Privatization in Latin America: New Roles for the Public and Private Sectors

By Werner Baer; Melissa H. Birch | Go to book overview

5
Foreign Direct Investment in Latin America during the 1990s Melissa H. Birch

If the 1980s was the "Lost Decade" in Latin America, the 1990s may turn out to be the "Found Decade." Newspaper reports suggest that foreign investors, who turned their backs on Latin America in the 1980s, are now returning in droves. Total private capital inflows into Latin America are estimated to have increased from about U.S.$5 billion in 1989 to $13.4 billion in 1990 and more than $40 billion in 1991.1 In fact, the appetite for attractive investment opportunities in Latin America drove stock markets in Argentina, Mexico, Brazil, and Chile to record highs and threatened the viability of some countries' stabilization plans. Foreign direct investment (FDI) in Latin America, after dropping from $7.5 billion in 1981 to less than $4 billion in 1983, rose to some $10 billion in 1990 and $13 billion in 1991 as foreign investors looked at the region with renewed interest.2

Until the 1980s, Latin America had hosted about half the total stock of foreign direct investment located in the developing world, while Brazil hosted the largest stock of FDI among all developing countries. During the 1980s, however, FDI in developing countries fell from 25 percent of all FDI to 17 percent--and only 6 percent went to Latin America and the Caribbean.3 The marked decline of FDI inflows to Latin America in the 1980s was a result of the slow growth of those economies in the wake of the debt crisis and the rising international business interest in Southeast Asian countries. In fact, during the 1980s, Asia surpassed Latin America as the major recipient region of FDI in the developing world, attracting some 9 percent of all FDI, or more than half all FDI flows to developing countries.4 According to a report by the Organization for Economic Cooperation and Development (OECD), the top three recipients of FDI in the 1980s were China, Hong Kong, and Singapore.5

As the 1990s begin, the situation may be changing. The World Bank estimated that in 1991, Mexico was the largest receiver of FDI flows among the

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Privatization in Latin America: New Roles for the Public and Private Sectors
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Figures and Tables vii
  • Preface xi
  • Notes xiii
  • 1 - Privatization and the Changing Role Of The State in Brazil 1
  • References 18
  • 2 - Privatization and the Role of the State In Post-Isi Mexico 21
  • Notes 41
  • 3 - The Regulation of Newly Privatized Firms: an Illustration from Argentina 45
  • References 68
  • 4 - Privatization: the Role of Domestic Business Elites 71
  • Notes 91
  • 5 - Foreign Direct Investment in Latin America During the 1990s 95
  • Conclusion 112
  • Notes 113
  • References 114
  • 6 - The Financial Sector in Latin American Restructuring 117
  • Notes 131
  • Notes 132
  • 7 - Privatization with Share Diffusion: Popular Capitalism in Chile, 1985-1988 135
  • Conclusion 153
  • Appendix 155
  • Acknowledgements 158
  • Notes 159
  • Refferences 160
  • 8 - Liquid Equity Markets as an Engine For Long-Term Growth in Latin America 163
  • Notes 177
  • Notes 180
  • 9 - Privatization in Spain 183
  • References 200
  • Selected Bibliography 201
  • Index 207
  • About the Contributors 213
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