The value of Spanish investment in Latin America
Many ties unite Latin Americans and Spaniards. Our countries share cultural and social ties, and consequently, ties in the economic field. Spain is the second-largest investor in the region, with companies such as MAPFRE that bring their experience in critical sectors of the economy to the other side of the Atlantic, generating quality employment and contributing to socio-economic development.
Spanish investment in Latin America currently is around €150 billion. Approximately half is in Mexico and another €45 billion in Brazil. They are followed by Chile and Argentina as the main investment destinations, with Peru as an important destination, and Colombia on an upward trend. Uruguay also stands out as a country that, due to its small size, does not present such high absolute figures, but with deep ties with Spanish companies in areas such as renewable energy, which has made it a leader in the region.
Companies will intensify their commitment to Latin America
As happened in so many other sectors, the pandemic slowed investment by Spanish multinationals over the past two years. But now, 77% of Spanish companies plan to increase their investments in the subcontinent this year, which is even higher than the record prior to the COVID-19 outbreak. This is the main conclusion of the 14th Panorama of Spanish Investment in Latin America, created by Casa de América and IE University in collaboration with Llorente y Cuenca and Iberia. Professionals and economists explain that the Spanish commitment to Latin America will increase once the worst of the health and economic crises have passed.
The model of companies based in Spain but expanding their activity to Latin America is characterized by permanence and long-term vision. This is the case of MAPFRE, which began its internationalization process in Colombia in 1984 and is now present in 17 countries in the region. This growth has also reached other continents more recently, leading MAPFRE to be the multinational company it is today, but with a heavy Latin American accent. Thirty-five percent of MAPFRE’s operations take place in Latin America.
Another main feature of Spanish companies that look to Latin America is their role as a link between this region and the rest of the world, particularly Europe. Many foreign companies that come to the subcontinent do so together with their Spanish counterparts. They see the opportunity to enter Latin America in their established structures, especially in the economic and cultural connections between our countries.
Opportunities for Latin Americans
What is the impact of this approach by Spanish companies?
“One of the biggest challenges facing Latin America is informal employment. In many of these countries, about half of the people who work do so without a legal contract and in worse conditions. In this context, companies like MAPFRE are generators of quality employment, which enables thousands and thousands of Latin Americans to find a job and a personal path with which they can achieve self-fulfillment,” said Jesús Martínez Castellanos, CEO LATAM of MAPFRE. In addition, in a world where innovation and digitalization are becoming increasingly relevant, companies like MAPFRE bring advances to the region in these fields that they share with Latin American professionals and enrich their economy.
One of the most noteworthy aspects of the report on Spanish investment is that, after surveying executives from more than a hundred companies present in Latin America, skilled labor is an increasingly decisive factor in making the leap and establishing themselves in the area. A third of the companies already consider this to be one of the main competitive advantages offered by the region.
The survey offers other interesting data about the vision of Spanish executives. The best cities to base headquarters are Mexico City, Miami, Panama City, and Santiago de Chile. Year after year, the most attractive option continues to be the capital of the country in which most companies operate, and in second place are cities that are very Latin American but not located in the subcontinent and which Spanish executives rate very highly in all aspects. Beyond the professional aspects, the safety and quality of family life in Panama City and Santiago are especially valued. Concerning leisure, Mexico City and Buenos Aires are particularly of note.
The insurance industry, fundamental to the economy in Latin America
MAPFRE is the leading general insurance company in Latin America. The insurance industry, as Jesús Martínez Castellanos noted, “makes a key contribution to the countries’ economies.” For example, it is the leading institutional investor supporting the governments’ public debt, an activity in which MAPFRE stands out for its long-term investment profile. It is also one of the best partners in reducing public spending by covering the costs generated by natural catastrophes in a region where they are more frequent and the costs derived from traffic accidents, such as healthcare.
Latin America has significant insurance needs. In many countries, more than 50% of vehicles, 90% of homes in areas where catastrophes are common, and more than 90% of companies (an essential aspect for the survival of many SMEs) remain uninsured. It is a scenario full of challenges that also opens up enormous possibilities for the development of the insurance industry and makes MAPFRE optimistic about the future in the region, with forecasts of growth for the coming years.
The contribution of Spanish companies in Latin America is not only limited to the economic sphere. They also play a vital social role. In a region that COVID-19 has hit particularly hard, many companies have intensified this aspect of their work, as has Fundación MAPFRE, which has contributed more than $35 million in aid since the outbreak of the pandemic, reaching 1.1 million Latin Americans.