Latin America: Opportunities and Challenges for Global Expansion

Latin America is increasingly on the radar for global companies seeking growth and diversification,  both from outside the region and companies in Latin America expanding across it. During a recent discussion with industry leaders, several themes emerged that highlight both the opportunities and complexities of entering and operating in this region.

The strongest interest continues to center on Mexico, Brazil, Colombia, Chile, and Costa Rica. In some countries, it was specific sectors driving interest; in particular, Chile stands out because of copper, a resource critical to technology manufacturing. Beyond these markets, countries like Peru, Bolivia, and El Salvador are beginning to surface as potential opportunities for companies willing to look beyond the traditional hubs. Argentina is showing encouraging signs as it works toward greater economic stability; if this continues, it could quickly move into a top destination once again.

According to UNCTAD's latest report, investment trends offer a clearer picture of the region's potential. While foreign direct investment in Latin America and the Caribbean fell by 12% in 2024, the underlying trends warrant closer examination. The decline was mainly due to reduced mergers and acquisitions and infrastructure financing. Greenfield investments, where companies are entering LATAM countries for new opportunities, showed resilience and growth.

Brazil remains the largest recipient of foreign capital, supported by ongoing investment in renewable energy sectors, while Mexico led in manufacturing and logistics tied to nearshoring. Guyana and Peru posted significant gains driven by mining and offshore oil projects. These patterns highlight opportunities for companies focused on new ventures and long-term expansion.

One of the most compelling trends shaping the region is nearshoring. As companies seek to relocate operations closer to the U.S., Latin America is emerging as a strategic alternative to Asia post-COVID-related supply chain issues and in response to changing tariff and political relationships. The U.S. government is more engaged than in recent years, actively supporting these initiatives. This shift could position Latin American economies as major beneficiaries, much like China did during previous decades of global supply chain realignment. A telling indicator as companies prepare to shift their operations due to tariffs: applications for the Miami Free Trade Zone have surged over the past year, signaling strong momentum toward regional integration.

Politics is a challenge, but not an impediment

Political dynamics influence investment decisions, and while changes can reshape priorities, they often open new opportunities for strategic moves. Countries like El Salvador, which have stabilized, present opportunities, but investment strategies must align with whether objectives are short-term or long-term.

One clear takeaway from our discussion was the importance of local expertise. Even with a room full of global specialists, everyone agreed that success in Latin America depends on having trusted professionals on the ground. Navigating regulatory, cultural, and operational complexities requires insights that only local experts can provide.

The energy in the room was undeniable, so much so that our discussion extended an extra hour. That speaks volumes about the value of these conversations and the growing interest in Latin America as a destination for global expansion. For companies ready to embrace innovation and growth, Latin America offers exceptional opportunities.

H&CO Can Be a Strategic Partner

We provide end-to-end support for cross-border market entry and operations, allowing our clients to focus on achieving their business objectives. This includes services from entity setup, accounting and tax support, HR & Payroll, Technology, and Human Capital. Our approach combines global expertise with local knowledge, helping businesses navigate regulatory frameworks and cultural nuances efficiently. From nearshoring initiatives to long-term market entry strategies, we deliver the infrastructure and guidance companies need to operate confidently and grow sustainably.

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This article reflects the personal insights of one of our experts and is for informational purposes only. Nothing expressed here should be construed as professional advice, direct recommendation, or specific instruction. For guidance tailored to your specific situation, we suggest consulting with your trusted advisor.