MercoPress. South Atlantic News Agency

Steep growth of foreign investment

Foreign investments grew a steep 44 percent in Latin America and the Caribbean in 2004, reaching a record $56.4 billion, a United Nations agency reported yesterday.

It was the first time since 1999 that the foreign investment flux increased in the region, according to the Economic Commission for Latin America and the Caribbean, or ECLAC.

The United States remains the main source of foreign investments, with 32 percent of the total amount.

But in spite of the increase, the Santiago-based UN agency said in its annual report on the subject that the region still needs to improve its capacity to attract ??better quality investments.'' ??Still pending is the attraction of investments that will bring better benefits to receiving countries,'' according to ECLAC. ??There is a clear limitation in the regional capacity to compete for better quality investments, including those for the production of advanced technology, research and development centres.''

The report also said that China is emerging as serious competition to some countries in the region in attracting foreign investors.

??For Mexico and the Caribbean, China now represents a threat as a competitor for investments that seek efficiency,'' according to the report.

Most of the foreign investments went to the services sector.

Unlike recent years, the privatization of state-owned companies was not the main attraction for foreign investors. Instead, they preferred the purchase of assets from the private sector.

Brazil and Chile were the favourite destinations for foreign investors in the region.