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Given the magnitude of the financial crisis in the United States, it is not surprising to think that foreign direct investment (FDI) activity to Latin America from U.S. investors increased by 31 percent in 2012. Several countries in Latin America are the darlings of the emerging markets with Mexico leading the way as a newly-industrialized nation, Brazil as one of the BRICS countries, Argentina staging a miraculous economic recovery after its spectacular collapse in the early 21st century, Chile becoming an economic powerhouse in South America, etc. Investments from Latin America to the U.S., however, have been less than forthcoming.
Members of the Hispanic business community in the U.S. have joined other American investors in injecting $153.4 billion in 2011. They added another $150 billion in 2012. There is an overall feeling of ebullient confidence in the economic success of Latin America by foreign investors, but the outward flow of money is not reciprocal. Investors living and working in Latin American and Caribbean countries do not feel too confident about the rest of the world's regions, or perhaps they are intent on taking advantage of their own growth.
Investors will always go where there is money to be made and even more so when the Return on Investment (ROI) happens a faster rate. The flow of FDI to Latin America and the Caribbean is not without risk, but U.S. investors feel that countries like Brazil and Chile are very promising for their investments. Some business and industrial sectors in the U.S. are enjoying the proverbial "green shoots" of the economy, but Latin American investors are not feeling as strongly about these developments as they have in the past.
This one-way flow of FDI, however, is showing some signs of reciprocity:
According to recent news report by Forbes, Chile is very serious about taking the absolute title as the Silicon Valley of Latin America. The government is providing grants to startup tech companies whose principals agree to move to Chile.
In 2011, the countries with stronger ties to the U.S. injected almost $30 billion in FDI: Colombia, Chile and Mexico.
Discounted luxury real estate in regions like Miami has managed to attract wealthy investors from Brazil, but now that housing prices are hitting bottom is several more regions, a larger number of investors will materialize.
The EB-5 visa program for foreign investors is bound to continue adding more applicants from Latin America, particularly from Mexico and Venezuela.
A positive trend that could emerge from the EB-5 program would be partnerships between companies in the existing Hispanic business sector in the U.S. and those Latin American investors seeking visa approval. Hispanic Americans as mentors and partners to these wealthy foreign investors could create greater opportunities although competition between the two groups would also be welcome.
