By: Staff Writer
July 7, 2023
The United Nations Conference on Trade and Development (UNCTAD) in their latest World Investment Report, 2023 said that the Caribbean’s foreign direct investment (FDI) input increased by 53 percent to $3.9bn, showing signs of a
The report said: “Flows to Latin America and the Caribbean increased by 51 per cent, reaching $208bn, the highest level ever recorded. High commodity prices pushed up reinvested earnings of foreign affiliates in extractive industries. Project growth across the region was more modest, with 14 per cent more greenfield announcements and a decline in international project finance deals.
In the Caribbean in particular, “FDI increased by 53 per cent to $3.9 billion, mainly driven by growth in inflows to the Dominican Republic, to $4 billion.”
FDI net inflows are the value of inward direct investment made by non-resident investors in the reporting economy, including reinvested earnings and intra-company loans, net of repatriation of capital and repayment of loans.
The report added: “Inflows to the 11 Caribbean SIDS (Small Island Developing States) rose by 27 per cent to $5.9bn, due to some recovery in international tourism investment. FDI flows in the Dominican Republic rose by 25 per cent to $4 billion.
“The number of greenfield projects more than doubled to 30, and the value more than quadrupled to $3.5bn. In the Bahamas, inflows rose by 6 per cent to $1.3bn, mainly due to intracompany loans. FDI to Jamaica increased by 12 per cent to $360m. Flows to Trinidad and Tobago were negative, at -$0.5bn, but there were several greenfield project announcements. The largest was the development of a solar project with a capacity of 148 MW of DC power and output of 112 MW of AC power by Shell Renewables Caribbean (Netherlands) and Lightsource (United Kingdom) for $180m.”
FDI flows to developing economies overall as a group increased by 4 per cent to $916bn in 2022. The increase was mainly the result of strong growth performance in Latin America and the Caribbean. FDI flows continue to be an important source of external finance for developing economies compared with other cross-border capital flows
On the Central American and Latin American side, FDI to Colombia grew by 82 per cent to $17bn, led by extractives; construction; finance; and transport, logistics and communication services.
The report also said: “In Central America, FDI reached $44bn – up 5 per cent from 2021. Flows to Mexico, the second largest recipient in Latin America, increased by 12 per cent to $35bn, with a rise in new equity investment and reinvested earnings. The value of net cross-border M&A sales jumped to $8.2bn (from less than $1bn in 2021). A large deal was the acquisition by Univision Communications (United States) of the media, content and production assets of Grupo Televisa for $4.8bn. The value of announced greenfield investment more than doubled to $41bn. Tesla (United States) is planning to invest $5bn in a plant in Mexico.
“Outward FDI from Latin America and the Caribbean continued its upward trend to $59bn. FDI outflows from Mexico turned positive to $13bn from -$2bn in 2021.”