Geopolitical Futures
Foreign direct investment in Latin America and the Caribbean grew steadily in 2024, but the trend may slow this year. Much of the region’s FDI comes from transnational firms already operating there. New investments are included in these equity inflows, so a slowdown could signal declining investor interest. The top three sources of regional FDI are the United States (38 percent), the European Union (15 percent) and Latin America and the Caribbean itself (12 percent). China and Hong Kong together account for just 2 percent.
Two technology-related sectors could drive FDI in the near and long term. The first is metals and minerals. Latin America and the Caribbean have significant critical mineral reserves, which are in high demand. The countries poised to benefit most include Chile (copper, lithium), Argentina (lithium), Peru (copper) and Brazil (graphite, rare earth elements). A key challenge will be moving away from exporting raw materials toward producing higher value-added goods made from these resources.
The second promising area is communications infrastructure, particularly technologies that support artificial intelligence, such as cloud storage, data centers and high-speed networks. Data from the past five years suggests that Mexico and Brazil will continue to be leading destinations for FDI in this sector. Colombia and Chile also show strong potential to expand these capabilities.
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