The United Nations regional body says that it is urgent to give strategic direction to FDI, linking countries' efforts to attract these flows with productive development policies
In a scenario of great uncertainty and high global tensions, Latin America and the Caribbean received $194.233 billion in foreign direct investment (FDI) in 2025, 1.7% more than in 2024, although with disparate results between countries and sectors of destination, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) reported today on Tuesday.
The organization highlights that the weight of FDI in economies varies strongly between countries and that on average, the share received by the region in the gross domestic product (GDP) (2.8%) and in gross fixed capital formation (14.0%) remained stable in 2025, indicates the annual report Foreign Direct Investment in Latin America and the Caribbean 2026: navigating the new global context, presented by the Executive Secretary of ECLAC, José Manuel Salazar-Xirinachs, at a press conference in Santiago, Chile.
According to the annual publication, most countries in South and Central America received more investment in 2025. In the Caribbean, the dynamics were heterogeneous.
Countries
Brazil, which received $77.676 billion (40% of the total), and Mexico, which received $43.221 billion in inflows (22%), accounted for 62% of total FDI inflows in 2025. In the case of Brazil, flows increased, approaching the highs of the 2010s. Mexico, meanwhile, registered its third highest amount since 1990 in 2025, despite a negative year-on-year change*.
After Brazil and Mexico, the countries that received the most FDI in 2025 were Chile (7% of the total), Peru (6%), Colombia (6%), Guyana (5%), Costa Rica (3%) and the Dominican Republic (3%).
“In the current global context of instrumentalized interdependence, it is crucial to understand the link between trade and foreign direct investment in order to design policies that allow us to move towards more productive, inclusive, and sustainable development. In Latin America and the Caribbean, rather than a lack of instruments, we see that the primary challenge is the coherent and strategic integration of trade, investment, and productive development agendas, which limits the transformative impact that FDI could have in the region,” said José Manuel Salazar-Xirinachs, Executive Secretary of ECLAC.
The main component
The ECLAC report specifies that in 2025, reinvestment of profits (51%) remained the main component of FDI, although it decreased. This was followed by capital contributions (34% of the total) and intercompany loans (15%).
Regarding the sectors receiving investment, inflows increased in services (+19.5%) and natural resources (+7.0%), while they decreased in manufacturing (-17.2%). Thus, in 2025, services received 53% of FDI, manufacturing 31%, and natural resources 16%.
On the other hand, 67% of the investment that entered the region in 2025, with an identifiable origin, came from the United States (35%) and Europe (32%). However, the publication specifies that in 2025, fewer investments were received from the United States (-11%), while inflows from Europe increased.
The report adds that, as in the rest of the world, the highly uncertain environment negatively impacted investment announcements in the region in 2025. In 2025, 1,326 projects totaling US$114.1 billion were announced in Latin America and the Caribbean, representing a reduction of -10.2% in the number of announcements and -34.3% in value compared to 2024.
Conversely, outflows of FDI from the region showed a recovery in the last three years, totaling US$62.286 billion in 2025, 19.3% more than in 2024 and the second highest value recorded since 2010. Public policies can play a key role in the effort to direct these investments, says the regional body, so that they generate benefits in terms of productivity, technological learning, innovation and access to markets, and avoid fiscal and productive risks.
Finally, this year's report includes a chapter analyzing how recent changes in US tariff policies may affect FDI in the region. The findings suggest that the region's exposure to changes in US trade policy is highly heterogeneous across countries and sectors, depending on both each country's production structure and its integration into regional value chains.
Policies, institutions, and capabilities matter, ECLAC emphasizes, and therefore proposes the following policy recommendations for navigating the new global context:
- Diversify export markets and FDI sources, especially in economies with a high share of the US market in their exports
- To link trade, investment and productive development within a policy framework that aims to maximize the impact of installed investment.
- To coordinate investment and trade promotion institutions and entities responsible for promoting other areas of productive development (human talent, technology transfer, innovation, etc.).
- Strengthen the technical, operational, political and prospective capacities of investment and trade promotion agencies, and incorporate monitoring and learning mechanisms in response to changes in the environment.
- Create and strengthen regional articulation spaces to expand opportunities for trade, investment and productive development among the countries of the region.
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