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Panama leads Latin America in attracting foreign direct investment

Thursday, August 17, 2017

While foreign direct investment is down in Latin America generally, Panama  and Colombia were the strongest performers, as each had an increase of 15.9 percent in 2016, compared to the previous year.

Brazil, Paraguay and Costa Rica were the other countries which had FDI growth, at 5.7 percent, 5.1 percent, and 1.1 percent, respectively, according to the United Nations Economic Commission for Latin America.

FDI for Latin America totaled $167 billion last year, a decline of 7.9 percent from 2015, and 17 percent less than the peak year of 2011.

Direct investment in Latin America is expected to experience a further 5 percent drop this year, largely as a result of poor preparedness for technological challenges, said Alicia Bárcena, executive secretary of the Commission.

A strong performance by Panama is based on logistical advantages, including an international airport hub, and an expanded canal, linked to the largest free zones in Latin America.

Costa Rica strengths include the perception of a well educated workforce, a competent managerial class, and a stable political system.
Meanwhile, the other Central American countries saw declines – albeit modest - in FDI in 2016, compared to the previous year.

El Salvador went from $399 million to $374 million; Guatemala from $1.22 billion  to $1.18 billion; Honduras from $1.2 billion to just over $1 billion; and Nicaragua from $950 million to $888 million.

The rest of Latin America did considerably worse (data in percentages 2016 versus 2015 from the United Nations Economic Commission for Latin America).

Country     Variation

Colombia    15,9

Panamá      15,9

Brasil            5,7

Paraguay     5,1

Costa Rica   1,1

Guatemala  -3,3

El Salvador -6,2

Nicaragua   -6,5

México        -7,9

Honduras  -16,7

Perú          -17,0

Uruguay    -25,5

Bolivia       -26,0

Chile         -40,3

Ecuador    -43,7

Argentina  -64,0