Spain consolidates itself as the great investor in Latin America

Spain has promoted investment in Latin America since the 1990s and has never looked back.

Its persistence has already consolidated it as one of the major investors in the region: the second country that invests the most in Latin America after the United States.

Once the covid-19 pandemic has been overcome, the latest data from the Institute of Economic Studies (IEE) confirm the status of the European country as an important player in Latin American business.

The IEE has presented its report

at the XIV Ibero-American Business Meeting that is being held this week in Santo Domingo.

The report indicates that Spain is the leading European investor in Latin America and that a large part of the capital of these companies is located in Mexico and Brazil.

Spanish companies are present in 11 of the 19 countries in the region and have maintained significant progress in Colombia and Argentina.

The document analyzes the behavior of investments during 2021, the second year of the pandemic, for which reason it recognizes a drop in Foreign Direct Investment (FDI) from Spain.

"It reflects the change in geographic and sectoral strategy and the abandonment of certain activities," says the text.

In the Latin American case, this scenario became visible, mainly, in Mexico with a 36% drop.

Spanish investments in Latin America have been concentrated to a greater extent in the services and natural resources sectors.

However, research is already seeing a noticeable turn towards telecommunications and renewable energy.

“The investment

has a greater weight in the financial sector (29.2%), telecommunications (10.2%), energy (8.4%) and the extraction of oil and natural gas (7.7%)”, details the document.

These figures indicate that Spanish investment "presents a notable degree of diversification", according to the study.

Latin American countries are eager to receive investment once the economic crisis derived from the covid-19 pandemic has been overcome.

The IEE points out that after the break, the Latin American countries that have reactivated investments in their territories are Brazil (33% of the total), Mexico (23%), Chile (11%), Colombia (7%), Peru (5% ) and Argentina (5%).

In Central America, Costa Rica has positioned itself as the main recipient of investment in recent years.

Latin American companies have also reaped investments that in the world amount to 750,000 million dollars.

These capitals have been made through the so-called multilatinas, companies that started locally, explored the region and continued to expand until they even reached other continents.

Dozens of them, for example, have settled with some security in Spain in the last decade.

“Given that multi-Latin companies are gaining more and more weight in the respective national economies, it is worth asking if they will be in charge of assuming the leading role in productive development, the modernization of their respective countries and, by extension, of the region itself in international markets. , in order, in this way, to become the spearhead of productivity, innovation and internationalization in the 21st century”, indicates the IEE study.

Latin America is the fourth investor in Spain, after France, the United States and the United Kingdom.

Since 2010, the growth of these capitals has been 92% and, after the pandemic, its multilatinas showed an outstanding recovery of 302% with positive figures for investors from Brazil, Chile and Colombia.

Mexico is the main Latin American investor in Spain, with a notable presence in the cement sector, followed by capital from Argentina and Venezuela.

Most of the investments that come from Latin America stay in the Community of Madrid.

Among the advantages that Latin American capital finds in Spain is its role as a gateway to business in the European Union.

“Among the factors that make it possible are the advantages of an advanced market with all the European connections that facilitate access to financing, technology, knowledge, a broad base of middle-income and high-income consumers, as well as the deployment of a global brand, and all of this within a stable macroeconomic and legal framework that is open to international capital”, adds the text.

Íñigo Fernández de Mesa, president of the IEE, explained at the XIV Ibero-American Business Meeting that in the face of a complex global economic environment, investors can take advantage of environments where human capital is better developed, in which States maintain stable economic indicators and less debt, as well as respect for the most robust regulations and legal framework for doing business.

"An unexpected change in the rules of the game makes companies reluctant to invest in the country in question," he warned.