São Paulo, June 15, 2004 (Agência Brasil) - "In 2003 foreign direct investments in Latin America and the Caribbean decreased for the fourth consecutive year, from US$ 109 billion in 1999 to US$ 49 billion," revealed the United Nation's 2004 world investment report. The study was released on Sunday (13) at the 11th United Nations Conference on Trade and Development (UNCTAD XI), which is being held in São Paulo through Friday (18). According to the UNCTAD, the latter figure corresponds to the minimum "limit" and, henceforth, capital flows toward the region should expand once again.

Brazil and Mexico, the largest countries in the region, continued to show a significant drop in investments in 2003 -- from US$ 33 billion in 2000 to US$ 10.1 billion in 2003, in the case of Brazil, and from US$ 26 billion in 2001 to US$ 10.7 billion in 2003, in the case of Mexico.

Various factors contributed to the decline, the report explains, some of them clearly beyond the control of the aforementioned countries. Among these causes are the multinationals, which ceased to invest abroad as a result of worsened economic conditions in their home countries. In 2001 the United States and the European Union, which are big investors, suffered an appreciable decline in their rates of economic growth.

According to the UNCTAD's "Index of Potential Investments," the future should be brighter for many countries. Investment growth, according to UNCTAD's economists, should be intensified in Chile, followed by Mexico, Argentina, El Salvador, Panama, Venezuela, Costa Rica, Trinidad and Tobago, the Dominican Republic, Uruguay, and Brazil, in that order. "Nevertheless, considerable efforts should be made by the governments," the document concludes.

The UNCTAD also observes that the reduction of foreign investments in Latin America is related as well to a normalization of capital flows. At the end of the decade of the '90's, the report notes, privatizations on the continent attracted an "explosion" of capital investments, chiefly in the service sector.

Reporter: André Deak
Translator: David Silberstein