Latin American mining investment is led by the private sector. The key
policy question that Latin American countries are addressing, then, is
how to ensure that foreign direct investment (FDI) promotes socially and
environmentally sustainable economic development. Mining investment
enhances gross domestic product (GDP) growth, but does not necessarily
address challenges like environmental governance, employment generation
or local-level community development. However, the Latin American
experience shows how some countries are attracting the kinds of foreign
investment that can address these challenges, with a focus not only on
the quantity of FDI, but also on quality, in terms of meeting the social
and environmental standards of the international mining industry.
Governments have also implemented fiscal arrangements to increase state
capture of extractive rent and to promote local level benefits. This
brief describes these challenges in the Latin American context, and
provides an overview of the investment policies and incentive packages
countries are using to attract responsible FDI and turn foreign
investment into concrete and sustainable development.
Latin American countries have been successful in attracting not only
quantity in FDI, but quality as well, as evidenced by the large number
of environmentally and socially responsible companies investing in the
Maximisation of fiscal revenues still remains a challenge. Economic
incentives for attracting private investment, such as tax schemes,
differ from one country to another. It is important to tailor the
choices of such incentives to each country’s context.
Glave, M. ELLA Policy Brief: Mining in Latin America: Attracting Quantity and Quality in FDI. ELLA, Practical Action Consulting, Lima, Peru (2012) 6 pp.