The macroeconomic context and investment: Latin America since 1980

This article analyses the evolution of regional investment within the context of general macroeconomic trends. First, trends in the macroeconomic context of investment between 1980 and 1994 are examined, and it is concluded that the economies’ vulnerability to external shocks was crucial to the decline in the rate of investment and its subsequent slow recovery: in countries where indebtedness and external account imbalances were lower, investment levels and rates fell less sharply. Next, the factors determining trends in private investment are reviewed, and it is concluded that over and above those traditionally taken into account by economic theory, a further three also played a part: the stability of policies and their consistency with structural reforms, which ensures the sustainability of regulations over time; access to the infrastructure, where public sector investment has traditionally been supplemented by private investment; and the availability of Financing.