The town of Sierra Grande in, southern Argentina was home to Latin America’s largest iron ore mine, but its closure in 1991 turned it into a ghost town. Today, its 12,000 inhabitants see hopes reborn, thanks to two multimillion-dollar projects that could turn it into a new oil mecca. File Photo by Juan Macri/EPA
Foreign direct investment in Latin America and the Caribbean rose 7.1% in 2024, reaching nearly $189 billion, the United Nations Economic Commission for Latin America and the Caribbean reported Thursday.
The increase came despite global economic uncertainty and an overall decline in investment flows worldwide.
Brazil and Mexico accounted for 61% of the total, helping offset declines in Colombia, Chile and Argentina. Investment also rose in Central America and the Caribbean, particularly in the manufacturing and communications sectors.
“Much of the increase is due to reinvested earnings from companies already operating in the region rather than new capital inflows,” said José Manuel Salazar-Xirinachs, executive secretary of the U.N. Economic Commission for Latin America and the Caribbean.
Equity contributions — the component that reflects new investments — are at their second-lowest level since 2010.
Globally, foreign direct investment dropped 11% in 2024 when excluding transactions in European financial centers, a decline attributed to rising geopolitical tensions, trade disputes and the restructuring of global value chains.
“Higher levels of conflict and heightened uncertainty are holding back investment decisions worldwide or at least are a deterrent,” Salazar-Xirinachs said.
Despite the global slowdown, announced foreign direct investment projects in the region surged 40% to a record $168 billion, driven by major hydrocarbon developments in Argentina, Mexico and Guyana. These included liquefied natural gas and oil megaprojects.
Unlike global trends, which prioritize renewable energy and semiconductors, Latin America’s investment announcements were dominated by fossil fuels. Renewable energy projects ranked second, but their value declined 13% from the previous year.
Marco Llinás Vargas of the economic commission noted concern over the region’s heavy reliance on extractive industries. He said the drop in technology-intensive investment is troubling and emphasized the need for more diverse and advanced forms of investment that can contribute to long-term productive development.
The report identified critical minerals — such as lithium, copper and rare earth elements — as a strategic opportunity for the region. Chile alone holds more than 30% of the world’s lithium reserves, but production and value-added exports remain limited.
“Reserves don’t automatically translate into production or economic benefit,” said Martín Abeles, head of the commission’s Natural Resources Division. There is a lack of technical, regulatory and institutional capacity to turn potential into performance.
From 2005 to 2024, just 21% of global mining foreign direct investment targeted Latin America. While lithium investments have increased — particularly in Argentina — other minerals have not seen similar momentum.
The United States strengthened its position as the leading investor in the region, accounting for 38% of the investment in 2024. The EU’s share — excluding Luxembourg and the Netherlands — fell to 15% of the regional total, its lowest level since 2012.
Investment from Latin America and the Caribbean made up 12% of foreign direct investment inflows, making it the third-largest source. Chinese investment accounted for just 2% of total inflows in 2024.
Abeles called for stronger policy alignment, citing countries like Australia and Canada that tie investment to local supplier development, technology transfer and environmental governance.
Digital transformation was also highlighted as a crucial development path. While foreign investment in telecommunications and data centers has grown, the region attracts only 7% of global digital investment.
Foreign direct investment can be a catalyst for digital transformation, Salazar-Xirinachs said, but only if matched by absorptive capacity and infrastructure.
Brazil and Mexico led the region in digital investment, followed by Argentina, Chile and Colombia. The commission recommended improving institutional coordination and investing in digital workforce development.
Despite progress, the report noted that Latin America and the Caribbean continue to face persistent challenges in attracting new investors.
The commission urged governments to treat foreign direct investment as part of broader productive development strategies. The report outlines 10 policy guidelines aimed at strengthening technical, operational, political and strategic capacities to attract and retain high-impact investment.
Attracting foreign investment must go hand-in-hand with broader development policies, Salazar-Xirinachs said. It’s not just about the amount of investment, but its quality and impact.
