Strategic Opportunities for Investment in Latin America

Nationalism has taken the center stage in the United States and other countries, as political shifts have moved the world’s focus away from previous globalization trends. In many ways, this has created new opportunities for Latin America, especially as the U.S. prioritizes near-shoring business operations to geographically close neighbors. The changes are stark. While U.S. foreign direct investment (FDI) into China has dropped from around $14 billion per year between 2005 and 2018 to under $10 billion since 2019, in Q1 2025, Mexico alone hit $21.4 billion FDI, up 5.4% year over year, with U.S. firms accounting for 38.7% of that flow.

The current U.S. administration prefers to engage in bilateral rather than multilateral negotiations with countries, which makes space for Latin American countries to establish specific agreements, trade and otherwise, via individual discussion and collaboration.  U.S. bilateral investment treaties with about 20 Latin American countries, which offer protections like fair and equitable treatment and arbitration rights, give  the region an advantage in bilateral negotiations as the U.S. seeks new economic partners.

At a time when many countries are experiencing a depletion of resources or face higher demand than domestic markets can supply, Latin American countries that are rich in natural resources such as gold, silver, and copper, as well as agricultural products and hydropower, provide unique opportunities for investors. In Argentina and Brazil, greenfield investments in energy, hydrogen, lithium, and mining rose significantly in 2024. But other countries in the region, especially those with smaller and less developed markets, remain filled with untapped potential. These resources, combined with geographic location, make countries like Panama particularly ripe for investment and trade.

Latin America benefits by being relatively isolated from geopolitical conflicts outside the region, allowing the flexibility to maintain positive and productive relations with partners in various parts of the world. In addition, stock prices are lower and dividend yields higher in the region — factors that favor more FDI and an increase in asset allocation from investors.

Nonetheless, for these investment opportunities to be appealing on the global stage, certain infrastructure, regulatory compliance levels, and economic and political stability are required to attract institutional investors, particularly those from the U.S. and Europe. As part of the investment process, investors must engage in due diligence processes, gathering data regarding finances, controlling interests, corporate information, legal and regulatory structures, operational procedures, intellectual property, and risk identification, to name a few.

There are risks associated with any investment, regardless of location. For investors interested in Latin America, the costs and risks should be carefully considered and reflected in the negotiation process, especially where it concerns the amount of the investment and the control or ownership of businesses and assets. Carefully conducting due diligence and working with the businesses in the region to mitigate risk can create a bright path forward for foreign investors in a region full of opportunity.

Now is the moment for a renewal of U.S. and European economic ties with Latin America. Businesses, trade associations, and independent policy organizations like Global Americans must come together to generate the political will and leadership necessary to bring together foreign investors and local Latin American businesses. The region is ready for a new wave of mutually beneficial partnerships and outside investment.

Marianne Scott Dwight is an accomplished professional with extensive experience in institutional investor services, fund advisory, and legal counsel. Currently serving as the Director of Institutional Investor Services at Strategic Insight Group since September 2020, Marianne also holds the position of Fellow at AIF Global, focusing on ESG and sustainable investing.

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