Chile saw 40% fall in Foreign Direct Investment last year – lowest since 2009

Isabel Cocker/The Santiago Times Staff

SANTIAGO – Foreign Direct Investment (FDI) in Chile fell to its lowest level in 2016 since 2009, the second successive year for which shrinkage has been reported, according to a report released last week by the U.N.

The document, published by the Economic Commission for Latin America and the Caribbean (ECLAC), reports that the country received $12.225 billion through FDI last year. This is a 40% decrease from 2015, falling to an amount close to that reported in the midst of the financial crisis in 2009.

Chile’s Diario Financiero reports that, for the first time, investment by foreign parties in Chile has been surpassed by that of Colombia, by over $1 billion. Colombia’s flow of investment increased by 15.9% from 2015, bucking the trend of the report, which showed an overall contraction across the region of 7.9% in 2016 compared to 2015.

This shrinkage is due, in part, to the slow economic growth of the region, which has yet to recover from the international banking crisis. It can also be traced to the decrease in prices of commodities and their impact on investments made in the natural resources sector, notes MercoPress.

Nevertheless, in Chile, this is being combatted by investment into renewable energy projects which, according to the report, accounted for 33% of the total FDI. This places it as the highest recipient of investment in this sector across the entire region, in comparison with an average investment of 18%.

According to the U.N. News Centre, FDI can be of great importance to a region, as it encourages the adoption of new management systems and business models which, in turn, increase productivity and competitiveness.

However, the Executive Secretary for the Commission, Alicia Bárcena, commented that “the big productivity gaps that persist in the region and the new technological scenarios which this fourth industrial revolution poses require new political policies in order to harness the benefits of FDI.”