SANTIAGO, Aug. 10 (Xinhua) -- The Unated Nations' Economic Commission for Latin America and the Caribbean (ECLAC) warned Thursday that foreign direct investment (FDI) flows in the region have been dropping and are likely to contract by 5 percent this year.
In 2016, total FDI in Latin America and the Caribbean shrunk by 7.9 percent from 2015. It reached 167 billion U.S. dollars, with a sharp drop of 17 percent compared to 2011.
ECLAC Executive Secretary, Alicia Barcena, highlighted the new trends of global FDI in a context of "strong technological and geopolitical transformations.", presenting ECLAC's annual report on FDI in Santiago, Chile.
Facing with this situation, Barcena called on governments to enact policies to attract investments as part of sustainable development.
She blamed the drop in FDI on low raw material prices and its impact on natural resource investments, coupled with slow growth in some countries, increasing technological sophistication and the expansion of the digital economy.
"In 2016, Latin America and the Caribbean received 10 percent of global FDI, a similar participation as in 2015," she said, adding that this was lower than the average 14 percent from 2011 to 2014.
"Despite this lower trend, FDI represents 3.6 percent of the region's GDP, when the global average is of 2.5 percent," added Barcena.
The executive secretary of ECLAC also pointed that outbound capital flows have surpassed FDI totals in several countries between 2010-2016.
Despite its recession, Brazil remained the main destination for FDI in 2016, accounting for 47 percent of the total, with a 5.7 percent rise to 78.92 billion dollars.
Mexico received 32.113 billion dollars in 2016, making the second-largest destination with 19 percent of the total. The country is still enjoying high levels of investment, while FDI dropped by 7.9 percent.
Colombia accounted for 8 percent of total FDI in 2016 with 13.59 billion dollars while Chile took up 7 percent with 12.225 billion dollars.
However, the ECLAC pointed to severe losses for the natural sector, which lost 18 percent of FDI revenue between 2010-2015, due to low raw material prices.
