Foreign Direct Investment in Mexico and Chile

Summary

Increased flows of Foreign Direct Investment (FDI) are a major source of capital for Latin American countries. This paper analyzes the experiences with attracting and the effects of FDI for two nations-Chile and Mexico. Clearly attempts to attract FDI through relaxed restrictions on profit remittances and other reforms have had an impact. However, while Mexico has succeeded in attracting investment to high productivity “greenfield” industries, Chile has seen most FDI go towards low productivity sectors such as mining and agriculture.