MercoPress. South Atlantic News Agency

Waiting for foreign investment

Foreign investment in Latinamerica dropped 19% in 2003, the fourth year running, according to the latest report from the United Nations Economic Commission for Latinamerica and the Caribbean, Cepal.

The peak was 1999 with 88 billion US dollars, but since then it consistently decreased reaching 44 billion in 2002 and 36,5 billion US dollars last year. Furthermore in 2003 Latinamerica was the only region of the world to experience a drop and a lesser participation of the global 653 billion US dollars.

"And the tendency seems to continue", added Jose Luis Machinea, Executive Secretary of Cepal. "I don't think will see a recovery reaching the level of the second half of the nineties for some time".

However some tepid signs of recovery can be appreciated in smaller countries but not in the leading economies such as Brazil, Argentina and Mexico. Actually in 2003 Mercosur and Mexico were the most punished by foreign investment absence, dropping an impressive 34,8%.

Brazil was the worst case with a 40% contraction managing to attract just 10,1 billion US dollars, while Argentina even when foreign investment expanded 42% in 2003, the net accumulation was just 1,1 billion, less than 10% of the annual influx from 1995 to 1999.

For Mexico 2003 marked the second year running of contraction with foreign investment reaching 10,7 billion US dollars, 26% less than in 2002.

The main investor in the region is still United States with a 32% participation, followed by Spain 19%, Holland 8%, France 4,5% and Britain 3%.

Services has been the area most attractive for foreign investment with 57% of funds, followed by manufacturing 28% and primary sector 15%.

Foreign investment continued to show a strong concentration in a few countries, actually six absorbed 88% of net investments. Brazil tops the list with 35%, Mexico 23%, Argentina 12%, Chile 8%, Venezuela 6% and Colombia 4%.