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.