Foreign investment in developing regions by for instance foreign direct investment (FDI), benefits the receiving parties' development by providing them with financial, technological and personnel skills inputs or resources. Macroeconomic policies geared to stability and market-orientated reforms such as privatization, are major criteria in gaining the recipient countries the necessary credibility and viability in the eyes of potential investors for the latter to invest.
Since 1990, large flows of foreign capital have been invested in Latin America and the Caribbean. It is estimated that US$65,000 million entered the region in 1993. Most of this foreign investment, as in previous years, was targeted for a few countries, with Mexico receiving the most, followed by Argentina and Brazil, whilst Chile, Columbia, Peru and Venezuela also attracted substantial foreign investment. A recent trend in the region has been the replacement of commercial bank loans by bond and equity portfolio flows and foreign direct investment. Foreign direct investments have moved away from extractive and manufacturing industries and toward capital-intensive service industries such as public utilities, transport and telecommunications. The USA is the major foreign investor in the region.