Foreign Direct Investment in Latin America and the Caribbean 2009

Abstract

In 2009, the global economy experienced the fallout from the worst economic crisis since the Great Depression of the 1930s. Given the decline in output and in international trade in the world's largest economies, sharply lower foreign direct investment (FDI) flows were to be expected, as was the subsequent toll on the installation of new production capacity and on the technological modernization of existing plant and equipment. In evaluating the consequences of these processes on inward and outward investment in the countries of Latin America and the Caribbean, this report focuses on three areas: a regional overview of FDI in 2009 and case studies of the automobile and iron and steel industries. These two industries are chosen for their strong linkages with each other and the rest of the economy, their great sensitivity to the business cycle and the strong presence of transnational and trans-Latin companies. In both cases, the analysis brings together considerations on national and business strategies being implemented in the largest economies of the region. Owing to the unique characteristics of each sector, the study on the automobile industry looks at strategies at the national level, while the analysis of the iron and steel sector focuses on corporate strategies.