Europe invests big in Latin America

[Ulhas Joglekar]

23 January 2000
Europe invests big in Latin America
WASHINGTON: European companies led by Spanish firms have surpassed the
United States as the main source of direct foreign investment in Latin
America and the Caribbean, at reaching record levels compared with the early
1990s, a U.N.-World Bank report said Friday.
The survey also said expansion of multinational corporations is gaining
momentum as the world economy becomes increasingly global.
The 223-page report, produced by the U.N. Economic Commission for Latin
America and the Caribbean, covers 1998, the last year for which complete
figures are available.
Michael Mortimore, the main author, said the region's foreign investment
would be "reaching unimaginable levels at the end of 1999, nearing $86
billion compared to $18 billion from 1990 to 1994".
The report said Latin America and the Caribbean have almost closed the gap
with Asia as a destination for investment funds. One factor in the
late-century growth spurt was the Asian financial crisis that started in
mid-1997 and sent investment dollars to the apparently safer Western
Hemisphere.
And even though the crisis spread to Brazil last year, the survey said, that
country, with Latin America's biggest economy, continued as the region's
principal destination for foreign investment, the survey said.
It said Argentina would pass Mexico to claim second place in foreign
investment thanks mainly to the sale of Argentina's oil firm Yacimientos
Petroliferos Fiscales to the Spanish petroleum company Repsol.
Chile would double its investment inflows in 1999, largely because of
purchases of energy and electric companies by the Spanish electricity giant
Endesa-Espana.
Mortimore said these Spanish companies and others are becoming "the new kids
on the block" in Latin American economies.
"Traditionally the United States has been the most important source of
funds," Mortimore said. "But in 1998 Europe passed the United States,
primarily because of the huge increase in investment by Spanish companies."
He cited Spain's Telefonica, the world's 12th largest telecommunications
company, which has invested more than $10 billion in Latin America and
Central America to become the leading global operator in the region's
communications.
"In the future, Telefonica is going to invest another $20 billion, with $6
billion of that destined for Brazil," Mortimore said. (AP)
For reprint rights: Times Syndication Service
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