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Petróleos de Venezuela tops the list of the largest transnational corporations from developing countries based on foreign assets

22 September 1999

Despite turbulence in emerging markets, flows of foreign direct investment (FDI)(1) by transnational corporations (TNCs)(2) into Latin America and the Caribbean gained five per cent last year to reach a record US$72 billion and Brazil saw its inflows increase by fully $10 billion to reach US$28.7 billion (table 1), states the World Investment Report 1999: Foreign Direct Investment and the Challenge of Development(3), published today by the United Nations Conference on Trade and Development (UNCTAD).

Privatizations accounted for approximately 25 per cent of the FDI inflows to Brazil in 1998. That this country reached such a high 1998 level also reflected a strong long-term commitment by foreign investors at a time of turbulence in many emerging markets.

FDI inflows to both Mexico and Argentina fell last year 20 per cent and 30 per cent respectively, which brought FDI into these countries back to levels registered in 1995-1996.

The United States continues to be the largest investor into the region with a 1998 total of US$17 billion down from US$24 billion in 1997 but 1997 FDI flows from the European Union into the region almost matched those of the United States. WIR99 reports that in 1997, 44 of the largest 100 foreign affiliates in the region (ranked by sales) were from the United States, while 37 of them were owned by TNCs from the European Union.

Mexico’s FDI inflows, while down from 1997, were above 1995 and 1996 levels and this report suggests that Mexico will continue to be an important magnet for manufacturing investment from United States TNCs, also as a result of the North American Free Trade Agreement (NAFTA).

Recent FDI inflows into Argentina (as into Brazil, Paraguay and Uruguay) have been influenced by the extension of the country’s market into the larger MERCOSUR area. While the overall FDI volume in 1998 into Argentina declined, it was close to the annual average seen from 1994-1997. The fall back may reflect the slowing of the privatization process.

Privatizations have been a key factor in inflows to Venezuela and Colombia in recent years. These two countries received lower inflows in 1998 but the levels registered still remain much above their 1994-1996 average (estimated at about US$1.8 billion for Colombia, and at about US$1.3 billion for Venezuela).

FDI outflows from Latin American and Caribbean countries continued to be strong at US$15 billion last year, about the same level as was reached in 1997, and twice that registered during 1994-1996. But a key distinction needs to be made between outflows from offshore financial centres, which amounted to about US$5 billion, and those that originate in other countries. The latter kind reflects a growing trend of TNCs from the region investing in neighbouring countries – a trend which is particularly noteworthy0 within MERCOSUR. This wave of Latin American FDI has been led by firms mainly from Argentina, Chile, Mexico and to a lesser extent Brazil. Assets abroad by firms headquartered in these countries can be estimated between US$40 and US$50 billions.

WIR99 also notes that: "In an overall turbulent year for financial movements, inflows into offshore financial centres such as Bahamas, Bermuda and Cayman Islands increased in 1998, representing about half of total inflows into Central America and the Caribbean (excluding Mexico)".

Meanwhile, several of the smaller economies (non-financial centres) in the Caribbean and in Central America secured substantial FDI gains last year. Privatizations in the services sector stimulated inflows into El Salvador and Guatemala, while privatizations and more traditional investment in export-oriented assembly manufacturing activities, stimulated FDI inflow gains for Costa Rica, Dominican Republic and Jamaica.

Top TNCs from Latin America

UNCTAD’s top 50 developing country TNC list contains numerous corporations from Latin America (the leading ones are ranked below). This year, Petróleos de Venezuela moved ahead of Daewoo Corporation to claim first place on UNCTAD’s 1999 list of the 50 largest TNCs from developing countries measured in terms of foreign assets. The only other corporation from the region to make the top 10 was Cemex of Mexico in fifth place.


1. Foreign direct investment is defined as an investment involving management control of a resident entity in one economy by an enterprise resident in another economy. FDI involves a long-term relationship reflecting an investor’s lasting interest in a foreign entity.

2. Transnational corporations comprise parent enterprises and their foreign affiliates: a parent enterprise is defined as one that controls assets of another entity or entities in a country or countries other than its home country, usually by owning a capital stake. An equity capital stake of at least 10 per cent is normally considered as a threshold for the control of assets in this context.

3. The World Investment Report, 1999 (Sales No. E.99.11.D.3, ISBN 92-1-112440-9) may be obtained at the price of US$49, and at a special price of US$19 for customers in developing countries, from United Nations Publications, Sales Section, Palais des Nations, CH-1211 Geneva 10, Switzerland, F: +41 22 917 0027, E: unpubli@un.org, Internet: www.un.org; or from United Nations Publications, Two UN Plaza, Room DC2-853, Dept. PRES, New York, N.Y. 10017, USA; T: +1 212 963 83 02 or +1 800 253 96 46, F: +1 212 963 34 89, E: publications.un.org.

For more information, please contact:
Chief, Karl P. Sauvant
International Investment Transnationals and Technology Flows Branch
Division on Investment, Technology and Enterprise Development, UNCTAD
T: +41 22 907 57 07
F: +41 22 907 01 94
E: karl.sauvant@unctad.org
Chief, Carine Richard-Van Maele
Press Unit, UNCTAD
T: +41 22 917 5816/28
F: +41 22 907 0043
E: press@unctad.org.


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