PRESS RELEASE

The Commission predicts that FDI will rise by between 15% and 25% in 2011 compared with 2010, but points out that the region should implement policies focused on innovation in order to better absorb the benefits of investment flows.

In 2010, Latin America and the Caribbean was the region with
the strongest percentage increases as a recipient and source of Foreign
Direct Investment (FDI), according to a report presented today in Mexico
City, Mexico, by the Economic Commission for Latin America and the Caribbean (ECLAC).

Last year, the region’s FDI inflows were 40% higher than in 2009,
representing 112.634 billion dollars, while outgoing FDI almost quadrupled
in the same period to reach a historic high of 43.108 billion dollars, which
highlights the buoyancy of transnational Latin American and Caribbean
enterprises, known as trans-Latins.

In a context of falling foreign investment in developed countries (-7%) and
rising investment in developing countries (10%), Latin America and the
Caribbean increased its share of the recipient market from 5% to 10% between
2007 and 2010.

For 2011, FDI flows to Latin America and the Caribbean are expected to
maintain this trend and increase by between 15% and 25%, which could take
them to unprecedented high levels, according to the projections of the
report launched by the Executive Secretary of ECLAC, Alicia Bárcena, and the Mexican Minister of Finance and Public Credit, Ernesto Cordero.

“The figures we are presenting today point to the growing integration of
Latin American and the Caribbean in the process of economic globalization.
The region’s countries not only remain attractive to foreign investors, but
they are also increasingly daring to conquer other markets by means of
trans-Latins”, stated Bárcena.

Nevertheless, the senior official did emphasize that “in order to improve
the capacity to absorb the benefits of such investment, we are stressing the
need to implement productive development policies focused on innovation and
on the strengthening of local capacities to promote the creation of quality
employment. FDI must help the region to grow with equality”.

According to the report ‘Foreign Direct Investment in Latin America and the
Caribbean 2010′, the region’s main recipient was Brazil, where FDI inflows posted a record surge of 87%, going from 25.949 billion dollars in 2009 to 48.462 billion dollars in 2010.

The second main recipient was Mexico (17.726 billion dollars), followed by
Chile (15.095 billion dollars), Peru (7.328 billion dollars), Colombia
(6.760 billion dollars) and Argentina (6.193 billion dollars).

In Central America, foreign investment flows to all countries grew, except
in the case of El Salvador (-79%). In the Caribbean, inflows fell 18%.

Mexico was the country that invested the most abroad in 2010 (12.694 billion
dollars). This was followed by Brazil (11.5 billion dollars), Chile (8.744
billion dollars) and Colombia (6.504 billion dollars).

The factors that resulted in the increased FDI receipts in 2010 include the
improved performance of developed economies and the buoyancy of certain
emerging economies that boosted some sectors thanks to increased demand.

United States remains the main investor in the region and was responsible
for 17% of the FDI received in 2010, followed by the Netherlands (13%),
China (9%) and Canada and Spain (both 4%).

The thirteenth version of this ECLAC report highlights the emergence of the
Asian giant (China). In 2010, Chinese companies invested almost 15.0 billion
dollars in Latin American and Caribbean countries, fundamentally in the form
of mergers and acquisitions.

Over 90% of confirmed Chinese investment in Latin America has targeted the
extraction of natural resources. In the medium term, this country’s
transnational enterprises are expected to continue to be active in the
region and diversify into infrastructure and manufacturing sectors.

Through its analysis of the sectors targeted by FDI, this United Nations
Commission points out that the investment flows are reinforcing the region’s
production pattern.

In South America, the main recipient sectors in 2010 were natural resources
(43%) and services (30%). Compared with the period 2005-2009, a greater
share of investment takes the form of primary sectors. In Mexico, Central
America and the Caribbean, investment continues to target mainly
manufactures (54%) and services (41%).

The share of Latin America and the Caribbean as a recipient of investment
with a high technology content remains small compared with other regions,
although there has been an increase in the number of FDI projects in medium
to high technology sectors and those associated with research and
development.

The ECLAC publication also deals with FDI and export platforms in Central
America, Panama and the Dominican Republic. According to ECLAC,
transnational enterprises still wish to invest in Central American countries
to generate export platforms, but the target sectors have changed from
manufactures to services (especially tourism, property business and remote
business services).

Lastly, the document reviews the main foreign investments and the business
strategies observed in the regional telecommunications industry, where there
is a convergence towards broadband, as well as the growing involvement of
Latin America in the software industry, which has become a driver of
economic growth.

The full report can be accessed at < http://www.eclac.cl/id.asp?ID=43290>

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