Photo courtesy of The Delian Group

Obviously the decision of where to invest in Latin America deserves deep and careful study; in this post I merely point out some general trends which could serve as a guidepost.

Based on international standards of competitiveness, the consensus number one country in which to invest in Latin America is Chile. Chile is known for its strong institutions, rule of law, low levels of corruption, and a relatively efficient government. Moreover, Chile s commodities (principally copper) and its varied exports provide it somewhat of a cushion to international economic trends. As a result, Chile has sustained a high consistent GDP growth rate for a decade (5.5% from 1985-2009!). Chile has 20 trade agreements with 57 countries, and has a relatively low corporate tax rate (17 %).

Panama ranks highly as well, and has also maintained a consistent GDP growth rate over the past decade. In addition, Panama has improved its infrastructure (widening the Canal, installing a metro, improving roads and rail), and has implemented financial reforms that make it an attractive center of operations.

Peru and Colombia have also had consistent GDP growth of around 5% for most of the past decade, and have as advantages high levels of education and diverse exports from oil to agricultural goods to manufactured products. In addition, Colombia has a balanced budget and very low debt and inflation.

Mexico is poised for real growth. President Pea is taking on some sacred cows (telecommunications, education, petroleum investment) and by doing so has liberalized the economy and improved the prospects for foreign investment. Mexico also has a huge internal market and perhaps the most diverse economy in Latin America, from agriculture to manufacturing to sophisticated telecoms.

In terms of technology, I would again place Chile at the top of the list in Latin America. Chile has the highest per capita broadband penetration in the hemisphere, and has initiated various programs to incentivize foreign investment in start-ups. Start-Up Chile started in 2010 as a pilot, bringing 22 start-ups from 14 countries to Chile. The program provided $40,000 of equity-free seed capital and a one-year visa for the companies to do work in Chile. The admissions process was conducted by Silicon Valley experts. In 2011 the process generated 187 start-ups (from almost 1,000 applications) from over 30 countries.

Various other Latin American countries have now started to emulated Chiles Chilicon Valley experiment and have improved on it. For example, Colombia has put much more money into technology incubators than Chile, and is starting to get better results in terms of start-ups developing actual commercial products in Colombia.

One sleeper might be Argentina, a country with known capability of producing good software (principally for 2D and 3D animation and gaming). With a change in government and market orientation, Argentina could become a technology hub, given its skills and its education level. Another sleeper might be Paraguay, which is enjoying high growth rates; this could be a blip, but the Cartes Administration is investing in infrastructure project on a large scale.