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Foreign Direct Investment in Latin America and the Caribbean 2009

image of Foreign Direct Investment in Latin America and the Caribbean 2009

Due to the global crisis, in 2009 FDI flows to the region shrunk by 42% with regard to the historical record of in 2008. This decrease is explained by a combination of factors: a fall in world production, prevailing uncertainty and the deceleration of growth in several countries of the region, which discouraged FDI in search of local markets. In addition, falling commodity prices in late 2008 warded off investment in the exploitation of these resources, while the recession in North America restrained investment in export platforms. The report notes that most announced FDI in manufacturing is concentrated in low and medium-low technology intensive activities, while FDI in high-tech sectors and research and development projects is still scarce. This reveals that the region still has difficulties attracting high-technology investment. The report suggests policies for productive development focused on innovation and strengthening local capabilities.

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The automotive industry and the crisis: Business strategies in Brazil and Mexico

The automotive industry is a key sector in many large economies around the world. In the United States, it generates nearly 4% of gross domestic product, 10% of the value of industrial output and 1 in 10 jobs, while in the European Union, it is the main industrial contributor to foreign trade and the source of about one third of manufacturing jobs (Cooney, 2008; European Parliament, 2009). Given its importance, it has always been favoured by industrial policies, including long-term sector-specific strategies and a diverse array of stimulus and support instruments. In many countries, policy for the automotive sector has been the industrial policy par excellence. Even in countries that claim not to pursue these kinds of policies, special considerations are always made for this industry.

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