Asian investments target large Latin American markets

Significance

Major Japanese and South Korean conglomerates are driving adoption of automated manufacturing, digitalisation of supply chains and other technologies critical to the region’s competitiveness. However, the pandemic forced many investors, especially mid-sized firms, to refocus on Asian markets. Increasingly, Latin America’s investment climate will be shaped by growing US-China rivalries.

Impacts

• Investment from Japanese and Korean companies is critical for the region’s competitiveness in increasingly digitalised global value chains.
• Smaller economies risk missing out on the benefits of high-technology investment from Japan and Korea, concentrated in Brazil and Mexico.
• US efforts to try to decouple global value chains from China have sparked interest in investing in the region, but to date lack substance.