Opportunities and bottlenecks (infrastructure, energy, talent) for attracting Foreign Direct Investment in Latin America

Abstract

This research investigates the critical determinants of Foreign Direct Investment (FDI) in Latin America within the context of the post-pandemic global supply chain reconfiguration. As multinational corporations increasingly adopt "nearshoring" and "green-shoring" strategies to mitigate geopolitical risks, Latin America has emerged as a strategic destination. However, the transition from a commodity-dependent investment model to high-value-added sectors is hindered by significant structural constraints. This study analyzes the interplay between three primary pillars: infrastructure, energy, and talent. Utilizing a mixed-methods approach combining econometric panel data analysis (2014–2024) with a Comparative Qualitative Analysis (QCA) the research identifies the specific bottlenecks that deter high-quality capital. The findings reveal that while the region possesses a comparative advantage in renewable energy potential, aging electrical grids and "transmission gaps" prevent the full realization of green-shoring opportunities. Furthermore, the "digital divide" and deficiencies in 5G deployment act as ceilings for Industry 4.0 integration. Most critically, a profound STEM "skills gap" and the misalignment between academic curricula and industrial needs limit the domestic "knowledge spillover" effect, trapping several nations in low-skill manufacturing enclaves. The results suggest that geographical proximity to the North American market is insufficient without a synchronized upgrade of physical and intangible assets. The study concludes that institutional stability and a triple-helix collaboration (state-industry-academia) are essential to dismantle these bottlenecks. Ultimately, the research provides a strategic roadmap for policymakers to harness FDI as a catalyst for sustainable economic growth and technological upgrading in the region.