Chile’s foreign investments highest since 1996 peak

Chile’s foreign investments had reached nearly US$5 billion by September of this year. Brazil and Peru together received the lion’s share with a combined 74 percent of the total, followed by Colombia and Argentina.

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Chile’s investment in foreign economies will reach a 14-year high in 2010, expected to exceed US$5 billion by the end of the fiscal year.

Based on statistics gathered in September 2010, the vast majority of this foreign investment was split between Brazil and Peru, claiming 38 percent and 36 percent respectively of Chile’s total foreign investments. Colombia received 19 percent of the total, and Argentina 3 percent with the remaining 4 percent spent in relatively small quantities elsewhere.

This year’s record is expected to exceed the 2007 high of US$4.57 billion by nearly US$500 million, but remains behind the 1996 record of US$6.4 billion. Recent trends and continued growth in the economy suggest that 2011 will see future growth in foreign investment, according to a report in La Tercera.

Though Chile has experienced extraordinary economic growth in recent years, its relatively small population has encouraged business people to turn to larger, developing markets in countries like Peru, Colombia and Brazil. In the past year, commercial enterprises turned over the largest percentage of Chile’s foreign investments at 23 percent. Over the past 20 years, energy has been the most common recipient of Chilean investment, garnering a total of nearly $14 billion dollars.

While investments in Peru and Colombia were primarily for commercial enterprises, money directed towards Brazil was aimed primarily at the forestry and transportation industries. The transportation industry overall received 21 percent of total foreign investments, making it the second largest recipient of Chilean funds, followed by industry (15%), services (9%) and finally forestry (7%).

The past twenty years have also seen a shift in the destination of Chilean funds. Historically, Argentina has been the primary recipient of Chilean foreign investment, totalling US$17 billion over the past two decades. However new trends in foreign investment have resulted in Chile’s shift to faster developing economies like Brazil’s, where potential for growth remains largest. These trends also point toward Chile’s rapid progress toward development.

This post is also available in Spanish