Latin America Seizes Investment Opportunities Amid Shift from Globalization

Latin America Emerges as a Key Player Amid Global Nationalism Trends

As nationalism gains momentum in the United States and beyond, the global economic landscape is shifting, creating new opportunities for regions like Latin America. The U.S.'s strategy of near-shoring has opened doors for increased business with its southern neighbors. Notably, U.S. foreign direct investment (FDI) in China has decreased significantly, dropping from approximately $14 billion annually during 2005-2018 to less than $10 billion since 2019. Meanwhile, Mexico saw $21.4 billion in FDI in the first quarter of 2025, marking a 5.4% increase compared to the previous year, with U.S. companies contributing to 38.7% of that figure.

The current strategy of the U.S. government leans towards bilateral rather than multilateral negotiations, which offers Latin American countries a unique opportunity to engage in tailored agreements. With around 20 existing bilateral investment treaties with the U.S., providing benefits such as equitable treatment and arbitration rights, Latin America stands at an advantage in these negotiations.

Latin America's wealth of natural resources, such as precious metals and agricultural products, positions it as an attractive candidate for investment. Recent years have seen a surge in greenfield investments in sectors like energy and mining in Argentina and Brazil. However, smaller countries like Panama, with less developed markets, also present untapped opportunities for investors.

The region's relative isolation from geopolitical tensions affords it the flexibility to maintain positive international relations. Additionally, lower stock prices and higher dividend yields in Latin America make it a favorable environment for increasing asset allocations by investors.

However, attracting significant global investments requires improvements in infrastructure, regulatory compliance, and political stability. Due diligence remains crucial, involving assessments of finances, legal structures, and operational risks, among other factors.

Investing in Latin America carries inherent risks, which necessitates careful consideration during negotiations. By conducting thorough due diligence and collaborating with regional businesses, investors can navigate these risks, opening up promising opportunities in the region.

This period presents a chance for revitalized economic relations between the U.S., Europe, and Latin America. Collective efforts by businesses, trade groups, and independent organizations like Global Americans can foster the political will needed to unite foreign investors with local Latin American enterprises, setting the stage for beneficial partnerships.

Marianne Scott Dwight serves as the Director of Institutional Investor Services at Strategic Insight Group and is a Fellow at AIF Global, with a focus on ESG and sustainable investing.