IE Business School and Air France KLM Panorama Report on Spanish investment in Latin America

Thirty eight large Spanish firms took part in the survey, all of which were either listed on the Madrid Stock Exchange, or had major investments in the region. These companies have an aggregate annual turnover of over 100 billion Euros, and have assets totaling 2,500 billion.

The stock invested by Spain in the Latin America region totals some 132 billion Euros, over 165 billion dollars, which is almost equivalent to Ecuador’s GDP and greater than that of Guatemala, Bolivia, Uruguay or Panama.

The report finds that while Latin America will continue to be a prime destination for Spanish investment, the increase in interest in investment in other destinations like the EU, Asia, or Africa, will slightly erode the position of total dominance the region has among Spanish investors.

“Last year 95% of the companies that took part in the survey hoped to increase their turnover in Latin America over the next 3 years, whereas the figure now stands at 89%. Moreover, in the previous report 81% of Spanish companies with a presence or interests in Latin America expected their business in Latin America to have a larger turnover than their Spanish operations over the next 3 years, while this year only 74% still hold that belief. They are not large drops, and the figures still indicate that Latin America is the preferred destination for investment by Spanish companies, but it is clear that little by little, Spain and Europe’s recovery, and burgeoning and increasingly real business alternatives such as those in the US, Asia, or Africa, are changing companies’ preferences,” says Juan Carlos Martinez, an economist at IE Business School and director of the report.

Vincent Coste, General Director of AIR FRANCE KLM for the Iberian Peninsula says that the growth of AIR FRANCE KLM group, a leader in terms of Latin America destinations with 26 routes, has been in lockstep with the growth of Spanish firms in the region. “Our results in the Spanish market in terms of flights to Latin America are in line with the answers provided by the large Spanish firms that have taken part in this survey, which further supports our expectations that the region will see further development."

Skilled labor in Chile, Mexican competitiveness, and Brazil’s size

Chile is the economy that has the best outlook in the Latin America region for 2014 according to participants in the survey, who gave it a score of 3.27 out of 4. It was followed by Mexico, which scored 3.21, a higher score than in previous editions of the report, Colombia with 3.16, and Peru with 3.08.

“There are no brusque changes, although there is a slight trend whereby potential government reform in Mexico is making it more attractive, while Brazil is losing a little impetus. In any case, both are still key countries in the region,” says Professor Juan Carlos Martinez.

Mexico stands out as the most interesting country due to its geographic position, its free trade agreements, and its competitiveness. Brazil stands out because of its internal market and raw materials, and Chile is recognized in the report as the country that offers the best supply of skilled labor, followed by Mexico and Colombia.

The full report is available at http://static-frm.ie.edu/informeinversionlatam