In recent years, nearshoring has emerged as a critical trend in global trade, driven in part by the pandemic. While much of the focus has been on Mexico due to its proximity to the United States, other Latin American countries such as Brazil, Chile, and Colombia also position themselves as attractive destinations for foreign investment in Latin America. According to JLL Global Consulting Services, the trend of nearshoring requires the development of hubs that offer logistical advantages and favorable economic and business conditions. These emerging markets could reshape the nearshoring landscape in Latin American foreign investment.

Mexico: The Main Beneficiary of Nearshoring

Nearshoring, a business strategy in which companies move production closer to their home countries, has significantly benefited Mexico. The country’s proximity to the U.S. and deep integration into North American logistics and manufacturing make it a prime destination for nearshoring initiatives. According to a JLL study, “Mexico has been the main beneficiary, placing its cities in a league of their own compared to other Latin American countries and Southeast Asia.”

Mexico’s strategic location, large economy, and established infrastructure make it a strong candidate for companies seeking to optimize their supply chains. The country acts as a hub for exports and a robust internal market. In addition to its manufacturing capacity, Mexico offers the advantage of cultural and economic alignment with the U.S., further enhancing its role as a nearshoring destination. However, Mexico is not the only Latin American country that can benefit from foreign investment in Latin America.

Brazil: The South American Giant

Due to its size, population, and economic prowess, Brazil is often called a continent within a continent. As the largest economy in Latin America, Brazil boasts a strong logistics network, a vast labor market, and a history of manufacturing. It has long been a global player in the agriculture, automotive, and technology sectors and is increasingly seen as a prime candidate for foreign investment in Latin America.

JLL’s analysis highlights Brazil’s potential, noting that nearshoring could boost its manufacturing exports by billions of dollars. However, given the country’s already well-established industrial base, the overall impact on its exports may not be as dramatic as in other countries. São Paulo, the country’s financial and industrial hub, is singled out as a critical destination for Latin American foreign investment. The city’s track record in attracting international businesses, strong logistics performance, and highly skilled labor force make it a pivotal player in Brazil’s nearshoring prospects.

Moreover, Brazil’s size and infrastructure development are significant advantages. In recent years, the country has invested heavily in transportation, ports, and highways, positioning itself as a logistics powerhouse in the region. Its role in global trade, particularly in the agricultural and manufacturing sectors, further underscores Brazil’s importance in foreign investment in Latin America.

Colombia: A Growing Industrial Base

While Colombia’s economy has traditionally been more focused on raw materials, the nearshoring trend offers the country an opportunity to diversify and expand its industrial base. According to JLL, Colombia could leverage nearshoring to create thousands of jobs in manufacturing, logistics, and administrative services, thus enhancing its role in foreign investment in Latin America.

Colombia can potentially attract significant foreign investment in Latin America, particularly in cities like Bogotá and Medellín. These urban centers benefit from a well-qualified labor force, competitive operating costs, and improving infrastructure. Bogotá, the country’s capital, is emerging as a business hub, with many multinational companies operating in the city. Medellín, once known for its turbulent past, has transformed into a center of innovation, technology, and manufacturing.

Colombia’s currency devaluation against the U.S. dollar also makes the country an attractive destination for Latin American foreign investment. Lower wages and a relatively skilled labor force provide cost advantages that can help international businesses reduce operational expenses. As Colombia continues to improve its business environment, it is likely to see increased interest from companies looking to nearshore their operations.

Chile: A Stable Business Environment

Chile has long been recognized for its political and economic stability, making it a prime destination for foreign investment in Latin America. JLL’s study points out that Chile offers one of Latin America’s most favorable business environments thanks to its transparency, low credit risk, and streamlined business procedures. The country’s commitment to democracy, rule of law, and fiscal responsibility has made it an attractive market for international companies.

Chile’s small but highly educated population and its reputation for transparency and good governance enhance its appeal as a nearshoring destination. The country is known for its ease of doing business and offers investors a clear legal framework, competitive tax incentives, and access to a stable economy. These factors position Chile as a strategic hub for companies looking to serve both Latin American and global markets through foreign investment in Latin America.

Conclusion: A Diversified Nearshoring Landscape

While Mexico remains the primary beneficiary of nearshoring, other Latin American countries such as Brazil, Chile, Colombia, and Costa Rica increasingly position themselves as attractive destinations for foreign investment in Latin America. Each country offers unique advantages, from Brazil’s economic scale and logistics potential to Chile’s stability and transparency, Colombia’s growing industrial base, and Costa Rica’s dynamic business ecosystem.

As nearshoring continues to evolve, these countries will likely see increased interest from companies looking to optimize their supply chains, reduce costs, and tap into new markets. By investing in infrastructure, improving business environments, and offering competitive incentives, Latin American nations can further strengthen their positions in the global landscape of Latin American foreign investment.