDP growth in 2024 in three of the countries in the region: Uruguay, Chile, and Peru.

According to the new projections, Paraguay will grow the most this year, with a projected expansion of 3.9%, followed by Uruguay (3.2%) and Mexico (2.8%).

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Paraguay: South America’s Rising Star for Business?

While giants like Brazil and Argentina often dominate headlines about South American economies, Paraguay is quietly emerging as a potential frontrunner for attracting new businesses. Let’s explore the factors that contribute to making Paraguay the country with the best business climate in South America.

Economic Sectors and Industries

Paraguay boasts a diverse economic landscape. Agriculture remains a significant player, with soybeans, corn, and beef as major exports. However, the manufacturing sector is experiencing a boom, particularly in food processing, textiles, and auto parts. The Paraguayan maquiladora industry holds significant economic promise, driving job creation, exports, and economic diversification. Here’s a breakdown of its importance:

• Export Growth: Maquiladoras typically focus on assembling imported components for re-export. This translates to increased exports for Paraguay, generating foreign currency and boosting the overall economic activity.
• Economic Diversification: Paraguay’s economy has traditionally been heavily reliant on agriculture. The maquiladora industry offers an opportunity to diversify the economy, reduce dependence on agricultural products, and foster growth in the manufacturing sector.
• Strategic Trade Partnerships: Paraguay’s free trade agreements with Brazil and Argentina, particularly for auto parts, incentivize maquiladoras to set up shop in the country. This allows them to export finished goods to these large markets without tariffs, creating a win-win situation for Paraguay and the established manufacturers in neighboring countries.

Workforce Composition

Paraguay has a growing young population with a median age of around 30. This translates to a readily available workforce that is eager to learn and adapt and is one of the reasons that Paraguay boasts the best business climate in South America. The education system is also undergoing reforms to equip graduates with the skills needed to thrive in the modern workplace. This combination of a youthful population and a focus on education positions Paraguay for future solid economic growth.

Government Policies for Business

The Paraguayan government has actively implemented policies to attract foreign investment and to create the best business climate in South America. These include:

• Low Tax Regime: Paraguay offers one of the most competitive tax rates in the region, with a corporate income tax of only 10%.
• Free Trade Agreements: Paraguay enjoys access to major markets through participation in trade agreements with Mercosur (Southern Common Market) and the European Union.
• Streamlined Business Registration: The government has simplified the business registration process, making it faster and easier for entrepreneurs to start.
• Investment Incentives: Paraguay offers tax breaks and other incentives for businesses operating in specific sectors, such as manufacturing and export-oriented industries.

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Geographic Advantage

Paraguay’s central location within South America offers a distinct logistical advantage. Businesses can leverage this position to efficiently access and distribute goods throughout the continent. Additionally, the abundant hydropower resources from the Itaipu Dam provide a reliable and relatively inexpensive industry energy source.

Paraguay’s combination of a growing economy, business-friendly policies, and strategic location makes it home to the best business climate in South America. While challenges remain, the Paraguayan government’s commitment to creating a favorable business environment suggests that this South American nation has the potential to become a significant economic player in the coming years.

Is Paraguay right for your business?

Carefully consider your specific industry’s needs and research the current market landscape in Paraguay. Consulting with international trade and investment experts at LATAM FDI can also provide valuable insights. Paraguay might be the business location you’ve been searching for in South America.

In summary, Paraguay has firmly established itself as a top contender for business ventures within South America. With a diverse economic landscape, a young and educated workforce, and government policies to foster a favorable business environment, Paraguay offers significant opportunities for growth and expansion. As businesses evaluate potential markets, Paraguay’s reputation as the country with the best business climate in South America makes it a compelling choice for investment and strategic expansion initiatives.