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Foreign Direct Investment in Latin America and the Caribbean 2004

image of Foreign Direct Investment in Latin America and the Caribbean 2004

This publication sets out and analyses the main foreign direct investment (FDI) trends in the countries of Latin America and the Caribbean in 2004. For the first time since 1999, foreign direct investment (FDI) inflows into Latin America and the Caribbean grew in 2004. These inflows topped US$ 54 billion, far exceeding the US$ 37 billion registered in 2003 and representing a 46% increase. This is welcome news for the region, as it may portend the beginning of a new and sustained investment boom.

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Summary and conclusions

In 2004 flows of foreign direct investment (FDI) to Latin America and the Caribbean rose substantially for the first time since 1999. From a level of US$ 39.1 billion in 2003, these inflows jumped to US$ 56.4 billion in 2004, an increase of 44%. While this is a very positive sign, it does not mean that the region has overcome its problems in attracting FDI. In 2002-2003 FDI flows to Latin America and the Caribbean had declined significantly in comparison to the volume that had entered these countries during the FDI boom of 1996-2001. The region has seen a steady decline in its traditional share of global FDI and demonstrates evident weaknesses in competing for newer, higher-quality investments (in higher-technology manufactures, research and development centres and new services such as those related to shared back-office activities, software and regional headquarters). Given this situation, the Latin American and Caribbean countries would do well to shift their focus towards attracting better-quality FDI. To do so, they will have to take a more astute approach to the design of national policies

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