S&P: Latin America slowed by lack of foreign direct investment

Standard & Poor's said in a report that it finds that the significant drop in foreign direct investment (FDI) into Latin American countries may explain why the prospects for growth in the region lag behind those in other emerging market economies.

According to S&P credit analyst Helena Hessel, the region received almost $550 billion in FDI during 1996-2005 and the peak year was 1999, when inflows totaled $74.9 billion, or 6.8% of total worldwide FDI inflows and 28.8% of FDI inflows to emerging market economies.

However, by the end of the analyzed decade in 2005, the region received only $55.9 billion in FDI, which accounted for 6.2% of the worldwide inflows but for only 15.5% of FDI inflows to EME market economies, S&P noted.

"The significant decline in the latter share is troublesome and perhaps explains why Latin American countries have grown slower than most other emerging market economies during this decade and why the prospects for growth in the region are relatively bleak," said Hessel in a release.

The agency said that the countries included in this study are the Republics of Argentina (B, all ratings herein are long-term foreign currency sovereign credit ratings), Bolivia (B-), Chile (A), Colombia (BB), Ecuador (CCC+), Paraguay (B-), Peru (BB), Uruguay (B), Venezuela (BB-), the Federative Republic of Brazil (BB) and the United Mexican States (BBB).

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