Country registers record inflow of foreign direct investment

A.M. Costa Rica graphic Graph shows that Costa Rica has more than recovered from the hardtimes of 2009 and 2010.

The country hit a record with $2.1 billion in foreign direct investment in 2011, a report issued Thursday said.

The report was by theEconomic Commission for Latin America and the Caribbean and covered the bulk of the nations in the Western Hemisphere.

The region also had a record $153 billion in direct investment last year. The amount is historic and could be exceeded this year, said the commission. But the organization warned about the increasing repatriation of profits by transnational companies to their countries of origin.

In 2010, the region received $120.9 billion, whereas in 2009, due to the international economic crisis, investments decreased to $81.6 billion, according to the commission. Until then, the highest record had been registered in 2008, when investments amounted to $137 billion.

In 2011, the main foreign direct investment recipients in the region were Brazil ($66.7 billion, representing 43.8 percent of the total of flows into the region), Mexico ($19.4 billion), Chile ($17.3 billion), Colombia ($13.2 billion), Peru ($7.7 billion), Argentina ($7.2 billion), Venezuela ($5.3 billion) and Uruguay ($2.5 billion), the commission reported, adding that of these countries, Brazil, Chile, Colombia, Peru and Uruguay reached historic records.

In Central America, direct investment increased by 36 percent compared to 2010, where the amounts received by Panama ($2.8 billion) and Honduras ($1 billion) stand out, as well as the amount for Costa Rica.

In the Caribbean, flows soared by 20 percent compared to the previous year, with the Dominican Republic at the head with $2.4 billion.

“In spite of the prevailing uncertainty in global financial markets, Latin American and Caribbean economies attracted important amounts of foreign direct investment during 2011. These amounts should remain high in 2012,” said Alicia Bárcena, executive secretary of the commissions.

In 2011, 46 percent of the net income deriving from foreign direct investment was due to profit re-investments, while the remaining percentage was due to capital contributions and loans among companies, said the report. According to the Organization, this denotes the trust of transnational companies in the region and important business opportunities within it.

Nevertheless, the commission said it identified a current phenomenon that is increasingly relevant since 2004: the growing repatriation of profits by transnational corporations investing in the region, a fact that shows direct investment does not flow in a single direction.

“FDI revenue transferred back to the countries of origin has increased from $20 billion per year between 1998 and 2003 to $84 billion between 2008 and 2010 per year,” noted Ms. Bárcena.

The report shows that the European Union, as a bloc, is the largest investor in Latin America and the Caribbean. In the last decade, the EU invested an average of $30 billion per year in the region, representing 40 percent of the total received. European investments, which have been mainly directed to South America, are widely diverse and strongly relevant to strategic sectors such as electricity and banking.

Among the main investors in 2011, the United States (18 percent), Spain (14 percent), the Latin American and Caribbean region itself (9 percent) and Japan (8 percent), among others, stand out, the commission said.

In contrast to the $2.1 billion indirect investment in Costa Rica in 2011, the annual average for the country from 2000 to 2005 was just $626 million a year.

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