Foreign direct investment (FDI) continues to play a crucial role in shaping the economic landscape of Latin America and the Caribbean. In 2024, the region welcomed US$188.962 billion in FDI inflows, a promising 7.1% increase from the previous year, according to the Foreign Direct Investment in Latin America and the Caribbean 2025 report by the Economic Commission for Latin America and the Caribbean (ECLAC). This surge, however, is accompanied by significant shifts in investment patterns, offering both challenges and opportunities for the region.
Latin America and the Caribbean FDI Inflows
First, despite the encouraging uptick in overall FDI, the proportion of FDI inflows in 2024 to gross fixed capital formation and GDP dropped to 13.7% and 2.8%, respectively, lagging behind the 2010s averages of 16.8% and 3.3%. This suggests that, while the region is attracting investment, it could benefit from even stronger momentum.
Second, Chile emerged as a bright spot in the Latin American and Caribbean economic horizon, ranking as the fourth Latin American country with the most FDI in 2024. Despite facing a year-over-year decline, the Chilean economy’s resilience, political stability, and transparent regulatory framework continue to make it an attractive destination for investors.
FDI in Chile 2024
Chile’s FDI inflows in 2024 amount to US$12.521 billion, down from US$18.377 billion in 2023. However, as a destination for international investment, Chile remains in high demand.
According to ECLAC, a large share of the regional FDI growth came from reinvested earnings of transnational corporations already operating in the region. In other words, Latin America and the Caribbean can count on existing investors to a certain degree. However, there is a decline in the share of new entrants.
Regional growth is also driven by investment project announcements, which grew considerably in 2024. The largest increase was recorded in the hydrocarbons sector, while both the renewable energy and the high-tech sectors declined. These trends are remarkable, given that the two former are vital for Latin America to achieve the transition to green energy and sustainable growth.
Brazil and Mexico Take the Lead
The FDI growth in 2024 was led by Brazil and Mexico, which together accounted for 62% of all FDI that came to the region. Brazil is the biggest Latin American country with the most FDI by absolute numbers: 38% or US$71.070 billion of the entire FDI flows that arrived in Latin America and the Caribbean in 2024.
Mexico also strengthened its position by attracting 24% of all FDI inflows or US$45.337 billion, far outperforming the runner-up Colombia. While this change at the regional leaderboard is modest, Brazil and Mexico’s combined FDI expansion from US$86.927 billion to US$116.407 billion explains the significant increase in the regional average.
Colombia’s FDI is only marginally lower than the previous year’s, but FDI to Argentina decreased from US$24.757 billion in 2023 to US$11.644 billion in 2024, with a relatively steep drop of 53%. This shows once again the importance of a sound and predictable economic policy.
Sectoral Analysis: Manufacturing Overtakes Services
Sectorally, FDI inflows were allocated as follows: manufacturing 43.6%, services 40.3%, and natural resources 16%. This is significant, as it signals a decrease in investments in the services sector, which had been the largest recipient previously.
In this sense, the pandemic recession of 2020 is over. After attracting investment to recover from a sudden stop, the service sector is now losing ground to manufacturing. However, this trend could signal the region’s recovery in the global manufacturing value chain.
Structurally, cross-border mergers and acquisitions are less frequent in the region than greenfield investments, but they tend to account for a larger share of the total FDI. In 2023, 59% of all FDI that went into Latin America and the Caribbean was in the form of greenfield investments, 28% were cross-border mergers and acquisitions, while 13% were investments in associated enterprises.
Outward Investment Surge Led by Translatinas
FDI outflows from Latin America and the Caribbean increased by an impressive 47% to US$53.033 billion in 2023. Brazil was the main source of FDI outflows (46%), although the country’s own FDI outflows declined by 3%. This suggests that other Latin American economies, as well as translatinas, are entering the ranks of multinational corporations at a growing rate.
In 2024, FDI outflows from Latin America and the Caribbean continued to grow by 17%, reaching a historical high of US$62.304 billion. Brazil once again provided the lion’s share, although the total value of FDI outflows originating from the South American country fell by 24% from the previous year. On the whole, this increase in the aggregate FDI outflows by Latin American and Caribbean economies confirms a trend towards the maturation of the region’s business.
Who Invested in Latin America in 2024
The United States continued to be the main source of FDI for Latin America and the Caribbean, accounting for 38% of the total in 2024. This figure, as well as the overall share of FDI originating from North America (49%), increased by 4 percentage points compared to the previous year.
On the contrary, the European Union (EU), excluding Luxembourg and the Netherlands, reduced its share of FDI into the region to 15% in 2024, the lowest since 2012. This drop is likely associated with the subdued economic performance and uncertainty in the EU economy, which forced European firms to look for other investment opportunities elsewhere.
Latin America and the Caribbean became the third-largest source of FDI for the region. Intra-regional investments accounted for 12% of all FDI inflows into Latin America and the Caribbean in 2024, an increase of 8 percentage points compared to the previous year.
Chinese investment continued to remain insignificant: 2% of the total FDI inflows into Latin America and the Caribbean. However, the ECLAC study states that “this data underestimates the overall share of Chinese FDI, which may be considerably higher when taking into account flows passing through intermediate countries or those recorded in non-traditional channels, such as acquisitions of assets, concessions, or infrastructure contracts”.
Mining: Targeting the Minerals of the Energy Transition
In the mining chapter, the report authors focus on the extractive industry’s role in the energy transition, highlighting the main ingredients, which include lithium and copper, both of which Latin America is extremely rich in.
Additionally, Chile, as the 4th Latin American country with the most FDI in 2024, is the largest lithium producer in the world. The authors of the study write that Latin American countries, by embracing and facilitating this transition, can set the stage for a wave of sustainable and productive investment, creating thousands of new jobs and improving living standards for millions.
FDI in Latin America and the Caribbean in 2024: Continuity and Change
The 2024 FDI trends in Latin America and the Caribbean show both continuity and change. Brazil and Mexico continue to be the region’s leaders in attracting FDI, and Chile remains the 4th Latin American country to receive the most FDI from abroad. This is largely due to long-term and geographically diverse investment in sectors related to the energy transition, particularly lithium and copper mining. The region is also diversifying its sources of FDI, and further integrating into global value chains in manufacturing, via greenfield investments and in outward flows through the rise of translatinas. The region’s economic modernization is picking up momentum. With a conducive mix of stability, innovation, and sustainability, Latin America can further enhance its global economic position in the coming years.