Brazil Only Loses to Chile as the Best Place to Invest in LatAm

A gas pipeline in Brazil According to a report from the World Economic Forum meeting this week in the Chilean capital Santiago, Chile, Brazil, Colombia and Peru figure as the most attractive countries in Latin America for private investment in infrastructure. At the other end Venezuela, Bolivia and the Dominican Republic figure as the less attractive.

The report "Benchmarking National Attractiveness for Private Investment in Latin American Infrastructure", covering twelve countries in Latin America and the Caribbean assesses the main drivers of private investment in infrastructure projects for ports, airports, roads and electricity.

This is the first time that the World Economic Forum has developed an index specifically analyzing the investment environment for infrastructure.

The World Economic Forum on Latin America 2006 in São Paulo identified poor infrastructure as a major obstacle to the region's ability to compete globally and as one of the priority areas in which the World Economic Forum needed to explore alternatives and catalyze actions to overcome the current shortcomings.

The study features the Infrastructure Private Investment Attractiveness Index (IPIAI), a customized, methodological tool gauging the institutions, factors and policies making it attractive for private investors to invest in infrastructure projects. An assessment of infrastructure investment opportunities is also performed for each of the countries covered.

Infrastructure Private Investment Attractiveness Index

Rank Country Score

1 Chile 5.43
2 Brazil 4.40
3 Colombia 4.33
4 Peru 4.23
5 Mexico 4.04
6 Uruguay 4.02
7 El Salvador 3.97
8 Guatemala 3.64
9 Argentina 3.41
10 Venezuela 3.37
11 Bolivia 3.34
12 Dominican Republic 3.33

The eight pillars measured by the IPIAI are:

* Macroeconomic environment: economic stability, market size and growth prospects
* Legal framework (rule of law), including regulatory efficiency, public ethics and the effectiveness of dispute settlement procedures
* Political risk
* Ease of access to information
* Sophistication and development of the financial markets that enable infrastructure financing
* The country's track record on private investment in infrastructure over the past 15 years
* Relations between government and society, including society's willingness to pay for the services related to infrastructure
* Government readiness to deal with and ability to facilitate private investment in infrastructure

"The IPIAI provides country-specific diagnostics about relative national strengths and weaknesses in attracting private infrastructure investment," said Irene Mia, Senior Economist at the World Economic Forum's Global Competitiveness Network.

"From an investor's perspective, the IPIAI provides a customized toolkit for investment decisions and location choices in Latin America while it guides policy-makers in the choice of the best policies to foster their national attractiveness for private investment in infrastructure and in prioritizing sectors and measures," said Julio Estrada, Research Projects Manager for Latin America at the World Economic Forum.

Chile-Brazil Ties

Chile ranks among the ten major trade partners of Brazil. It is the seventh largest destination for Brazilian exports, and the eight largest imports source.

From 2002 to 2006, the trade flow between the two countries more than tripled, rising from US$ 2.1 billion to US$ 6.8 billion – always with a positive trade balance in favor of Brazil.

During the same period, Brazilian exports went up from US$ 1.46 billion to US$ 3.89 billion, a 266% increase. Imports saw an even greater increase: from US$ 648 million to US$ 2.9 billion (447%).

Industrialized, manufactured and semi-manufactured goods answer to 70% of the Brazilian export basket to Chile. In 2006, the main items exported were raw petroleum (29.35%) and cellular telephones (4.45%).

Automobile bodies, automobiles, chassis and tractors also accounted for a significant share – together, they answered to 14.8% of exports.

The most imported commodities by Brazil were products derived from copper, the main export item of Chile: 68.94%. The country also imports salmon (2.02%), wine (1.26%) and newsprint paper (0.76%).

Anba, ABr

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