Weekly Report - 05 December 2013 (WR-13-48)

CHILE | Shifting focus from Argentina to Brazil. On 2 December Chile’s foreign economic relations directorate (Direcon) reported that Brazil has now become the main recipient of Chilean investment, overtaking Argentina for the first time. Historically, Chilean businesses have had close links with their neighbours across the Andes, but according to Direcon since 2000 there has been a shift towards increased investment in Brazil rather than in Argentina. Data compiled by Direcon since 1990 shows that Chilean Foreign Direct Investment (FDI) in Brazil in the 1990-1999 period represented 16% of all Chilean FDI outflows, while in the 2000-2009 period this figure had increased to 31%. Moreover in the 2010-June 2013 period, Chilean FDI in Brazil represented over half (53%) of the total outflow. To put it into context, Direcon points out that since 1990 Chilean FDI in Brazil is an accumulated US$21.9bn, presenting 25.4% of all FDI going into Brazil. In comparison, Chilean FDI in Argentina during the period was US$16.8bn, or 19.5% of the total. Highlighting the fact that Chilean investment is not concentrated on a single sector but has been directed towards various sectors, led by industry (35.8% of the total) and services (32.4%), Direcon said that the investment was instrumental in promoting Brazil’s economic development. According to the study, Chilean investment in Brazil has generated 83,858 jobs, 67.6% direct and 32.4% indirect, during this period. Commenting on the study’s findings, the head of Direcon head, Alvaro Jana, noted: “Brazil is a very important trade partner for Chile in the region... it is market with great growth potential... and it is an attractive destination for Chilean capital”.

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