Latin American Investment Increases

However, FDI in Latin America is not without risk. Recent political shifts and weakening economies have raised red flags. The rules of the game for investors can change suddenly due to policy shifts. Many deals are made informally, which increases risk exposure for multinational companies. Confusing tax structures further increase risk.

Latin American Investment Opportunities in the U.S.

Latin American countries are also investing abroad, although in smaller amounts than the United States. In 2011, Chile led Latin American foreign investment with $11.82 billion, followed by Mexico (US$9.64 billion) and Colombia (US$8.28 billion). While the opportunity for economic growth in foreign countries influences investment decisions, many investors are also driven by domestic security concerns in their own home countries.

FDI in the United States from countries like Mexico and Venezuela has increased, thanks in part to growing instability and drug violence in countries like Mexico and Venezuela. These investors are often concerned less with the return on their money and more with the ability to immigrate to the United States. A $500,000 investment in a designated high-unemployment or rural area in the United States grants foreign nationals and their families a conditional EB-5 visa.

In 2009, 1,000 foreign investors applied for the EB-5 visa. The number of applicants more than tripled in the first 10 months of 2011, increasing to 3,355. While more than half of these applicants are Chinese nationals, the number of Latin American petitions increased by 71 percent between 2010 and 2011. Venezuela and Mexico lead the way.

While reciprocal FDI is currently low from Latin America, the EB-5 visa program may encourage additional investment by introducing Hispanic businesses to new opportunities in the United States. Increased opportunities in the Hispanic market may also encourage Hispanic leaders abroad to consider reciprocal investments in the United States.