Record-setting investment in Latin America

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As if one were needed, another sign of Latin America’s economic ascendancy came last week when the United Nations’ Economic Commission for Latin America and the Caribbean announced that foreign investment in the region reached $106 billion in 2007, up a staggering 41% from the previous year and 20% more than the previous record $89 billion set back in 1999.

Colombia, the ugly stepchild for foreign investors over much of the last two decades, rose to fourth among Latin countries, behind Brazil, Mexico and Chile, as ranked by the foreign capital it attracted, which totaled $9 billion. That’s a 40% increase from 2006.

Driving the Colombian increase was $3.4 billion invested in the oil industry, principally in a refinery expansion in Cartagena by the Swiss firm Glencore from and by a score of other companies who drilled 80 exploratory oil wells.

What’s driving much but not all of the huge boost in investment is the global need for commodities that the hemisphere has in abundance. Commodities-rich Brazil raked in $34.6 billion, up 84% from the previous year.

But a telling statistic was that service industries there, not commodities or manufacturers, received the most foreign capital, an indication that the economy is perceived as maturing and stable.

Despite headlines that might create the impression that China led the charge by investing big bucks to secure natural resources for its economic expansion, the leading foreign investors in Latin America last year were the United States, Holland and Spain.

Meanwhile, foreign investors continued to avoid Venezuela and Hugo Chavez’s socialist Bolivarean Revolution, investing only $646 million there last year, up from a negative $590 million in 2006 when many foreign companies folded their tents, grabbed the assets they could carry and fled.

-- By Chris Kraul, Bogota bureau