Transnationals' profits from LatAm & Caribbean reached 113 billion in 2011 [View all]

[Catherina]

Transnationals' Profits Come from LatAm and Caribbean


Quito, May 16 (Prensa Latina) The profits obtained by trans-national companies in Latin America and the Caribbean multiplied by five in the last ten years, going from $20.4 billion USD in 2002 to $113.6 billion USD in 2011.

Around 55 percent of those profits, also known as Direct Foreign Investment (DFI) rents, are sent to the headquarters of the transnationals, according to a report from the Economic Commission for Latin American and the Caribbean (ECLAC).

The considerable increase in those profits tends to neutralize the positive effect of direct foreign investment on the balance of payments, said the UN entity.

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According to ECLAC, transnational companies are present in almost all the sectors of the economy and generate considerable profits in a context of domestic demand increase and high prices of the elementary export products.

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The report describes FDI as increasingly focused on the exploitation of natural resources, particularly in South America. Manufacturing represents a fairly low proportion of inward FDI (except in Brazil and Mexico).

In addition, the profits of transnational enterprises operating in Latin America and the Caribbean (also known as FID income) grew fivefold in nine years, rising from 20.425 billion dollars in 2002 to 113.067 billion dollars in 2011. On average, transnational enterprises were repatriating a slightly higher proportion of profits to their parent companies (55%) than they were investing in the countries of the region where they were generated (45%).

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Other countries that posted higher figures than in 2011 were Argentina (27%), Paraguay (27%), Bolivia (23%), Colombia (18%) and Uruguay (8%). In Central America, the most striking results were El Salvador (34%), Guatemala (18%), Costa Rica (5%), Honduras (4%) and Panama (10%) (which remains the subregion's main recipient).

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United States and European Union countries remain the main investors in Latin America and the Caribbean, with Canada and Japan also making significant contributions. Having said that, 2012 saw a dramatic rise in the proportion of FDI from the region's own countries (14% of the total). A high percentage of the investment received cannot be attributed to any particular economy because of the increasingly common practice of transnationals channelling their investment abroad through subsidiaries in third countries.

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Links to the report in Spanish and in English