Every month, in these weekday stories as well as in the pages of the Domingo Brief, we track some of the major investments being made by the world’s largest transnational corporations in Latin America.

Whether carmakers’ big Mexican moves or Telefonica’s recent Andean divestments, we try to ensure you’re up to date on all of the ways in which foreign direct investment (FDI) is powering the region’s economic success stories.

Bubble chart comparing yearly Foreign Direct Investment outflows across Latin American countries, showing Brazil and Chile as the largest investors | Sources: CEPAL, Latinometrics
Brazil and Chile are LatAm's biggest investors

Yes, while Brazil tops the investor ranking list with nearly $20B in average annual outflows since 2019, Chile is the true success story of Latin America. The region’s fifth-largest economy has averaged over half of Brazil’s outflows, in the process outpacing larger markets like Argentina, Colombia, and especially Mexico.

A few factors explain this. To start, Chile’s long history of macroeconomic and political stability have contributed to the country’s economic development, especially relative to the rest of the region. Neighbors like Argentina or Bolivia have struggled with fiscal discipline or robust legal frameworks, causing decades of lost progress owing to economic volatility and polarization.

Chile’s post-1990 consensus on consistent pro-market policies have helped its companies develop a stronger financial health. And owing to the country’s small domestic market, Chilean firms are more incentivized than their peers in, say, Mexico to internationalize through acquisitions or greenfield investments to power their growth. In fact, Chilean companies – like many of their peers from around Latin America – will actually choose to invest within the region over far-off markets like Europe and Asia.

Treemap comparing the value of FDI announcements by companies in Latin America by region, showing Latin American countries are the largest investors in the region | Sources: CEPAL, Latinometrics
Latin America invests in itself

This helps explain the rise of Chile’s multilatinas, which have strengthened the country’s investor profile in recent decades. Whether with the region’s largest airline (LATAM, formerly LAN) or retailers like Falabella and Ripley which have set up shop across the Andes, Chilean firms have had Latin America on their mind since liberalization, and it shows.

Even in sectors like energy and forestry, which can be often protected by domestic lobbies, Chilean giants like Arauco have diversified their assets by investing in Brazil and Uruguay.

No doubt much of the region can look from looking south to how smart policies have turned a country of fewer than 20M people into Latin America’s largest investor success story.

What would it take for Mexico to rival Chile on outward FDI within five years?