Foreign Investment Versus Employment


News from Panama / Tuesday, May 21st, 2013

I found this statistic amazing.  For every million dollars that comes into Central America as Foreign Direct Investment, only 4.7 jobs are created on average.

In Nicaragua, for example, an average of six new jobs are created per million dollars in incoming FDI, this is the highest number among the countries in Central America. “The data reflects the recent report on FDI in Latin America and the Caribbean 2013, by the Economic Commission for Latin America and the Caribbean (ECLAC),” noted an article in Laprensa.com.ni.

According to the report, in the region there are significant differences between countries, but it concludes that the overall employment figures are “modest”. “FDI in Latin America has modest effects on job creation, as it generates on average 2.5 jobs per million dollars,” said ECLAC.

Hubo Beteta, director of ECLAC subregional headquarters in Mexico, says understanding how FDI contributes to the transformation of production in Latin America and thereby its competitiveness, has led to the discovery that investors come because they seek access to strategic natural resources, accessing export platforms early in order to reach large markets such as the U.S. A third concern is access to new and larger markets such as Brazil.

However, according to the official “instead of becoming more sophisticated in their industrial infrastructure, companies will be regressing, being exporters of natural resources with little added value, low job creation and altering the capacity of other sectors.”