FDI may not improve Latin America's competitiveness

Significance

Attracting investment could represent a tool to move regional economies up value chains rather than exporting raw materials or providing cheap labour for basic manufacturing. This would help Latin America to break out of its low growth trap and take advantage of global trends, such as the energy transition.

Impacts

• Human capital deficits will restrict investment in cutting-edge industries.
• Renewable energy projects and associated infrastructure will face opposition due to environmental impacts.
• Manufacturing and mining projects will increase competition for water resources.