Foreign Investment
Total Page:16
File Type:pdf, Size:1020Kb
2006 Foreign Investment in latin america and the caribbean 2 Economic Commission for Latin America and the Caribbean (ECLAC) Foreign Investment in Latin America and the Caribbean, 2006 is the latest edition of a series published annually by the Unit on Investment and Corporate Strategies of the ECLAC Division of Production, Productivity and Management. It was prepared by Álvaro Calderón, Michael Mortimore and Márcia Tavares, with assistance from Pablo Carvallo, Nicolas Chahine, Allison Colwell, Martin Fretigne, Gregoire Garsous, Marcela Andrea Gómez, Bryant Ives, Phillip Muller, Fazia Pusterla and Sebastián Soria. Formal contributions were received from consultants Nicolo Gligo, Lidia Goldenstein and Jae Sung Kwak. The Government of the Republic of Korea provided funding for some of the research done for chapter III as part of a project on foreign direct investment by the Republic of Korea in Latin America and the Caribbean. ECLAC wishes to express its appreciation for the contribution provided by the following government officials: Hong-Jo Chun of the Korean Embassy in Chile; Young-Ju Ahn, Chul-Hee Kim, Yoon Jung Ji, Deok-Rae Jeong of the Korea Trade Investment Promotion Agency and their respective teams. Jennifer Han of Vestex (Guatemala) provided invaluable assistance in interviewing representatives of apparel firms in Guatemala. Assistance was also received from Hyo Chan Chung, Ye Chi Chung, Eun Young Lee, Hyejin Nah and Hyun Jee Oh (Kyung Hee University) and Eun Jung Cho and Hyun Hee Park (Seoul National University). Thanks are also due to the executives who agreed to be interviewed for the preparation of this chapter. The information used in this report has been drawn from a number of international agencies, including the International Monetary Fund, the United Nations Conference on Trade and Development and the Organisation for Economic Co- operation and Development, as well as a host of national institutions, such as central banks and investment promotion agencies in Latin America and the Caribbean, and specialized press. A crucial input for this report —the data on the operations of leading firms in the region— was obtained from the specialized journal América economía. Any comments or suggestions regarding this publication should be addressed to Michael Mortimore (email: michael. [email protected]) Explanatory notes The following symbols are used in tables in this edition of the Foreign Investment: Three dots (…) indicate that data are not available or are not separately reported. A dash (–) indicates that the amount is nil or negligible. A point (.) is used to indicate decimals. Use of a hyphen (-) between years (e.g., 2001-2005) indicates reference to the complete period considered, including the beginning and end years. The word “tons” means metric tons and the word “dollars” means United States dollars, unless otherwise specified. References to annual rates of growth or variation signify compound annual rates, unless otherwise specified. Individual figures and percentages in tables do not necessarily add up to the corresponding totals because of rounding. United Nations publication ISBN: 978-92-1-121623-3 ISSN printed version: 1680-8649 ISSN online version: 1681-0287 LC/G.2336-P Sales number: E.07.II.G.32 Copyright © United Nations, May 2007. All rights reserved Printed in Santiago, Chile Request for authorization to reproduce this work in whole or in part should be sent to the Secretary of the Publication Board, United Nations Headquarters, New York, N.Y. 10017, United States of America. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and to inform the United Nations of such reproduction. Foreign Investment in Latin America and the Caribbean • 2006 3 Contents Page Abstract ................................................................................................................................................................................... 9 Summary and conclusions .................................................................................................................................................. 11 Chapter I Foreign direct investment and transnational corporations in Latin America and the Caribbean .................... 25 A. Introduction ....................................................................................................................................................................... 25 B. International background .................................................................................................................................................. 27 C. FDI inflows and TNCs in Latin America and the Caribbean ............................................................................................ 30 1. Characteristics and trends .......................................................................................................................................... 30 2. FDI in 2006 from the point of view of corporate strategies ...................................................................................... 36 3. Conclusions ............................................................................................................................................................... 45 D. OFDI and the trans-Latins ................................................................................................................................................ 46 1. Outward foreign direct investment flows .................................................................................................................. 46 2. Latin America and Caribbean OFDI from the viewpoint of trans-Latins and their strategies ..................................................................................................................................................... 48 3. Conclusions ............................................................................................................................................................... 52 E. General conclusions .......................................................................................................................................................... 52 Annex - Latin America and the Caribbean: main characteristics of foreign direct investment in 2006, by country .................. 55 Chapter II Active policies for attracting foreign direct investment: international experiences and the situation in Latin America and the Caribbean ................................................................................................................................. 65 A. Introduction ....................................................................................................................................................................... 65 B. An analytical framework for attracting FDI: the importance of active policies ............................................................... 66 1. Motivations and factors that influence foreign investment decisions ....................................................................... 66 2. Models and policy options ........................................................................................................................................ 68 3. Active and integrated policy tools ............................................................................................................................. 72 C. International experiences .................................................................................................................................................. 74 1. Developing countries: active policies that have helped to close the gap with industrialized economies ........................................................................................................................................... 74 2. Developed countries: from passive to active policies ................................................................................................ 80 4 Economic Commission for Latin America and the Caribbean (ECLAC) Page D. Proposals to reduce the gap between Latin America and the Caribbean and countries with best practices in terms of FDI attraction policies ..................................................................................................................... 82 1. Characteristics of the gap .......................................................................................................................................... 83 2. Proposals to close the gap ......................................................................................................................................... 85 E. Conclusions ....................................................................................................................................................................... 88 Chapter III Republic of Korea: investment and corporate strategies in Latin America and the Caribbean ....................... 89 A. Introduction ....................................................................................................................................................................... 89 1. The initial burst of growth, 1962-1997...................................................................................................................... 90 2. The 1997 financial crisis ..........................................................................................................................................