This chapter examines the role of foreign direct investment (FDI) in shaping labour market outcomes in Latin America and the Caribbean (LAC), focusing on employment creation and the quality of jobs generated. It assesses the contribution of FDI to key dimensions of job quality, such as wages, job stability, working hours, labour formality, access to social security, opportunities for skills development and training, and gender equality. This chapter provides a comparative assessment of job creation by major investors in the region, with a special focus on the contribution of investment from the European Union (EU).
Assessing the Socio‑economic Impact of Foreign Direct Investment in Latin America and the Caribbean
A Focus on EU Investments
Abstract
The establishment of new foreign business operations (or greenfield FDI) generated about 5.5 million direct jobs in Latin America and the Caribbean (LAC) between 2003-2024. This is equivalent to roughly 4.4% of formal employment in the region and underlines the importance of greenfield FDI for employment generation. Job creation in the region was particularly strong over the past decade: LAC accounted for 12% of global greenfield FDI-related jobs, well above the region’s share of the world’s population and of foreign investment. The region also recorded the second highest job creation intensity in the world, with nearly 3 000 jobs generated per USD billion invested. Notably, LAC was the only region to see an increase in FDI job intensity over time; that is, the number of jobs created per USD billion invested. This reflects an investment shift from capital-intensive sectors, such as mining, fossil fuels and telecommunications, towards more labour-intensive activities like manufacturing, transport and storage, business services and digital services.
Over the past decade, manufacturing has been the main engine of job creation in LAC, generating 54% of total greenfield FDI-related jobs. The motor vehicles sector alone contributed nearly 20% of all greenfield FDI-related employment, largely concentrated in Mexico. Services accounted for another 35%, with digital services emerging as the most dynamic segment, representing 12% of total greenfield FDI employment in 2014-2024. The energy sector recorded the fastest job growth, with employment in renewable energy more than doubling during the last decade, rising from 1% to 3% of total greenfield FDI jobs, albeit from a relatively low base. Overall, these shifts reflect the broader re-allocation of investment toward activities tied to digital transformation and the energy transition.
Owing to their significant share of total greenfield FDI in LAC, the European Union (EU) and the United States (U.S.) were the two largest sources of greenfield FDI employment in the region, together accounting for nearly 60% of all jobs created by foreign investors. Between 2003 and 2024, EU greenfield FDI generated 1.6 million jobs, more than any other investor, though its share of total greenfield FDI-related employment fell slightly from 30% to 27% as other investors expanded their presence in labour-intensive activities. In particular, the United States expanded investments in digital services, while China increased investments across various manufacturing industries. EU greenfield FDI-related job creation has also become more geographically concentrated: between 2014 and 2024, Mexico absorbed 42% of all EU-related FDI jobs, while employment generation linked to EU greenfield investment declined in Brazil and several other markets.
Over the past two decades, the profile of EU job creation in LAC has evolved significantly. The share of EU greenfield FDI jobs linked to the priority sectors of the EU-LAC Global Gateway Investment Agenda (GGIA), including digital, green energy and health, rose from 23% in 2003-2013 to 35% in 2014-2024. More than half of EU-related jobs are still in manufacturing, especially in motor vehicles, food and beverages, and electrical equipment. Services account for 36% of EU jobs, with information and communication services emerging as the most dynamic area of growth and now accounting for 13% of EU-related employment in the region. Within this sector, the emphasis of EU investment has shifted from telecoms infrastructure, more prominent in the previous decade, towards digital services. Digital services have become a significant source of EU-driven job creation, particularly in countries such as Argentina, Mexico and Brazil. The renewable energy sector has also grown strongly, responsible for 6% of total EU greenfield FDI-related jobs in 2014-2024, an increase of 3 percentage points compared to the previous decade.
The job intensity of EU investment in LAC has increased slightly over the past two decades, averaging about 2 500 jobs per USD billion invested, lower than the 3 200 jobs generated by US investment and the 2 880 linked to Chinese investment. This pattern reflects the EU’s strong focus on capital- and technology-intensive sectors, such as renewables, and high-tech manufacturing, a focus further reinforced by the priorities of the GGIA. Although there has been some re-orientation toward more labour-intensive activities, particularly digital services, EU investment in LAC remains concentrated in sectors that generate relatively few jobs per unit of capital.
While job creation is an important policy objective, the quality of job opportunities created is equally critical. FDI in LAC contributes positively to several key dimensions of job quality: foreign firms are more likely to offer permanent contracts and pay higher wages than domestic firms. In some countries, such as Bolivia and El Salvador, the foreign wage premium is greatest among low-wage workers, helping reduce inequality at the bottom of the pay scale. They also tend to employ a higher share of women; however, they are not more likely than domestic firms to promote women to leadership roles. Overall, the concentration of greenfield FDI in male-dominated sectors, such as medium- and high-tech manufacturing, energy, mining and quarrying, and transport and storage, may perpetuate gender disparities in the labour market as women are less likely to benefit from the higher-quality jobs typically generated by foreign firms in capital- and technology-intensive sectors.
EU greenfield investment in LAC is associated with higher-quality jobs. In Brazil, Uruguay and Guatemala, over 80% of EU greenfield FDI-related employment is concentrated in sectors where average wages are 1.5 to 1.8 times higher than the national average. These sectors also show a lower incidence of low-wage employment compared to the broader economy. Moreover, EU greenfield FDI-intensive sectors are characterised by higher levels of labour formality and better social security outcomes. In Brazil, for example, nearly 90% of workers in these sectors are employed under formal contracts. Similar patterns are observed in Colombia and Uruguay, where EU-invested sectors exhibit higher rates of pension coverage and access to health insurance. On average, EU affiliates in the region reported the highest average wages in capital- and technology-intensive sectors, including chemicals, computers and electronics, pharmaceuticals, and information and communication services.
EU greenfield investment also appears to play a positive role in supporting skills development in LAC. Although investment projects targeting education and training activity make up less than 1% of total FDI, EU investors represent around 32% of these investments, with more than half directed to manufacturing and supporting the development of technical skills. In addition, sectors with a strong EU presence tend to employ a more qualified workforce: in Brazil, for instance, 85% of workers in sectors with a strong EU presence have completed secondary or tertiary education compared to 69% in sectors with limited or no EU investment.
EU greenfield investment in LAC is heavily concentrated in male-dominated industries, such as manufacturing and energy, where female participation remains low. By contrast, in sectors with higher female employment, including education, and professional and technical services, EU affiliates typically offer lower wages than those found in male-dominated industries, mirroring broader cross-industry pay gaps. This pattern indicates that EU investment may risk reinforcing existing gender inequalities in LAC labour markets.
3.2.1. Greenfield FDI created 12% direct jobs in LAC in the last two decades
FDI, particularly greenfield projects, plays a critical role in job creation. Greenfield FDI involves the establishment of new production facilities or business operations from the ground up, directly contributing to employment generation in host countries. Beyond the immediate jobs created, greenfield investment also stimulates indirect employment through supply chain linkages as foreign firms engage with local suppliers, service providers and distributors (OECD, 2022[1]). While FDI has played a role in supporting employment across LAC, the scale and distribution of job creation vary widely depending on sectoral focus and investment characteristics (Box 3.2).
Statistics on jobs created by FDI are not systematically collected in most countries. Project-level data on greenfield FDI provide a valuable alternative, offering comparable estimates of direct employment creation across countries. Although these figures do not necessarily reflect the exact number of jobs generated as they are often based on investor announcements, they give a useful indication of the employment impact of such investments (see Box 3.1).
Over the past two decades, greenfield FDI has generated around 5.5 million direct jobs across the LAC, equivalent to 12% of global greenfield FDI employment (Figure 3.1, Panel A). While this share is lower than that of Europe and Central Asia (28%), and East Asia and the Pacific (26%), which together account for more than half of all FDI-generated jobs worldwide, it remains significant as it exceeds LAC’s 8% share of the global population. FDI has also been relatively employment-intensive in the region. Between 2014 and 2024, LAC attracted about 10% of global greenfield FDI capital investment, a slightly smaller share than its contribution to job creation, suggesting that investment projects in the region tend to create proportionally more jobs. Measured against LAC’s domestic labour markets, the impact is also notable. Between 2003 and 2024, greenfield FDI-created jobs represented about 4.4% of formal employment in LAC, a share comparable to Europe and Central Asia (4%), higher than in East Asia and the Pacific (3.5%) and North America (2.3%), though below Sub-Saharan Africa (5%) and South Asia (8%).
Assessing the direct employment effects of foreign direct investment (FDI) is challenging, especially for cross-country or sectoral comparisons. Official FDI statistics, usually based on surveys of foreign-owned firms, provide valuable macroeconomic information, but rarely include detailed data on jobs created.
To address this gap, many analyses use greenfield FDI project data, which offer a consistent and comparable measure of direct job creation across countries. These figures indicate the number of jobs projects announce or are estimated to create rather than verified employment outcomes.
One widely used source is the Financial Times’ fDi Markets database, which compiles project-level information on company activities, capital investment and employment. Where direct figures are unavailable, jobs and investment are estimated using a standardised proprietary methodology. While this approach differs from official government data, it allows for systematic analysis of FDI-related employment effects that are otherwise not captured in national statistics.
To fully understand the impact of FDI on employment in LAC, it is important not only to consider the total number of jobs generated, but also the extent to which investment translates into employment, measured by the number of jobs generated per USD billion invested. Greenfield FDI in LAC is estimated to have generated nearly 3 000 direct jobs per USD 1 billion invested in 2014-2024, second only to Southeast Asia (Figure 3.1, Panel B). FDI-driven job intensity varies significantly across regions, shaped by both sectoral composition and the geographical distribution of investment. South Asia exhibits the highest job intensity, supported by robust FDI in business services, alongside investment in relatively more labour-intensive manufacturing activities (OECD, Forthcoming[2]). In LAC, job intensity is bolstered by FDI in the manufacturing sector, particularly in Mexico, as well as increasing flows into digital and business services. North America and Europe's lower job intensity reflects a concentration of FDI in tech-intensive sectors such as information and communication technology (ICT). In the Middle East and North Africa (MENA) and Sub-Saharan Africa, FDI is primarily in capital-intensive industries, including energy, extractives and real estate, resulting in limited direct employment impact (OECD, Forthcoming[2]).
LAC is the only region where the job intensity of FDI increased between the last two decades (2003-2013 and 2014-2024). This indicates that FDI in the region shifted toward more labour-intensive sectors or activities, enhancing the potential contribution of greenfield FDI to employment generation. In particular, greenfield FDI declined in capital-intensive sectors, such as mining, fossil fuels, telecommunications and financial services, areas that have historically generated relatively few jobs. At the same time, FDI expanded in more labour-intensive sectors, such as food, beverages and tobacco, and transport and storage. Notably, some re-allocation within sectors has also taken place. For example, within the broader information and communication sector, FDI has shifted from traditional telecommunications toward digital services, which tend to be more labour-intensive. These sectors not only offer higher employment per unit of investment, but also gained a larger share of total FDI, contributing significantly to the rise in overall job intensity during the last two decades. Notably, in the post-COVID years (2019-2024), job intensity has shown a declining trend in line with global trends driven by different factors, including inflation and redirection of FDI toward capital-intensive sectors, such as renewable energy (OECD, Forthcoming[2]).
Note: The aggregate for LAC excludes Aruba, the Bahamas, Bermuda, Cayman Islands, Curaçao, Turks and Caicos.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
Foreign direct investment has contributed to employment creation across Latin America and the Caribbean, though its overall impact remains modest and shaped by sectoral composition, investment modality and local economic structure.
Macroeconomic studies point to a positive association between FDI inflows and employment growth, both in the Caribbean (Craigwell, 2006[4]) and in Latin American economies (Modrego et al., 2022[5]) (Vacaflores, 2011[6]). A study on Mexican states finds that FDI reduces the overall unemployment rate, but does not have significant impacts on informal sector employment and unemployment duration (Sharma and Cardenas, 2018[7]). Employment gains in Latin American countries tend to be more significant in countries with more stable macroeconomic conditions and low inflation (Vacaflores, 2011[6]).
At the sector level, the most consistent employment effects are observed in manufacturing and export-oriented industries. In Mexico, for example, FDI has had a statistically significant impact on employment (Saucedo, Ozuna and Zamora, 2020[8]), though the scale has been relatively limited and concentrated in blue-collar roles within capital-intensive, export-focused industries (Waldkirch, 2011[9]) (Waldkirch, Nunnenkamp and Alatorre Bremont, 2009[10]). These jobs are often tied to export platforms, especially in industries like automotive and electronics. Yet the magnitude of employment creation is modest and employment gains tend to diminish in higher-skill, technology-intensive segments (Nunnenkamp and Alatorre, 2007[11]).
Moreover, while greenfield FDI is generally more labour-intensive than mergers and acquisitions, its job creation potential can be curtailed when the investment is concentrated in capital-intensive activities. In Mexico’s automotive sector, for example, large-scale greenfield projects expanded production capacity, but relied heavily on automation, limiting local employment impact despite strong export growth (Ramírez, 2000[12]).
Indirect employment effects, such as those generated through linkages with local suppliers, have been weaker than expected in much of the Caribbean. Structural constraints, such as small domestic markets, limited capabilities among local firms and low integration into global value chains restrict the extent to which FDI can generate spillover-driven job creation (Sanchez-Martin, de Pinies and Antoine, 2015[13]). In larger countries like Brazil, foreign capital is linked to positive impacts on the labour market, especially regarding human capital development (Arbache, 2004[14]).
Taken together, the evidence suggests that, while FDI can support employment in LAC, its effect is far from automatic. Policy efforts that enhance workforce skills, strengthen domestic supplier networks and align FDI attraction with inclusive employment goals are essential to maximising job creation.
3.2.2. The European Union and the United States have contributed considerably to job creation in LAC
Greenfield FDI from the European Union and the United States plays a particularly important role in job creation across LAC. Between 2003 and 2024, investors from the EU were the leading source of FDI-related employment in the region, generating nearly 1.6 million direct jobs, followed closely by investors from the United States, with 1.5 million jobs (Figure 3.2, Panel A). Combined, these two sources accounted for nearly 60% of all greenfield jobs created in LAC over the past two decades (Figure 3.2, Panel B). In order of magnitude, the direct jobs created by EU and US investors combined were equivalent to around 2.5% of formal employment during the same period. Investors from within the LAC region also made a notable contribution, generating about 9% of total FDI jobs. Other important investors included China and the United Kingdom, which contributed 6% and 4% of total FDI-related jobs, respectively.
The relative importance of major investor countries in FDI-related job creation has shifted over the past two decades. Except for the United Kingdom, all major investors increased their employment generation in the most recent decade (2014-2024) compared to the earlier period (2003-2013). EU investments generated over 800 000 jobs between 2014 and 2024, representing an increase of over 40 000 compared to the previous decade (Figure 3.2, Panel A). While EU FDI-related employment experienced growth in absolute numbers, its share of total FDI-related employment in LAC declined slightly from 30% to 27%, indicating that EU job creation grew more slowly than the regional average (Figure 3.2, Panel B). This occurred even though the EU’s share of capital investment in LAC remained relatively constant at around 30% across both decades, suggesting that EU investment became less labour-intensive over time and shifted toward more capital-intensive sectors, like renewable energy (see Chapter 1). The United States recorded a more substantial increase, generating an additional 190 000 greenfield FDI-related jobs in 2014-2024 compared to 2003-2013 (Figure 3.2, Panel A). This expansion raised the US share of total employment from greenfield FDI by 3 percentage points, up to almost 30% of total greenfield FDI-related jobs (Figure 3.2, Panel B).
China experienced the most pronounced growth, more than doubling its share of FDI-related employment in the region from 3% to 8%. This trend closely mirrored the rise in its share of FDI capital investment in LAC over the same period (see Chapter 1). Investors from the LAC region contributed to 9% of total greenfield jobs during 2014-2024, maintaining the same share as in the previous period. The United Kingdom was the only major investor to experience a decline in both absolute job creation and relative share, with its contribution falling from 4% to 3%. These trends highlight both the enduring significance of traditional investors, such as the European Union and the United States, and the rising influence of newer players like China in shaping the employment landscape linked to greenfield FDI in LAC.
Note: The aggregate for LAC excludes Aruba, the Bahamas, Bermuda, Cayman Islands, Curaçao, Turks and Caicos.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
The contribution of greenfield FDI to job creation and the relative importance of different investor countries vary significantly across LAC economies. Between 2014 and 2024, FDI-related employment was heavily concentrated in the region’s largest markets, with Mexico alone accounting for 46% of total greenfield FDI jobs, followed by Brazil (16%) and Colombia (7%) (Figure 3.3, Panel A). While these major economies dominated job creation across all sources of FDI, their respective contributions reveal distinct regional patterns (Figure 3.3, Panel B). EU greenfield FDI was the leading source of FDI-related employment in several South American countries, most notably in Argentina (37%), Brazil (31%), Chile (40%) and Uruguay (55%), as well as in Caribbean economies such as Cuba (49%) and the Dominican Republic (35%). In contrast, the United States held a stronger position in Central America and Mexico, where it accounted for 32% of total FDI job creation, surpassing the EU’s 25% share in those sub-regions.
Over the past two decades, the overall distribution of FDI-related jobs across LAC countries remained relatively stable, with only a few economies experiencing significant shifts in the volume or composition of job creation between 2003-2013 and 2014-2024. In South America, Chile and Colombia, for example, followed contrasting trajectories: Chile experienced a moderate decline in FDI-related employment, largely due to reduced inflows from traditional partners, such as the United States and the United Kingdom, while Colombia saw a modest increase, supported by steady investment from the United States and the European Union and growing contributions from intra-regional sources.
Among smaller economies, several also registered meaningful changes. Panama, for example, saw a moderate decline in FDI-related employment, driven by the United Kingdom and the European Union. Costa Rica saw a substantial increase, benefiting from deeper integration into high-value global supply chains and strong investor interest from OECD partners. In the Caribbean, the Dominican Republic saw a 50% job increase over the two decades, supported by US and EU investment, and new announcements from Asia. FDI jobs in Jamaica more than doubled, driven by US investment. Guyana recorded one of the strongest increases in the region, driven by large-scale investment in its emerging oil and gas sector, particularly from the United States, regional investors and the European Union.
At the regional level, the most significant structural shifts were shaped by trends in Mexico and Brazil. Mexico experienced a strong increase during the 2014-2024 period, led by rising investment from the United States and China, and reflecting tighter integration into North American manufacturing networks. In contrast, Brazil saw a net decline, driven by reduced job creation from the EU in the manufacturing sectors (see Box 3.3 for a detailed exploration of job creation trends in Mexico and Brazil).
While the largest economies in LAC naturally attract the highest volumes of investment and account for the majority of FDI-related employment, smaller developing economies can realise greater relative gains. In many of these countries, FDI often represents a higher share of GDP compared to larger or more advanced economies. In such contexts, even modest FDI inflows can have a significant impact on labour markets, given the smaller size of the working-age population and more limited domestic investment capacity. In environments where alternative sources of capital and industrial upgrading are scarce, FDI has the potential to play a more transformative role, creating jobs and serving as a catalyst for economic diversification and skills development.
Note: In panel B, countries are ranked according to the share of FDI jobs created by EU investors.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
Mexico and Brazil together account for over 60% of total greenfield FDI-related job creation in Latin America and the Caribbean, as well as a comparable share of overall greenfield FDI inflows into the region. Combined, they also represent more than half of the region’s total population. Given their dominant role, trends in these two economies are crucial to understanding the broader employment impact of FDI across the region. Changes in the volume, source or sectoral focus of FDI in Mexico and Brazil disproportionately shape regional dynamics, driving patterns of job creation, industrial upgrading and deeper integration into global value chains throughout Latin America and the Caribbean.
In Mexico, total FDI-related employment increased by 58%, rising from 860 000 jobs in 2003-2013 to more than 1.35 million in 2014-2024 (Figure 3.3, Panel A). As a rough point of comparison, average total employment grew by about 21% over the same period, indicating that FDI-related jobs expanded at a much faster pace than overall employment. The United States was the main contributor to FDI jobs growth, accounting for approximately 27% of the increase. This underscores the significance of geographic proximity and deep supply chain integration. US-related employment growth was driven primarily by investments in information and communication, and motor vehicle manufacturing. China also emerged as a major new player, contributing nearly 23% of Mexico’s FDI job growth. This increase was driven primarily by increases in motor vehicle manufacturing, as well as strong growth in electrical equipment, machinery and furniture manufacturing, highlighting a growing investment relationship likely due to shifts in global production networks. The EU accounted for 19% of the growth, representing 28% of total FDI-related employment in 2014-2024. The largest contributions came from the manufacture of motor vehicles; trailers and semi-trailers; and information and communication.
Brazil experienced a marked decline in greenfield FDI-related job creation. Between 2014 and 2024, nearly 180 000 fewer FDI jobs were generated compared to the previous decade (Figure 3.3, Panel A). In contrast, average total employment increased by around 8% during the same period, showing that the downturn was specific to FDI-related jobs rather than a reflection of broader labour market dynamics. The decline in FDI-related jobs was largely driven by a reduction in EU investment, which resulted in almost 100 000 fewer jobs, accounting for close to 60% of the overall decline. The drop in EU-related jobs was especially pronounced in motor vehicle manufacturing and construction. At the same time, there were notable increases in areas such as renewable electric power generation and food, beverages and tobacco manufacturing, highlighting a partial re-orientation of EU investment toward more capital-intensive, sustainable and consumer-oriented sectors.
The number of jobs created by the United States also dropped, decreasing by 27%, largely due to reduced investment in the manufacturing of motor vehicles, and machinery and equipment. Nevertheless, some investors expanded their presence, partially offsetting the decline. FDI-related employment from LAC investors nearly doubled, mostly due to an increase in the number of jobs created in the retail sector. Similarly, jobs generated by Chinese greenfield investment increased by nearly 60%, driven by transportation and storage, and manufacture of electrical equipment. These trends might point toward a restructuring in Brazil’s investment landscape, with the declining presence of traditional partners in job-intensive sectors, partially balanced by a shift toward more capital-intensive sectors and an increasing engagement from regional and emerging players. The observed decline in greenfield FDI in Brazil’s automotive sector might reflect a predominantly domestic-market orientation in which incumbents have already installed sufficient capacity to serve local demand, alongside ongoing industry restructuring. Despite this, the EU remained the leading source of FDI employment in Brazil, responsible for 31% of total greenfield FDI jobs in 2014-2024.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
3.2.3. More than half of greenfield FDI jobs in LAC were created in the manufacturing sector
During 2014-2024, manufacturing accounted for more than half of greenfield FDI-related employment in LAC, followed by services, which generated 35% of total FDI-related jobs (Figure 3.4). Energy, agriculture, construction and mining together represented only around 11% of total FDI employment. This sectoral distribution differs markedly from the region’s overall employment structure, where manufacturing represented just 11% of total jobs and services around 65% (ECLAC, 2023[15]). This suggests that greenfield FDI creates a disproportionately higher share of jobs in manufacturing than in services, thereby diverging from prevailing labour market patterns.
Compared with the previous decade, the composition of FDI-driven jobs shifted significantly. The most notable change was in the energy sector, where FDI job creation doubled, mostly driven by jobs in renewable energy, reflecting the region’s rising positioning as an attractive destination for renewable energy investment (see Chapter 1). Services also expanded strongly, with FDI jobs rising by 45%, while manufacturing saw a more moderate increase of 18%. In contrast, FDI jobs in resource-based sectors contracted, with mining declining by 66% and agriculture by 27%. Job creation in the construction sector also declined. These shifts point to a re-orientation of FDI toward greener and more service-oriented economic activities.
Between 2014 and 2024, the sectoral composition of FDI-related job creation in LAC varied considerably by investor origin, reflecting distinct strategic priorities. Investors from the EU were the main source of greenfield FDI jobs in the energy sector, accounting for 52% of total jobs, far ahead of other investors, including those from the United States (14%), the United Kingdom (9%), LAC (5%) and China (3%). This reflects the European Union’s strong orientation toward energy, and in particular, renewable energy investment. In manufacturing, investors from both the European Union and the United States were the primary sources of FDI-related employment, each contributing approximately 26% of total FDI jobs. Investors from China followed with 11%, while investors from the region and the United Kingdom accounted for smaller shares. Job creation in services was led by investors from the United States, which accounted for 36% of total FDI jobs, followed by EU investors with 28%. Investors from LAC contributed 14%, indicating a significant intra-regional component. China and the United Kingdom accounted for 4% and 3% of service sector jobs, respectively.
Other sectors showed more balanced investor participation. In construction, investors from the European Union, the United States and LAC accounted for comparable shares of FDI jobs (24-26%), with China contributing 13% and the United Kingdom less than 1%. In mining, despite a broader decline in total FDI jobs, job creation was more concentrated, with investors from China leading (19% of jobs in the sector), followed by investors from the United States (15%), the European Union (11%) and LAC (8%). In agriculture, investors from the United States led with 30% of total FDI employment, followed by investors from the EU (27%) and regional investors (16%), while the United Kingdom and China had a more marginal role.
Number of jobs created by greenfield FDI in LAC, by origin country/region, 2003-2013 and 2014-2024
Note: The sectoral aggregates presented refer to the ISIC Rev.4 sectoral classification.
Source: Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
FDI jobs in LAC are significantly concentrated across a narrow set of subsectors and countries. In 2014-2024, the motor vehicles industry alone accounted for over half a million jobs in the manufacturing sector, nearly 20% of all FDI-related employment. Investors from the European Union and the United States were the top contributors, responsible for more than half of the FDI jobs in the sector, reflecting broad international interest in the LAC automotive sector.
Mexico captured the bulk of motor vehicles FDI jobs, with nearly 78% of the regional total, followed by Brazil with 13% and Argentina with 5% (Financial Times, 2025[3]). The strong geographic concentration reflects the robust industrial capabilities and established value chains in these countries, particularly Mexico, which has positioned itself as a global automotive manufacturing hub thanks to its competitive labour costs and proximity to the US market. Excluding Mexico, the motor vehicle subsector accounts for only 8% of total FDI jobs across the rest of LAC, where manufacturing jobs are more evenly distributed.
Within services, information and communication emerged as the primary driver of FDI job creation. Greenfield FDI in the sector generated approximately 337 000 jobs during 2014-2024, equivalent to 12% of the regional total. The United States and the European Union again emerged as key players, while LAC-based investors also played a notable role, accounting for 11% of total FDI jobs in the sector.
Number of greenfield FDI jobs in LAC, by sector and origin country/region, 2014-2024
Note: The sectoral aggregates presented refer to the ISIC Rev.4 sectoral classification.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
ICT-related employment also exhibited a more balanced geographical distribution than manufacturing. While Mexico still accounted for the largest share (30%), other countries also captured significant portions: Brazil accounted for 20%, Colombia 13%, Argentina 12% and Costa Rica 9%. This more balanced distribution reflects the broader geographic reach of digital and technology-related investments, which are less dependent on large-scale industrial infrastructure and more sensitive to factors such as skills availability, connectivity infrastructure and supportive regulatory environments. In contrast, other service subsectors, such as finance and professional services, generated comparatively limited employment, pointing to more constrained FDI engagement in these areas.
3.2.4. Job creation by EU investors was substantial in sectors prioritised by the EU-LAC Global Gateway Investment Agenda
EU greenfield FDI-related job creation in LAC is undergoing a structural transformation, increasingly aligning with the core priorities of the EU-LAC Global Gateway Investment Agenda (GGIA), namely digital sectors, climate and green energy, health, education, and sustainable transport (see Box 1.2 in Chapter 1). While total EU greenfield FDI-related job creation in the region grew by a modest 6% between 2014 and 2024 compared to the previous decade, this aggregate figure masks significant shifts in sectoral composition. The share of EU-related jobs in sectors targeting EU-LAC GGIA’s priorities rose from 23% to 35%. These job creation trends mirror a deeper re-allocation of EU investment capital, with FDI flows increasingly targeting technology-intensive and sustainability-oriented sectors (see Chapter 1). This shift reflects both the strategic orientation of the EU-LAC GGIA and evolving corporate priorities to support greener, more digital and socially inclusive development pathways in LAC.
Manufacturing remained the largest source of greenfield FDI-related jobs from EU investors, accounting for just over half of all jobs created between 2014 and 2024. Job creation became concentrated in fewer subsectors: motor vehicles remained the dominant sector, jobs in food, beverages and tobacco nearly doubled and electrical equipment also recorded notable gains. At the same time, job creation declined in basic metals, and computer and electronic products, which together accounted for a net loss of over 30 000 jobs.
Services accounted for approximately 36% of all EU greenfield FDI jobs in LAC between 2014 and 2024 (Figure 3.6). Digital sectors, a priority for the EU-LAC GGIA, recorded the most dynamic growth in job creation. The share of EU greenfield FDI-related jobs in information and communication services increased from 16% to 19%, largely driven by the expansion of software development and information technology (IT) services (see 3.2.6 below). These activities generated over 50 000 net new jobs, with growth concentrated in Argentina, Mexico and Brazil. Meanwhile, employment in telecommunications and ICT hardware declined, pointing to a shift from infrastructure deployment to digitally enabled services.
The broader services sector showed mixed results. Employment in transportation and storage increased significantly. Administrative and support services also recorded moderate growth. In contrast, several more traditional service industries contracted. Accommodation and food services recorded the largest decline, down by almost 26 000 over the two decades, while financial services and real estate also saw substantial reductions.
Other priority sectors of the EU-LAC GGIA – education and health – also recorded significant growth in FDI-related job creation. Jobs created in education increased nearly fivefold over the period, reflecting growing investor interest in human capital development, training and institutional capacity-building in the region. In health-related industries, jobs in pharmaceuticals, medical instruments, health services and chemicals grew from 4.5% to around 11% of total EU FDI-related jobs. Growth was strongest in medical instruments, where jobs nearly tripled, followed by steady gains in health services and pharmaceuticals. By contrast, the chemical sector maintained a stable share of jobs, accounting for 2.5% of total EU-FDI jobs.
Jobs created by EU investors in the renewable energy sector, a central pillar of the EU-LAC GGIA, doubled in both absolute and relative terms, rising from 3% to 6% of total EU FDI jobs in LAC. Nearly 50 000 jobs were created in the sector between 2014 and 2024 compared to 21 000 in the previous decade. In contrast, job creation in fossil fuel-based power generation declined, signalling a gradual shift away from carbon-intensive activities. Similarly, green transport, particularly electric motor vehicles, experienced strong growth, with its share of total EU FDI-related jobs increasing nearly fourfold, from 1% to 5%. This surge reflects the EU’s deepening engagement in sustainable mobility and infrastructure development across the region.
Sectoral distribution of EU greenfield FDI jobs in Latin America and the Caribbean, % of total EU jobs, 2003-2013 and 2014-2024
Note: The sectoral aggregates presented refer to the ISIC Rev.4 sectoral classification.
Note: Bars with red borders indicate sectors that align with partnership areas under the EU-LAC Global Gateway Investment Agenda (See Box 1.2 in Chapter 1). Partnership areas: digital (information and communication, electronics, electrical machinery); climate and energy (renewable energy); transport (electric motor vehicles within “Motor vehicles”); health (chemicals, pharmaceuticals, medical instruments, health and social work). Investments in education and research are cross-cutting in nature and cannot be captured within the ISIC Rev. 4 sector classification.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
Between 2014 and 2024, EU-related job creation became more geographically concentrated, with Mexico emerging as the main recipient. During this period, Mexico accounted for 43% of all EU greenfield FDI-related jobs in the region, up from 33% in 2003-2013. In contrast, Brazil’s share fell sharply, from 33% to 18%, reflecting lower levels of EU investment, particularly in motor vehicles and basic metals (Box 3.2). If Mexico is put aside, EU greenfield FDI-related job creation across the rest of LAC declined by around 10%. This underscores Mexico’s growing importance as a key destination for EU investment and a primary driver of greenfield FDI-related job creation in the region.
The sectoral composition of EU greenfield FDI-related employment in LAC changes notably when Mexico is excluded from the analysis. In this scenario, manufacturing accounts for 35% of total EU greenfield FDI-related jobs. Within manufacturing, food, beverages and tobacco becomes the top employment-generating sector, accounting for 7% of total jobs, up from 4% in 2003-2013. In contrast, the motor vehicles sector contributes only 5%, marking a sharp decline from 15% in the previous decade. This drop primarily reflects reduced job creation in Brazil’s motor vehicles industry, historically a key destination for EU manufacturing investment. In parallel, services emerge as the leading sector of EU greenfield FDI-related employment in the rest of the region. Information and communication activities account for 18% of total jobs, followed by administrative and support services (10%), and accommodation and food services (8%). The renewable energy sector also gains relative importance, making up 9% of EU FDI-related jobs, up from 3% in the previous decade. This highlights the rising significance of green investments in smaller and mid-sized economies, such as Chile.
Note: The sectoral aggregates presented refer to the ISIC Rev.4 sectoral classification.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
3.2.5. The bulk of EU affiliates’ employment is found in labour-intensive services sectors
Employment data from EU-controlled firms operating in Brazil, Mexico, Argentina, Chile, Uruguay and Venezuela, available through Eurostat’s Foreign Affiliates Statistics (FATS), provide additional insights into the employment contribution of EU investment in the region. Unlike greenfield FDI data, which capture employment generated through the establishment of new facilities or operations, FATS data reflect longer-term employment within established EU affiliates in LAC, offering a more comprehensive view of durable job creation.
In 2022, the most recent year for which data are available, the six LAC countries accounted for approximately 16% of total extra-EU employment by EU affiliates. This figure highlights the region’s considerable role in the global operations of EU multinationals. In absolute terms, EU affiliates employed an estimated 2.7 million individuals across the six countries. EU’s affiliates' employment is highly concentrated in Brazil and Mexico, which together represent over 80% of the total (Figure 3.8, Panel A). Brazil alone accounts for more than one million jobs, or approximately 49% of the regional total. Mexico follows with 34%. Argentina and Chile, with 8% and 7%, respectively, while Uruguay and Venezuela each account for less than 2%. As a point of comparison, EU affiliates accounted for about 2% of total formal employment across the six countries in 2022. Their relevance, however, varies by country: EU affiliates represented around 2% of formal employment in Argentina and Brazil, 3% in Chile and Uruguay, 4% in Mexico, and only 0.2% in Venezuela (Figure 3.8, Panel A). While their overall share may appear modest, the contribution of EU affiliates to employment is economically meaningful, reflecting their role in job creation and fostering economic linkages with the EU.
EU affiliate employment is predominantly service based. Services account for 60% of total employment, while manufacturing represents 36%. The remaining employment is spread across construction, extractive industries and utilities. Within the services sector, employment is concentrated in business-oriented and knowledge-intensive activities. Retail trade is the largest subsector, accounting for 21% of total services employment, followed by administrative and support services at 20%, and professional and scientific activities at 17%. The information and communication sector accounted for 14% of total EU affiliates’ employment. Other services, including finance, transport and accommodation, are present, but represent smaller shares.
Manufacturing employment is more narrowly distributed across select subsectors. Approximately 30% of manufacturing jobs are concentrated in motor vehicle production, particularly in Mexico and Brazil. The food, beverages and tobacco industry accounts for around 13%, while machinery and equipment contribute 11%. Additional manufacturing activities, such as chemicals and electronics, also contribute significantly to EU affiliates’ employment and have attracted substantial shares of EU greenfield investment.
These figures stand in contrast to the distribution of greenfield FDI jobs, which are more heavily concentrated in manufacturing sectors. This divergence likely reflects both differences in investment modalities and methodological approaches. EU investors may be more inclined to undertake greenfield investment in manufacturing, where establishing new production facilities is often necessary, while preferring brownfield modes, such as mergers or acquisitions, for investments in services. Consequently, EU affiliate employment in the region is predominantly service based. In addition, greenfield FDI data report the total number of jobs a project is expected to generate over its implementation period, whereas affiliate statistics capture the number of people employed in a specific year. These definitional differences may further contribute to the variation observed across the two datasets.
Note: The data show the reported number of employees of EU affiliates in LAC, covering five countries: Brazil, Mexico, Argentina, Chile, Uruguay. Venezuela is excluded due to a lack of data at the sectoral level.
Source: Eurostat (2021/2022[16]), Foreign controlling EU enterprises - outward FATS,
The employment contribution of EU affiliates varies considerably across the five LAC countries with available data (Figure 3.9). In Brazil, EU affiliates' jobs are predominantly in services, which accounts for about 75% of employment, supported by a relatively diversified manufacturing base. Mexico shows a more industrial profile: manufacturing represents 54% of EU affiliates' jobs, driven largely by the motor vehicle industry, which alone generates nearly one-third of EU affiliates' employment in the country. In Argentina and Chile, EU affiliates' employment is mostly service based; Argentina also retains notable activity in food and chemicals, while Chile’s services focus on logistics and business support. Uruguay stands out as the most service-specialised economy, with over 90% of EU affiliates' jobs concentrated in professional, administrative and financial activities, reflecting its role as a hub for regional headquarters and back-office operations.
Number of persons employed by EU affiliates, by LAC country and subsector, in 2022 or latest year available
Note: The data show the reported number of employees of EU affiliates in LAC, covering five countries: Brazil, Mexico, Argentina, Chile, Uruguay. Due to confidentiality constraints, data for Venezuela are not available.
* indicate sectors that align with partnership areas under the EU Global Gateway Investment Agenda (See Box 1.2 in Chapter 1). Partnership areas: digital (information and communication, electronics, electrical machinery); climate and energy (renewable energy); transport (electric motor vehicles within “Motor vehicles”); health (chemicals, pharmaceuticals, medical instruments, health and social work). Investments in education and research are cross-cutting in nature and cannot be captured within the ISIC Rev. 4 sector classification.
Source: Eurostat (2021/2022[16]), Foreign controlling EU enterprises - outward FATS,
3.2.6. Digital greenfield FDI from EU and U.S. is becoming a key source of jobs in LAC
Digital sectors have become an increasingly important source of FDI-related job creation in LAC. From 2014 to 2024, greenfield investments in these sectors accounted for 20% of total greenfield FDI jobs, an increase of 2 percentage points compared to the previous decade, underscoring their growing impact on the region’s labour market (Figure 3.10).
The relevance of digital sectors in FDI-related job creation varies significantly across countries in LAC. In Costa Rica, Argentina and Colombia, digital sectors accounted for approximately one-quarter of total FDI-related jobs during 2014-2024, reflecting more developed digital ecosystems. In contrast, countries such as Guyana and Belize saw digital sectors contribute less than 1% of FDI-related jobs, highlighting more limited digital ecosystems and local digital capabilities. Compared to the 2003-2013 period, the share of FDI-related jobs in digital sectors increased in most LAC economies between 2014 and 2024. However, a few exceptions stand out. In Mexico, the Dominican Republic and Bolivia, the share of digital FDI-related jobs declined slightly, while in Paraguay and several Caribbean countries, the decline was more marked.
Greenfield FDI jobs in digital sectors, by digital subsector, 2003-2013 and 2014-2024, % of total FDI jobs
Note: Digital sectors include digital services (e.g. computer programming activities; data processing and hosting activities; information services activities, etc.); ICT goods (electronics, computer equipment, etc.); electrical components (batteries, electrical equipment, wiring devices, etc.); and telecommunications (wired and wireless telecommunications activities and satellite activities).
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
The majority of greenfield FDI-related jobs in digital sectors were generated by investors from the United States and the European Union, who together have played a leading role in shaping digital greenfield FDI employment in LAC (Figure 3.11). Between 2014 and 2024, these two investor regions were responsible for the bulk of greenfield FDI-related job creation in digital sectors across the region. The EU accounted for 27% of digital FDI-related jobs, maintaining a stable share compared to the previous decade, while the United States expanded its footprint, increasing its share from 30% to 37%. However, the EU remained particularly influential in telecommunications and digital services, accounting for 40% of telecom-related FDI jobs and more than one-third of all FDI-related employment in digital services in the region.
The EU has long been a leading investor in telecommunications in LAC, playing a pivotal role in expanding digital connectivity across the region, even before the launch of the EU-LAC Digital Alliance in 2023, which has boosted digital collaboration within the EU-LAC GGIA. Early investments focused on strengthening telecom infrastructure, which laid the groundwork for more advanced digital ecosystems. As basic connectivity became more widespread, investment increasingly shifted toward digital services, supporting the growth and diversification of service-based digital activities.
Greenfield FDI jobs in digital sectors, by origin country/region, 2003-2013 and 2014-2024, thousands of jobs
Note: Digital sectors include digital services (e.g. computer programming activities; data processing and hosting activities; information services activities, etc.); ICT goods (electronics, computer equipment, etc.); electrical components (batteries, electrical equipment, wiring devices, etc.); and telecommunications (wired and wireless telecommunications activities and satellite activities).
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
European Union FDI is shifting from capital-intensive ICT production toward digital services. In 2014-2024, digital sectors accounted for nearly 20% of all EU FDI-related jobs, up from 15% in the preceding decade (Figure 3.12). This reflects a shift from ICT goods and telecommunications infrastructure toward more labour-intensive digital services, such as software development, IT consulting, and business process. This transition helped sustain job creation in digital sectors despite lower investment volumes than in previous periods. A similar trend is observed in US greenfield FDI in LAC. Digital sectors generated 25% of US FDI-related jobs in 2014-2024, up from 20% in 2003-2013. Within this, digital services alone accounted for 13% of total US FDI-related employment, reflecting a clear move toward service-based and knowledge-intensive activities.
Greenfield FDI jobs in digital sector as share of total FDI jobs in LAC, by investor country/region, 2003-2013 and 2014-2024
Note: Digital sectors include digital services (e.g. computer programming activities; data processing and hosting activities; information services activities, etc.); ICT goods (electronics, computer equipment, etc.); electrical components (batteries, electrical equipment, wiring devices, etc.); and telecommunications (wired and wireless telecommunications activities and satellite activities).
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
3.2.7. EU investors account for over half of all FDI-related jobs in renewable energy
Energy-related FDI employment continues to represent less than 7% of total greenfield FDI-generated jobs in LAC (Figure 3.13, Panel A). However, over the past decade, there has been a marked shift in investor preferences from fossil fuels activities toward renewable energy generation, resulting in expanding labour market opportunities within the low-carbon energy sector. Between 2003 and 2013, greenfield FDI-related employment in the energy sector was largely concentrated in fossil fuels, which accounted for approximately 3% of total FDI jobs, while renewable energy represented only 1%. This distribution changed significantly in the subsequent decade as the LAC energy matrix shifted toward cleaner sources and FDI in renewable energy expanded significantly (see Chapter 1).
Between 2014 and 2024, the share of FDI-related jobs in renewable energy rose to 3%, generating over 85 000 jobs. In contrast, employment linked to fossil fuel FDI declined both in absolute terms and relative terms, falling to below 2% of total FDI employment in the region. This implies a net gain of roughly 1% of total FDI jobs associated with renewable energy, indicating that, at the regional level, the green transition has so far been employment-positive in terms of FDI-jobs. In 2014-2024, 63% of energy-related FDI-linked jobs in LAC were associated with renewable energy, a significant increase from 35% in the previous decade, underscoring a broader re-alignment of investor interest toward sustainable, low-carbon energy sources and signalling a transition in the region’s energy investment landscape.
The EU has consolidated as the leading source of greenfield FDI-related renewable energy jobs in LAC, underscoring its broader climate and investment agenda, which is consistent with the EU-LAC GGIA’s priorities in the region. Between 2014 and 2024, 58% of greenfield FDI-related jobs in renewable energy in LAC were created by EU-based investors, far exceeding the contributions of other major economies (Figure 3.13, Panel B). In contrast, the EU accounted for 18% of fossil fuel-related greenfield FDI jobs during the same period, reflecting a clear prioritisation of clean energy over traditional energy sources. Investors from the United States generated 44% of greenfield FDI-related employment in fossil fuels and only 9% in renewables. China, the United Kingdom and regional actors played relatively minor roles in renewable energy job creation, with contributions of 3%, 7% and 4%, respectively.
Note: Note: The sectoral aggregates presented refer to the Financial Times (2025[3]), FDI Markets classification.
Note: “Renewable energy” includes biomass power, geothermal power, hydroelectric power, marine power, solar power, wind power and other renewable sources such as green hydrogen. “Coal, oil and gas” include fossil fuel-based electricity generation; coal mining; gasoline stations; natural, liquefied, and compressed gas; oil and gas extraction; petroleum refineries; other petroleum and coal products; and support activities related to coal, oil and gas energy.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
During the last decade, the composition of renewable energy greenfield FDI jobs in LAC has shifted from traditional sources to more scalable and technology-driven energy solutions. The most dynamic sub-industry has been solar electric power generation, where job creation expanded more than twelvefold, from 3 500 to more than 40 000 jobs, making it the energy sub-industry with the largest share of FDI-employment (Figure 3.14). Wind electric power generation also saw substantial growth, rising from 9 500 to more than 15 000 jobs. In contrast, traditional renewable sources such as biomass and hydroelectric power experienced sharp declines, dropping by almost 50% between 2003-2013 and 2014-2024. While hydroelectric power has historically dominated the region’s renewable energy mix, it has contributed little to recent FDI job growth. FDI jobs in geothermal energy followed a similar downward trend. Notably, the “Other renewable energy” category, which includes emerging technologies such as green hydrogen, expanded from less than 2 000 jobs to more than 18 000, indicating diversification and innovation in the region’s renewable energy landscape.
The increase observed in the renewable energy sector was driven by investors from the EU, which accounted for most of the new job creation in the sector. Between 2003-2013 and 2014-2024, the number of renewable energy greenfield FDI-related jobs created by EU investors more than doubled, adding more than 25 000 jobs and representing approximately 47% of the total net increase in FDI employment in renewable energy across the region during this period. Investors from the United States also expanded their renewable energy greenfield FDI employment by 32%, adding almost 2 000 new jobs, while investors from China exhibited the most relative growth, with jobs rising from 20 to more than 2 000, signalling a rising interest in the region's clean energy potential among emerging global investors.
Note: "Other renewable energy" includes electricity generated from mixed renewable sources (e.g. solar and wind), as well as investments in emerging technologies such as green hydrogen.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
All major investors expanded their presence in the solar sector, led by investors from the EU, which saw solar-related jobs increase more than tenfold. Wind energy employment also grew moderately for most investors, except for those from the United States, which recorded a slight decline. Investors from China entered both the solar and wind segments from a zero base, signalling their rising interest and growing footprint in clean energy investment. In contrast, employment linked to other renewable technologies showed mixed results, declining for the EU, U.S. and LAC-based investors, while increasing notably for the United Kingdom and other international actors. Investment from the EU remained the principal driver of FDI job creation in the region’s clean energy sector, accounting for 65% of solar and 77% of wind-related FDI employment between 2014 and 2024 (Figure 3.15).
Greenfield FDI jobs in renewable energy, selected energy sources, by investor, 2003-2013 and 2014-2024, thousands of greenfield jobs
Note: “Other renewable energy” includes biomass power, geothermal power, hydroelectric power, marine power and other renewable sources such as green hydrogen.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
More than 60% of energy-related FDI jobs in LAC are in the renewable energy sector, highlighting the region’s increasing shift toward cleaner and more sustainable energy sources. In several countries, including Barbados, Belize, Honduras, Suriname and Trinidad and Tobago, 100% of energy FDI jobs were generated in renewables (Figure 3.16). Others, such as Chile, the Dominican Republic and Panama, also show renewable shares above 95%. In Chile, these jobs are primarily concentrated in solar and wind power, while in Suriname, solar energy alone constitutes the bulk of renewable energy greenfield FDI employment. Barbados also shows relatively high figures, with hydro and other renewables accounting for 9% of all FDI jobs. Similarly, Uruguay reported that 6% of its FDI employment is tied to solar, wind and other renewable sources. These trends suggest that many LAC countries are successfully leveraging FDI to support their clean energy transitions.
Greenfield FDI jobs in energy, by energy source, 2014-2024, % of energy FDI jobs and % of total FDI jobs
Note: Note: The sectoral aggregates presented refer to the Financial Times (2025[3]), FDI Markets classification.
Note: “Renewable energy” includes biomass power, geothermal power, hydroelectric power, marine power, solar power, wind power and other renewable sources such as green hydrogen. “Coal, oil and gas” include fossil fuel-based electricity generation; coal mining; gasoline stations; natural, liquefied, and compressed gas; oil and gas extraction; petroleum refineries; other petroleum and coal products; and support activities related to coal, oil and gas energy.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
However, fossil fuels remain the dominant sector for energy-related FDI jobs in a subset of economies. In Bolivia, Guyana and Venezuela, all energy-related FDI jobs are concentrated in fossil fuel projects. Guyana, in particular, stands out, with over half (51%) of its total FDI jobs in the energy sector entirely fossil fuel-based, reflecting the country’s strong dependence on extractive industries. Other countries, such as Argentina, Mexico and El Salvador, also show a significant share of fossil fuel employment within their energy-related FDI.
Energy-related FDI jobs represent about 5% of total FDI employment in the region, a share that aligns with global patterns for this capital-intensive sector. Given the nature of energy investments, which are typically infrastructure-heavy and technology-driven, a lower share of direct job creation is expected. While the direct employment impact of energy FDI is limited relative to other sectors, its broader role in enabling economic transformation should not be overlooked. The energy transition holds significant potential for job creation across the value chain, from manufacturing and construction to operations, maintenance and supporting services. Moreover, given that energy accounts for only a small share of total FDI jobs in most countries, the labour market disruption associated with phasing out fossil fuels may be more manageable than often assumed. These trends suggest that the job cost of the energy transition can be mitigated, especially if LAC countries continue to attract and channel FDI toward renewable energy and its supporting sectors.
3.2.8. EU greenfield investment in LAC shows lower but stable job intensity due to FDI sectoral composition
The job creation potential of greenfield FDI is strongly influenced by the labour or capital intensity of the activities involved. In LAC, labour-intensive sectors, such as services and light manufacturing, generate the highest number of jobs per USD billion invested (Figure 3.17). For example, administrative and support services create over 46 000 jobs, while textiles and wearing apparel, and leather exceed 14 000 jobs per billion. In contrast, capital-intensive sectors such as fossil fuels (200 jobs), and mining and quarrying (674 jobs) generate far fewer employment opportunities per USD billion invested. These differences reflect not only the broader characteristics of each sector and the specific activities carried out by multinational enterprises (MNEs), but also the size and scope of investment projects. Sectors dominated by smaller-scale investments, in particular, can appear highly job-intensive when measured per USD billion-dollar investment, even if their total employment impact is limited.
When comparing investment patterns, both EU and US investors show higher-than-average job intensity in sectors such as administrative services, textiles and health services, indicating a focus on labour-intensive activities within these areas. Greenfield investments from the EU also show strong job creation in education, while US investments show particularly high intensity in wearing apparel and leather. In contrast, lower job intensity is observed in EU greenfield investments in sectors such as furniture, and wood and cork, and, in US investments, in metal products and mining, reflecting more capital-intensive operations within these sectors. These patterns highlight that job intensity varies not only across sectors, but also within sectors, depending on the type and scale of foreign investment and the activities carried out.
Job intensity of greenfield FDI in LAC, by sector and selected origin country/region, 2014-2024
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
The variation in FDI job intensity across sectors leads to differences in job intensity across sources, driven by the sectoral composition of their investments. Over the past decade, the job intensity of greenfield FDI in LAC was highest for investments from the United States, followed by greenfield FDI from LAC and China (Figure 3.18). In contrast, investments from the European Union and the United Kingdom generated relatively lower employment per USD billion invested. These differences reflect both the sectors targeted, such as more labour-intensive manufacturing and services in the case of US and intra-regional investors, and the nature of the operations. For example, EU and UK investments have often been concentrated in capital- or technology-intensive activities, including energy infrastructure, which typically require substantial capital investment, but create fewer direct jobs per unit of investment. Between 2003 to 2013 and 2014 to 2024, notable shifts in job intensity have emerged across investor countries, primarily driven by changes in the sectoral composition of FDI.
Investment from the EU maintained a lower but increasing job intensity across the two periods, creating around 2 400 jobs per USD billion invested. Although capital-intensive sectors, such as renewable energy, attracted increased investment, the large amounts of capital deployed led to only modest gains in job intensity. However, this trend was partially offset by growth in other sectors that saw increases in both capital investment and job intensity, such as textiles and printing (Figure 3.19). These shifts helped balance the overall composition, compensating for the lower job intensity of renewable energy investments and contributing to a relatively stable average job intensity across the region.
US investment created around 3 200 direct jobs per USD billion and a moderate decline was observed over time. This was primarily driven by a growing concentration of greenfield FDI in capital-intensive sectors, such as information and communication, which saw investment nearly double between 2003-2013 and 2014-2024, while maintaining a relatively low job intensity (around 2 300 jobs per USD billion invested). Mining and quarrying similarly expanded (increasing from 12% of total investment in 2003-2013 to 17% of total US investment in 2014-2024) despite generating few jobs, contributing to an overall decrease in job intensity.
Chinese investment recorded a notable increase in job intensity, reaching 2 880 direct jobs created per USD billion of greenfield investment between 2014 and 2024. The increase can be explained largely by diversification into new, labour-intensive sectors. While investment during the 2003-2013 decade focused on capital-heavy infrastructure and energy, the most recent decade marked entry into manufacturing segments such as textiles, wearing apparel and furniture, none of which received investment in the previous period. These sectors reported job intensities exceeding 8 000 jobs per USD billion, significantly increasing the average. Simultaneously, job intensity increased within existing sectors such as machinery, suggesting both re-allocation of capital across sectors and transformation within sectors. Notably, even with a rising share of investment going to renewables and mining, the overall job intensity increased.
Intra-regional investment within LAC exhibited the most pronounced increase in job intensity despite relatively stable or even declining capital shares in job-rich sectors (see Chapter 1). The increase in job intensity appears to be driven less by sectoral re-allocation and more by changes in the typology of financed projects. Several sectors, including fabricated metal products, rubber and plastics, and information and communication, saw large increases in job creation per USD billion invested, even as their share of total investment declined. This pattern may suggest a shift toward smaller-scale, labour-intensive initiatives, potentially reflecting the influence of small- and medium-sized enterprises (SMEs). The overall trend indicates that regional capital can play a growing role in supporting employment creation across the region.
UK greenfield FDI recorded the lowest average job intensity among major investor groups (1 250 direct jobs per USD billion invested) and experienced a decline over the last two decades. Despite notable gains in employment efficiency within specific sectors, such as construction and education, these sectors received a shrinking share of total capital. At the same time, a growing share of investment was directed toward capital-intensive sectors like energy and in particular gas. The result is a portfolio increasingly oriented toward infrastructure and energy, with limited offsetting from labour-absorbing sectors, contributing to a subdued employment impact per dollar invested.
Jobs per USD billion of greenfield FDI, by investor country/region for 2003-2013 and 2014-2024 s per billion invested
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
3.2.9. EU greenfield investment is concentrated in capital-intensive sectors with lower job intensity
EU greenfield investment in LAC is increasingly targeting sectors aligned with the EU-LAC GGIA, including digital sectors, climate and green energy, green transport and health. Owing to their structural characteristics, these sectors are highly capital-intensive and yield relatively low employment per USD billion invested compared with other sectors. For example, renewable energy accounted for 28% of EU investment, yet their employment intensity was relatively low, averaging 513 jobs per USD billion invested (Figure 3.19). Similarly, the information and communication sector accounted for 7% of EU investment, with a job intensity of 3 174 jobs per USD billion. The motor vehicles sector, which includes electric vehicles, combined moderate job intensity (4 990) with 8% of total EU investment, and accounted for almost 20% of EU-related jobs. In contrast, sectors with higher job intensity, such as administrative and support services, textiles and furniture manufacturing, received limited EU investment. Nonetheless, some higher job-intensity sectors, including administrative and support services, and electrical machinery, contributed a significant share of EU-generated jobs despite smaller investment volumes.
Note: Job intensity is the number of jobs created per USD billion invested; here, in total greenfield FDI in LAC
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
While job intensity remains a relevant metric for assessing the employment-generating capacity of investment it offers only a partial perspective on labour market outcomes, particularly for capital-intensive, higher-added-value sectors. Specifically, job intensity facilitates the identification of labour-intensive sectors and can inform strategies aimed at maximising employment gains. However, it does not account for the stability and quality of jobs created, including employment conditions. Moreover, while FDI in more capital- and technology-intensive sectors tends to generate fewer jobs per unit of capital invested compared to more labour-intensive activities, it often supports the creation of higher-quality employment and contributes to productivity gains (see Chapter 1). Jobs in these sectors typically require higher skill levels, offer more formal and stable working arrangements and provide better wages. As such, although their quantitative employment impact may be more limited, these sectors can play a significant role in improving job quality.
Over the past two decades, EU greenfield FDI in LAC has remained broadly stable in its overall employment impact, while gradually shifting toward more labour-intensive digital services, renewable energy and other strategic sectors. Figure 3.20 shows the relationship between changes in EU FDI-related employment and job intensity by sector between 2014-2024 and 2003-2013. The size of each bubble reflects the sector’s share of total EU FDI-related jobs during 2014-2024. Sectors positioned to the right became more labour-intensive, while those higher on the chart recorded job growth. Bubbles in the top-right quadrant represent sectors that both increased their labour intensity and expanded employment.
Among those aligned with the EU-LAC GGIA, the information and communication sector recorded the most pronounced growth, becoming increasingly labour-intensive and emerging as a key source of employment (Figure 3.20). This shift was primarily driven by a re-allocation of investment away from capital-intensive telecommunications services towards digital services and more labour-intensive activities, such as computer programming. Similarly, education, despite accounting for less than 1% of total EU investment, registered notable increases in both job intensity and employment. In contrast, sectors such as electrical equipment, electronics and motor vehicles became more labour-intensive over time, but saw an overall decline in job creation, likely reflecting increased automation and a shift towards more capital-intensive production processes. Renewable energy also experienced significant job growth, while labour intensity remained relatively stable, indicating that employment gains were largely driven by the scale of capital deployment. The investment pattern of the EU suggests that investors are increasingly targeting strategic areas under the EU-LAC GGIA, such as advancing digital infrastructure and capabilities, supporting the transition to sustainable energy systems and fostering high-value-added industries. Most of these sectors have demonstrated rising job intensity and have maintained a steady level of importance in terms of EU-generated employment. Notably, the renewable energy sector has gained increasing weight within total EU-generated jobs, reflecting its growing prominence in the overall investment landscape.
Other sectors not directly associated with the EU-LAC GGIA followed different trajectories. Retail trade recorded rising labour intensity despite its limited share in overall EU-related employment. Financial services and real estate experienced declines in both labour intensity and job creation, suggesting a gradual withdrawal of FDI from these areas (see Chapter 1). Most other sectors, represented by the bubbles clustered around zero (Figure 3.20), remained broadly stable, with only marginal changes in labour intensity and employment levels, indicating steady EU job creation patterns over time and providing a consistent base for understanding emerging changes in FDI employment dynamics.
Change in job intensity and total employment from EU greenfield FDI, by sector, 2014-2024 vs. 2003-2013
Note: The size of each bubble represents the share of EU jobs generated in the sector during the period 2014-2024. The figure plots the percentage changes in EU FDI-related jobs and percentage changes in EU FDI job intensity for 2014-2024 compared to 2003-2013. Bubbles on the right side of the chart represent sectors that have become more labour-intensive, meaning investment within these sectors is increasingly directed towards labour-intensive activities. Bubbles near the top of the figure indicate sectors that experienced an increase in the number of jobs created. Thus, bubbles located in the top-right quadrant correspond to sectors that both became more labour-intensive and saw job growth.
*Bubbles with blue borders indicate sectors that align with partnership areas under the EU Global Gateway Investment Agenda. Partnership areas: digital (information and communication, electronics, electrical machinery); climate and energy (renewable energy); transport (electric motor vehicles within “Motor vehicles”); health (chemicals, pharmaceuticals, medical instruments, health and social work). Investments in education and research are cross-cutting in nature and cannot be captured within the ISIC Rev. 4 sector classification.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
3.3.1. Foreign firms in LAC pay, on average, higher wages, in line with global trends
While job creation is an important policy goal, the quality of the jobs created is equally crucial to ensure that investment has a sustainable development impact. Job quality is determined by factors such as wage levels and working conditions, including job stability, working hours, formality, access to social security and opportunities for skills development and training. Gender equality, the inclusion of vulnerable groups, particularly women, in the labour force and their representation across all skill levels, roles and sectors are also key attributes of job quality, contributing to more resilient, inclusive and productive labour markets (Box 3.4).
Evidence from the OECD FDI Qualities Initiative shows that FDI can contribute positively to job quality, particularly when directed toward higher-value-added sectors. Foreign investors are often associated with higher wages, better working conditions and increased access to training opportunities compared to domestic firms. Yet, the extent of these benefits varies widely, depending on the sector, the type of investor and the specific features of the host country’s labour market, including its legal and policy frameworks (Box 3.6) (OECD, 2022[1]; OECD, 2019[17]). In addition, the absence of comparable data on job quality across countries and sectors, especially with respect to vulnerable groups such as women, migrants, Indigenous Peoples and persons with disabilities, remains a key obstacle to assessing the impact of FDI on labour market outcomes (Box 3.5).
The FDI Qualities Indicators, based on the World Bank Enterprise Surveys, (Box 1.3 in Chapter 2) offer a valuable basis for comparing the employment practices of foreign and domestic firms. Although the indicators do not identify the specific country of origin of foreign firms, the sample reflects the actual distribution of international investors in each market. Given the EU’s strong investment footprint in LAC, EU-based firms likely represent a substantial portion of the foreign-owned companies captured in the data. As such, the findings are likely to be driven, at least in part, by the performance of EU companies.
The OECD FDI Qualities Initiative assesses how FDI contributes not only to the quantity of jobs, but also to their quality. Job quality encompasses several interrelated dimensions that shape workers’ well-being, access to opportunities and long-term prospects. The Initiative focuses on the following core dimensions:
Wages: Refers to the level of compensation received by employees. Higher wages are generally associated with better living standards and reflect the productivity and value-added of jobs. FDI can influence wage levels by introducing more productive activities and raising standards in host labour markets.
Working conditions: Encompass the stability, predictability and overall environment of employment. This includes factors such as contract duration, working hours and formality of employment. Key indicators include the share of informal jobs and the type or length of employment contracts. FDI can play a role in improving working conditions by fostering formal employment and aligning practices with international standards and national labour laws, thus enhancing economic security for workers.
Skills development and training: Captures opportunities for workers to enhance their skills through formal or on-the-job training. FDI can support skills development by transferring knowledge, technologies and international practices, helping to build human capital and support career progression.
Inclusivity (gender equality): Assesses the extent to which employment opportunities and outcomes are equitably distributed across different population groups, especially women. This includes gender gaps mainly in participation, wages and representation in leadership or high-skill roles. FDI can promote inclusivity by adhering to gender equality and corporate diversity commitments and supporting equal access to quality jobs.
According to the indicators, on average, foreign firms in LAC tend to offer better wages than domestic firms. Specifically, in 26 of the 31 countries covered by the indicators, foreign firms reported paying higher average wages (measured by total labour cost per employee) than domestic firms (Figure 3.21). Not all countries, however, follow the same pattern, and in some cases, foreign firms do not stand out in terms of wages. In Mexico, Costa Rica, Panama and Uruguay, the wage premium offered by foreign firms is not statistically significant. This may reflect the fact that foreign firms in these countries often operate in high-productivity sectors, where domestic firms already offer competitive wages, limiting the extent to which foreign investors can offer a wage premium. Additionally, strong labour institutions, collective bargaining arrangements and wage-setting mechanisms may help ensure broadly comparable wage levels across foreign and domestic firms, aligning compensation practices across firms, regardless of ownership.
Relative difference between foreign and domestic firms’ outcomes, 2010-2023
Note: The indicators show the relative gap between the average outcomes of foreign and domestic firms; the difference between the average wage in foreign and domestic firms, divided by the average wage in domestic firms. Positive values indicate that foreign firms outperform domestic firms (e.g. offer higher average wages), while negative values suggest the opposite. Reference years vary across countries, ranging from 2010 to 2023. Lines around the markers represent 95% confidence intervals. Estimates whose intervals include zero are not statistically significant at the 5% significance level.
Source: Based on World Bank (2024[18]), World Bank Enterprise Surveys, https://www.enterprisesurveys.org/en/enterprisesurveys.
Several small economies also show no clear wage advantage for foreign firms, likely due to the sectoral distribution of foreign investment. In small Caribbean countries like Grenada, the Bahamas, Antigua and Barbuda, St. Kitts and Nevis, Dominica, St. Vincent and the Grenadines, and St. Lucia, the data do not show a statistically significant wage premium. In many of these countries, foreign investment is concentrated in low-complexity sectors like tourism, hospitality and retail. These industries tend to be labour-intensive and offer mostly low- to medium-skill jobs, with less variation in pay across firms. Even when foreign firms are profitable, the scope for wage differentiation may be limited by local labour market norms, seasonal employment patterns and a strong presence of informal work. These results show that foreign ownership does not necessarily translate into significantly higher wages, even when firms are performing well, reflecting how industry structure and local labour market conditions can shape the wage impact of foreign investment.
Macro-level FDI statistics and available business surveys generally do not allow for meaningful differentiation across segments of the labour force, particularly with respect to vulnerable groups. While gender-disaggregated information exists in some cases, comparable data on immigrants, Indigenous Peoples and persons with disabilities remain extremely limited. To begin addressing this evidence gap, in 2022-23 the OECD, in collaboration with Invest in Canada, conducted a business consultation involving structured interviews with 23 Canadian companies and 33 foreign-owned enterprises operating in the country. Firms were selected to reflect a diversity of industries, company sizes and countries of origin. The survey instrument included questions on diversity and inclusion, with specific reference to women, Indigenous Peoples, persons with disabilities and foreign workers. Although not representative of the full population of firms, the consultation provides valuable insights into company practices regarding workforce diversity.
Findings suggest that Canadian-owned firms appear more attuned to issues of diversity and inclusion than affiliates of foreign multinationals. Participating Canadian firms reported a higher representation of women, Indigenous Peoples and persons with disabilities in their workforces, as well as greater representation of these groups in managerial positions. By contrast, foreign affiliates reported a larger share of foreign workers overall, including in management roles, consistent with the global reach of their labour recruitment practices.
The consultation also reveals differences in the way firms operationalise inclusion. Canadian firms more frequently reported implementing inclusive workplace strategies, such as diversity-oriented recruitment and training initiatives. Foreign affiliates, however, placed greater emphasis on formal training provision. Not only were they more likely to offer structured training programmes, but they also reported higher participation of vulnerable groups in these programmes. This aligns with broader international evidence, suggesting that foreign-owned firms tend to invest more systematically in workforce skills upgrading, even if their record on representation and diversity is more mixed.
Source: OECD (2024[19]) FDI Qualities Review of Canada: https://www.oecd.org/en/publications/2024/06/fdi-qualities-review-of-canada_7ab14cc9.html.
3.3.2. Foreign firms contribute to lower wage inequality in some LAC countries
In several LAC countries, the wage premium offered by foreign firms is highest among the lowest-paid workers. In some countries, such as Bolivia, Argentina and El Salvador, foreign firms pay higher wages at the bottom of the wage distribution compared to domestic firms (Figure 3.22).
For example, in Bolivia, the wage premium is higher for the bottom 25% of workers and decreases progressively toward the top. This pattern suggests that foreign firms may help reduce wage inequality within countries by raising wages, especially for lower-wage workers, possibly due to more formal employment arrangements, compliance with labour standards or firm-wide minimum wages.
However, in some countries, the pattern is less clear, with smaller wage premiums at the bottom of the distribution. In countries such as Brazil, Colombia and Chile, wage differences between foreign and domestic firms are relatively modest along the wage distribution. This variability may reflect differences in sectoral composition, types of jobs filled by foreign firms or the degree of formalisation within industries. Where foreign investment is concentrated in higher-skilled or capital-intensive segments, the impact on reducing labour-market inequality may be smaller.
While foreign firms often raise average wages, they can also contribute to increased wage inequality, particularly where they concentrate on higher-skilled segments of the labour market. In Peru, Honduras, and Nicaragua, the wage premium is higher at the top of the wage distribution. This pattern can be explained by the fact that in less advanced countries, foreign firms often compete for scarce, high-skilled talent, which is often lacking locally. They offer internationally benchmarked pay to attract foreign talent and operate in high-productivity sectors requiring specialised expertise. As a result, employment patterns in these firms tend to be skill-biased, reinforcing wage disparities within the labour market.
Relative difference between foreign and domestic firms’ outcomes, by wage distribution percentiles, 2010-2023
Note: The indicators show the relative gap between the average outcomes of foreign and domestic firms, the difference between the average wage in foreign and domestic firms, divided by the average wage in domestic firms. Positive values indicate that foreign firms outperform domestic firms (e.g. offer higher average wages), while negative values suggest the opposite. Reference years vary across countries, ranging from 2010 to 2023. Lines around the markers represent 95% confidence intervals. Estimates whose intervals include zero are not statistically significant at the 5% significance level.
Source: Based on World Bank (2024[18]), World Bank Enterprise Surveys, https://www.enterprisesurveys.org/en/enterprisesurveys.
Foreign direct investment can be a powerful catalyst for labour market transformation, particularly through its effects on job quality. While FDI often contributes to higher wages and expanded employment opportunities, it can also produce uneven outcomes. Evidence from LAC countries suggests that FDI can reinforce existing labour market dualities, exacerbate wage inequality and contribute to the development of segmented employment structures.
In LAC countries, foreign-owned firms tend to pay higher wages than their domestic counterparts (Arbache, 2004[14]). A study on Mexico shows that FDI reduces the number of workers seeking extra hours and raises the median hourly wage (Sharma and Cardenas, 2018[7]). However, these wage premiums can be confined to employees within multinational enterprise affiliates and seldom spill over to local firms (Aitken, Harrison and Lipsey, 1996[20]). In Brazil, evidence suggests indirect wage gains through labour mobility as domestic firms benefit from hiring workers previously employed and trained by MNEs (Poole, 2013[21]). Nevertheless, broader evidence on inter-firm wage spillovers within the same industry remains mixed.
FDI-related employment gains in LAC tend to be skill-biased (Modrego et al., 2022[5]). FDI can disproportionately benefit skilled and educated workers, while wages for low-skilled labour remain stagnant or decline. In some countries, FDI was found to depress the wages of low-skilled workers more significantly than those of their skilled counterparts (Velde, 2003[22]). A recent study finds that in Mexico, FDI is linked to higher wages for both skilled and unskilled workers, but the gap between them widens (Ibarra‐Olivo and Rodríguez‐Pose, 2022[23]). These effects are more pronounced in capital-intensive industries such as automotive manufacturing, where technological sophistication reduces demand for unskilled labour (Ramírez, 2000[12]).
Gender-differentiated impacts are also evident. FDI has been found to favour male employment more in some settings (Vacaflores, 2011[6]), although investment in female-dominated sectors may support gains in female employment (Vacaflores Rivero, 2009[24]). However, FDI and the operations of multinational firms in host countries can be an important conduit for the transmission of high-quality gender policy and practice. A recent study shows that workers moving from multinationals to domestic firms in Brazil modestly reduces gender wage gaps, especially in managerial roles, but improvements depend on the gender policies and standards multinationals uphold rather than their country of origin (Davis and Poole, 2023[25]).
Finally, the quality of FDI-related jobs depends on the structure of production networks and the absorptive capacity of domestic firms. When local suppliers lack the technological or managerial capability to meet multinational standards, backward linkages remain weak, constraining opportunities for skills upgrading and limiting sustained job quality improvements (Sanchez-Martin, de Pinies and Antoine, 2015[13]).
3.3.3. EU affiliates pay relatively higher wages in capital- and technology-intensive sectors
Datasets containing information on companies’ employment practices are used to distinguish between different sources of investment in LAC and to isolate the contribution of EU-based companies to job quality in the region. Data on annual employee benefit expenses, including wages, salaries and employers' social security contributions, sourced from Eurostat’s Foreign Affiliates Statistics (FATS), provide an estimate of the average annual wage paid by EU affiliates in four key LAC countries: Argentina, Brazil, Chile and Mexico. Due to limited data availability in Uruguay and Venezuela, which was confined to a small number of companies and sectors, these countries have been excluded from the analysis. Although the findings cannot be applied to all LAC countries, they offer valuable insights into wage trends among EU affiliates as these four countries account for over 95% of total employment by EU affiliates in the region.
EU affiliates in LAC reported the highest average wages in specialised capital- and technology-intensive sectors, many of which align with the EU-LAC GGIA’s strategic priorities. In capital-intensive industries, such as mining and quarrying, average annual salaries for EU affiliates exceed EUR 70 000 (Figure 3.23). Within manufacturing, sectors such as chemicals; computers and electronics; motor vehicles and pharmaceuticals, which are key areas of focus under the EU-LAC GGIA and characterised by advanced technologies and demand for skilled labour, offer average wages around EUR 50 000. By contrast, less technology-intensive industries, including furniture and textiles manufacturing, reported the lowest wage levels within the manufacturing sector. In services, average wages are generally lower than in manufacturing. Higher salaries are reported in financial and insurance services, with average wages around EUR 40 000, as well as in transport, storage, and information and communication, where wages average approximately EUR 28 000. By contrast, sectors like wholesale and retail trade, and professional, scientific and technical services tend to have lower average wages, typically around EUR 20 000 annually. These wage differences reflect the concentration of high-skilled roles in specialised, capital-intensive sectors, where the demand for skilled labour drives higher wages. In comparison, sectors such as wholesale and retail trade, which are typically less capital-intensive, generate more extensive employment opportunities, but at lower wage levels as they tend to rely on a broader, less specialised labour force.
Average annual labour cost per employee, by sector, 2021-2022
Note: Average annual labour cost comprises employee benefits expense (wages, salaries and employers' social security costs) divided by the number of persons employed. Employee benefits and the number of persons employed are aggregated for 2021 and 2022, then averaged across four LAC countries – Argentina, Brazil, Chile, Mexico. Sectors with fewer than five reporting companies are excluded from the analysis. *Bars with red borders indicate sectors that align with partnership areas under the EU Global Gateway Investment Agenda (See Box 1.2 in Chapter 1). Partnership areas: digital (information and communication, electronics, electrical machinery); climate and energy (renewable energy); transport (electric motor vehicles within “Motor vehicles”); health (chemicals, pharmaceuticals, medical instruments, health and social work). Investments in education and research are cross-cutting in nature and cannot be captured within the ISIC Rev. 4 sector classification. Business activities include professional, scientific and technical activities.
Source: Based on Eurostat (2021/2022[16]), Foreign controlling EU enterprises - outward FATS,
Average wage levels among EU affiliates vary considerably across LAC countries, reflecting both the availability of local skills and the structure of FDI. In the chemicals sector, for instance, wages differ markedly between countries. In Argentina, EU affiliates reported much higher wages, averaging EUR 130 000 annually. This contrasts sharply with Brazil (EUR 36 000), Mexico (EUR 25 000) and Chile (EUR 10 000), where wages are considerably lower. These disparities can be attributed to differences in the nature of FDI in the chemical sector across countries. In Argentina, investment may target higher-value-added segments, such as specialty chemicals, which require advanced technologies and skilled labour. In contrast, in Brazil, Mexico and Chile, FDI is more likely directed towards traditional, labour-intensive chemical manufacturing, where the demand for specialised skills is lower, resulting in comparatively lower wage levels.
Wage differences can also be influenced by the competitiveness and the structure of local labour markets. In countries with limited availability of skilled labour, foreign firms may need to offer higher wages to attract and retain the required talent. For example, industries demanding specialised expertise or advanced technical skills often see wages driven up by the availability (or scarcity) of local talent, prompting foreign firms to raise compensation in order to remain competitive within the market. Additionally, national wage regulations and wage distributions within each country can impact wage levels. Variations in minimum wage laws, labour market policies, and the overall wage and skills structure in a given country can create further differences in how wages are set, influencing the compensation offered by EU affiliates operating in these countries. Moreover, national provisions on social security contributions, which can differ significantly across countries, may also affect overall wage costs and contribute to cross-country wage differences.
3.3.4. Foreign firms tend to offer more stable job opportunities
The FDI Qualities Indicators also show that foreign firms tend to employ a larger share of workers on permanent full-time contracts compared to domestic firms, although with notable variations across countries. In 20 countries in LAC, foreign firms offer a greater proportion of permanent full-time contracts (Figure 3.24). Specifically, in countries such as Colombia, Peru, El Salvador and Paraguay, foreign companies provide a higher percentage of permanent contracts compared to their domestic counterparts. This can reflect the greater resources and adherence to global labour standards typical of foreign firms. Their financial capacity and established corporate practices allow them to offer more stable employment, with better job security and formal labour conditions, reducing reliance on temporary or informal work.
Relative difference between foreign and domestic firms’ outcomes, 2010-2023
Note: The indicators show the relative gap between the average outcomes of foreign and domestic firms; the difference between the proportion of permanent full-time employees in foreign and domestic firms, divided by the proportion of full-time employees in domestic firms. Positive values indicate that foreign firms outperform domestic firms (e.g. have a higher share of full-time employees), while negative values suggest the opposite. Reference years vary across countries, ranging from 2010 to 2023. Lines around the markers represent 95% confidence intervals. Estimates whose intervals include zero are not statistically significant at the 5% significance level.
Source: Based on World Bank (2024[18]), World Bank Enterprise Surveys, https://www.enterprisesurveys.org/en/enterprisesurveys.
However, in other countries like Costa Rica, Suriname and Argentina, the share of permanent contracts in foreign firms is not significantly higher than that of domestic firms. One possible explanation is that both foreign and domestic firms may be influenced by local labour laws or regulations that encourage the use of permanent contracts, leading to similar employment patterns across both types of firms. Another explanation is that in some sectors, such as tourism or seasonal industries, both foreign and domestic firms may rely more heavily on temporary or short-term labour arrangements. Economic conditions and cost constraints within these industries further drive the preference for more flexible employment contracts. As a result, foreign firms may not significantly outperform domestic firms in terms of offering permanent employment.
3.3.5. Greenfield FDI is focused in sectors with limited female participation in the workforce
The sectoral distribution of greenfield FDI in LAC remains heavily skewed toward male-dominated sectors, limiting its potential to support gender-equitable employment outcomes. From 2014 to 2023, over 70% of greenfield FDI in the region was directed into sectors with relatively low female participation, including manufacturing, energy, mining and quarrying, communication infrastructure, and transport and storage (Figure 3.25). These industries are traditionally male-dominated, both globally and within the region, offering limited opportunities for women to benefit from job creation and wage growth associated with foreign investment. In contrast, investment has been markedly lower in sectors where women represent most of the workforce, such as health and social work, education, textile, and accommodation and food services, where female employment often exceeds 60%.
While the concentration of FDI in male-dominated sectors can exacerbate gender disparities, it also has untapped potential to promote gender equality, provided the right policies and enablers are in place. MNEs often operate under global labour standards and may introduce more inclusive workplace practices, such as gender-sensitive recruitment, equal pay frameworks, social security arrangements linked to formal employment, care provisions and protections against discrimination. Research shows that the country of origin of investment is a key determinant of gender performance in the workplace. Specifically, firms originating from countries with higher levels of gender equality are more likely to adopt inclusive policies and achieve better gender-related labour market outcomes (Kodama, Javorcik and Abe, 2018[26]; Tang and Zhang, 2021[27]).
Female employment (% of total employment) by sector, 2024 and greenfield FDI, by sector, 2014-2023
Note: The cumulative value of greenfield FDI over the period 2014-2023 is used as a proxy for FDI stock. The size of the bubbles reflects the sector’s share in total value added.
Source: Based on ILOSTAT (2024[28]), Employment by sex and economic activity, https://ilostat.ilo.org/fr/; Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; UN Data (2024[29]), Table 2.1 Value added by industries at current prices (ISIC Rev. 3),https://data.un.org/Data.aspx?d=SNA&f=group_code%3a201.
3.3.6. The contribution of foreign firms to gender equality is uneven, with persistent gaps in the representation of women in management positions
According to the FDI Qualities Indicators, the contribution of foreign firms to gender equality in the labour market across LAC is uneven. On average, foreign firms employ a higher share of female workers in 18 out of 31 LAC countries, although in 7 of these, the difference is not statistically significant, indicating a generally positive contribution to women’s participation in the labour market (Figure 3.26). This also points to a potential long-term contribution of FDI to structural transformation in gender equality as MNEs may help introduce more inclusive employment practices and gradually influence local labour market structures.
Foreign firms do not outperform domestic firms in promoting women to management positions. In 19 out of 31 countries, the share of foreign firms with female top managers is lower than that of domestic firms, though in most cases the difference is not statistically significant. These gaps may reflect the sectoral focus of FDI, which is often concentrated in capital-intensive, male-dominated industries, where women are less likely to hold senior positions. Additionally, MNEs may rely more heavily on expatriate or internationally recruited leadership, which can create barriers to the advancement of local female professionals. Structural factors, such as limited access to networks or executive training, may further constrain women’s opportunities to take on ownership or top management roles in foreign firms (OECD, 2022[1]).
Relative difference between foreign and domestic firms’ outcomes, 2010-2023
Note: The indicator in panel A shows the share of female employees over total employees, while the indicator in Panel B reflects the share of firms with female participation in top managerial positions. The indicators in Panels A and B capture the relative gap between the average outcomes of foreign and domestic firms. For instance, the difference between the average share of female employees in foreign and domestic firms is divided by the average share of female employees in domestic firms. Positive values indicate that foreign firms outperform domestic firms (e.g. have higher shares of female employees), whereas negative values suggest the opposite. Reference years vary across countries, ranging from 2010 to 2023. Lines around the markers represent 95% confidence intervals. Estimates whose intervals include zero are not statistically significant at the 5% significance level.
Source: Based on World Bank (2024[18]), World Bank Enterprise Surveys, https://www.enterprisesurveys.org/en/enterprisesurveys.
3.3.7. Sectors receiving EU greenfield FDI have a higher share of workers earning high-quality wages
Analysis combining greenfield FDI data with labour income statistics from household surveys reveals that across all observed LAC countries, workers in EU FDI-intensive sectors earn significantly higher wages than those in other sectors (Box 3.7). For instance, in countries such as Guatemala, Argentina, Uruguay and Brazil, they earn 1.5 to 1.8 times more (Figure 3.27).
Average wage ratio between sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. Wage ratio is calculated as average wage in FDI sector divided by average wage in non-FDI sector, based on main job. For further detail, please see Box 3.7.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html
EU FDI-intensive sectors are associated with a higher share of workers earning high-quality wages (defined as wages above the national average) and a lower incidence of low-wage employment. For example, in Argentina, 76% of workers in EU greenfield FDI sectors earn above-average wages compared to 48% in other sectors, while only 6% are in low-wage jobs versus 12% elsewhere. Similar patterns are observed in Guatemala (67% vs. 35% for high wages), Uruguay (52% vs. 29%) and Brazil (45% vs. 27%) (Figure 3.28). This may indicate that, on average, EU investors tend to operate in sectors that provide wages that exceed national wage levels.
Wage quality in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. Wage quality is defined based on monthly labour income. An individual's wage is classified as low if it is less than 0.5 times the national median, middle if it falls between 0.5 and 1.5 times the median, and upper if it exceeds 1.5 times the national median. For further detail, please see Box 3.7.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
This analysis examines how labour market outcomes differ between sectors that have generated the most jobs from European Union foreign direct investment (EU-FDI) and the rest of the economy. This is a comparative exercise and does not establish any causal relationships.
The study combines sector-level data on announced greenfield FDI from the fDi Markets database with harmonised household survey data compiled by the OECD for eight countries in the region. The household data are restricted to individuals aged 15-65 who are active in the labour force, employed in an enterprise and receive a monthly wage. Data are matched between the two datasets using the ISIC Rev.4 classification at the 2-digit level.
To identify sectors most influenced by EU FDI, the analysis focuses on those that accounted for at least 80% of total EU FDI-related jobs in each country during the five years preceding the latest household survey. A minimum of five sectors is selected per country. The remaining sectors – those receiving little or no EU FDI – are referred to as “other sectors” throughout the analysis.
The analysis currently covers the following countries, with the year in parentheses indicating the household survey year: Argentina (2023), Brazil (2023), Colombia (2023), the Dominican Republic (2018), El Salvador (2023), Guatemala (2022), Peru (2023) and Uruguay (2018).
Presentation of the results
Results for EU FDI-intensive sectors are presented as weighted averages, with each sector’s share of total EU FDI-related job creation used as the weight. This approach gives greater relevance to sectors in which EU FDI generates the most employment, providing a representative profile of labour outcomes in these sectors. In contrast, results for other sectors – those receiving little or no EU FDI – are shown as simple (unweighted) averages, reflecting typical labour outcomes across the rest of the economy.
Highlighting the role of EU-LAC Global Gateway Investment Agenda sectors
A significant share of the sectors identified as EU FDI-intensive in this analysis include subsectors included in the EU-LAC Global Gateway Investment Agenda (EU-LAC GGIA), particularly in digital industries, green energy, health and sustainable transport. This underscores the role of EU greenfield FDI in supporting quality job creation in sectors that contribute to inclusive economic growth, the digital and green transitions, and enhanced resilience in partner countries. The list of sectors considered is provided in Annex Table 3.A.1 (Annex 3.A).
3.3.8. EU FDI-intensive sectors are associated with higher rates of permanent and full-time jobs
Prevalence of written and permanent contracts in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7. Data refers to the presence of a written contract and a permanent employment arrangement in the worker’s main job. No data available for Argentina, the Dominican Republic, Guatemala and Uruguay.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
EU greenfield FDI-intensive sectors consistently report higher rates of permanent and written employment arrangements, suggesting that EU greenfield FDI contributes to more secure and stable jobs in the region. This pattern is particularly pronounced in Brazil, where 89% of workers in EU greenfield FDI-intensive sectors have written contracts compared to 53% in other sectors and 95% hold permanent contracts versus 78% elsewhere. The incidence of written and permanent contracts is lower in Peru and El Salvador, with 47% and 37% of EU FDI sector workers holding written contracts, respectively. But these figures still surpass those observed in the rest of the economy (Figure 3.29). These findings reinforce the role of EU investment in sectors that promote quality employment across diverse labour market contexts in LAC.
Workers in EU greenfield FDI-intensive sectors tend to work longer hours per week compared to those in other sectors across most LAC countries. This difference is particularly pronounced in the Dominican Republic, where average weekly working hours reach 52.1 in EU greenfield FDI-intensive sectors compared to 45.5 hours in other sectors. Notable differences are also observed in Colombia (46.6 vs. 45.9 hours) and Brazil (41.9 vs. 39.3 hours) (Figure 3.30). In all cases, these figures remain within local parameters when overtime is taken into account.
Average weekly hours worked in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7. Average worked hours are based on the usual number of hours worked weekly in the primary job. No available data for El Salvador, Guatemala and Peru.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
3.3.9. EU FDI-intensive sectors display lower informality rates and better social security outcomes
Informality remains a persistent and widespread challenge across LAC, affecting over 50% of total employment in many countries (ILO, 2023[31]). It is particularly prevalent among low-skilled workers, youth and women, and is concentrated in sectors such as agriculture, construction and retail trade. Informal employment is often characterised by low wages, limited job security and lack of access to social protection, contributing to inequality and undermining fiscal capacity. Despite some progress in recent years, structural factors, including labour market segmentation, regulatory barriers and weak enforcement, continue to hinder transitions to formality, limiting the region’s ability to achieve more inclusive and resilient growth. FDI can play a key role in supporting formal job creation in LAC. MNEs are typically more likely to operate in the formal economy and to comply with labour regulations, including the provision of formal contracts and social security benefits. Moreover, FDI in high-value-added sectors, such as chemicals, information and communication, and renewable energy, tends to generate jobs that require skilled labour and are more likely to be formal.
Analysis combining matched greenfield FDI statistics with data on working arrangements from household surveys enables an examination of the relationship between EU greenfield investment and informality in labour markets across LAC (Box 3.7). The findings show that sectors that account for at least 80% of the jobs created by EU greenfield FDI in the country tend to exhibit significantly lower informality rates compared to other sectors, indicating that EU investment is more frequently associated with formal employment relationships (Figure 3.31). For example, in Brazil, only 6% of workers in EU greenfield FDI sectors are in informal jobs compared to 25% in other sectors; in Colombia, the respective figures are 3% and 23%; and in Peru, 28% versus 47%. Even in countries with persistently high levels of informality, such as Guatemala or El Salvador, sectors with EU greenfield investment show markedly lower informality rates, highlighting the potential of such investment to support the transition to more formal labour markets.
Proportion of labour informality in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7. Labour informality refers to working arrangements that are in practice or by law not subject to national labour legislation, income taxation or entitlement to social protection or other employment guarantees (ILO, 2023[32]). The indicator only considers the worker’s primary job.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/;OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
Workers in EU FDI-intensive sectors are more likely to contribute to a pension scheme than those in other sectors, across all observed countries. For example, the share of contributors in EU greenfield FDI sectors reaches 99% in Uruguay, 90% in the Dominican Republic and 86% in Colombia, consistently higher than in other sectors (Figure 3.32). Moreover, workers in sectors receiving EU greenfield FDI are also more likely to have health insurance coverage compared to those in other sectors. In Uruguay, coverage is nearly universal in both groups (100% in EU FDI sectors vs. 99% in others), while more pronounced differences are observed in Argentina (96% vs. 78%), Colombia (94% vs. 74%) and Guatemala (46% vs. 25%) (Figure 3.33).
Proportion of workers contributing to a pension scheme in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7. Pension coverage refers to workers contributing to a pension scheme through social security contributions at their main job. No data available for Brazil.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
Proportion of workers with health insurance in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7. Health insurance refers to coverage provided through contributions linked to a work contract. No data available for Brazil.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
3.3.10. While FDI in education and training activities is generally low, EU-based greenfield investors have been important drivers of the investment that exists in this area
Although domestic public and private actors provide most of the investment in education and training, FDI can be pivotal in advancing education and skills development in host countries (OECD, 2022[1]). MNEs often bring with them not only capital and technology but also critical know-how and training systems that enhance the capabilities of local workforces (OECD, 2022[1]). These contributions are embedded both within company-specific workforce development programmes (see Chapter 4) and in broader investments in education and training infrastructure in host countries. Greenfield FDI data, by capturing the establishment of new facilities, offer a unique lens into the extent and nature of international investment in education and training activities. This includes the creation of technical learning facilities, professional education centres and international training centres that are instrumental in upgrading skills and aligning them with global labour market needs.
Although still representing a relatively small share of total greenfield FDI in LAC, investment in education and training has grown steadily over the past two decades. Between 2003 and 2024, such investments accounted for approximately 0.2% of total greenfield FDI, reaching USD 2 billion over the 2014-2024 period (Figure 3.34, Panel A). During 2014-2024, more than half of education and training-related investment in LAC was directed to the manufacturing sector (57% of total), followed by the education sector itself (34%) and, to a much lesser extent, information and communication services (3%) (Figure 3.34, Panel A). Within manufacturing, investment was concentrated in the automotive industry (35%), computers and electronics (34%), and chemicals (14%) (Figure 3.34, Panel B). FDI in training activities can play an important role in addressing talent shortages in the manufacturing sector, strengthening technical skills and supporting the diffusion of new production technologies across the economy (OECD, 2022[1]).
The sectoral composition of training and education investment has evolved during the last two decades. Compared with 2003-2013, when manufacturing accounted for over 70% of total education- and training-related FDI, its share declined in 2014-2024, while the share of the education sector expanded markedly (from 18% to 34%). This shift points to a gradual internationalisation of education services in the region, including the creation of foreign-funded universities, business schools and training centres. While such developments can contribute to skills development and innovation, they may also pose challenges in contexts where public education systems are weaker. Potential risks include widening inequalities in access to training opportunities and reinforcing skill mismatches if private provision does not align with labour market needs (Crawfurd, Hares and Todd, 2023[33]).
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
From the investor perspective, companies based in the EU emerged as the leading sources of greenfield FDI in education and training activities. Between 2014 and 2024, EU-based investors accounted for 32% of total greenfield FDI in the sector in LAC, up slightly from 31% in 2003-2013 (Figure 3.35). In absolute terms, EU investment increased from USD 592 million to USD 643 million over the two periods. Beyond financing, EU investors often introduce structured vocational training systems, technical education frameworks and long-term institutional partnerships, supporting LAC countries in their efforts to strengthen human capital and expand access to quality training opportunities (see Chapter 4).
China was the second-largest source of greenfield FDI in education and training in LAC during 2014-2024, accounting for 22% of total investment, up from less than 3% in the previous decade. Education and training represented 0.5% of China’s total FDI in the region, more than doubling its share from 0.2% in 2003-2013, reflecting a growing strategic interest in the sector. Notably, 95% of all greenfield FDI by Chinese investors was announced in Mexico. Intra-regional investment from LAC countries represented 17% of total greenfield FDI in education and training in 2014-2024, highlighting an important and growing role for regional actors in advancing skills development. By contrast, the United States and the United Kingdom experienced significant declines in their investment shares. The U.S. accounted for 15% of total greenfield FDI in education and training in 2014-2024, down 42% from its 2003-2013 level. The UK’s share fell even more sharply, by 43%, to account for less than 1% of total investment in the sector during the most recent decade.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
Within LAC, greenfield investment in education and training remained concentrated in a small number of countries (Figure 3.36). Between 2014 and 2024, only 15 of the 33 countries in the region reported such investments. Mexico attracted the largest share (42%), followed by Colombia (31%) and Brazil (8%). China was the leading investor in Mexico, accounting for 44% of all education and training investment in the country. The EU emerged as the dominant investor in Argentina, Brazil, Chile and Costa Rica, while the United States led in Panama and Honduras. In Colombia, regional investors from LAC held the largest share, reflecting growing intra-regional investment in human capital development.
Greenfield FDI in education and training activities, by origin country/region, USD million, 2014-2024
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/.
3.3.11. EU greenfield FDI-intensive sectors tend to employ more highly educated workers
Household survey data offer deeper insight into the relationship between greenfield FDI and workforce skills, particularly in terms of secondary and tertiary educational attainment (Box 3.7). Sectors with significant EU investor activity tend to employ a more highly educated workforce. In Brazil, for example, 85% of workers in sectors where EU investors are active have completed secondary or tertiary education compared to 69% in sectors with limited or no EU presence (Figure 3.37). In Colombia, the share rises to 93% versus 84%, in Argentina to 92% versus 73% and in Peru to 91% versus 78%. The Dominican Republic represents a notable exception to this trend, where sectors attracting EU investors employ a lower share of workers with secondary or tertiary education than those not targeted by EU investment.
This pattern suggests that EU greenfield FDI is skills-biased, that is, it tends to concentrate in sectors that already require a more educated labour force. This has important implications. On the one hand, such investment can act as a catalyst for skills upgrading by increasing demand for qualified workers, prompting education and training institutions to adapt and expand their offerings. On the other hand, this dynamic may exacerbate existing disparities if the local supply of skilled labour is limited or unevenly distributed across regions, sectors or social groups. Moreover, the skill composition of FDI-related employment is shaped not only by the sector in which investment occurs, but also by the specific activities multinational enterprises choose to carry out.
Share of workers by educational attainment in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
Overall, the strong association between EU greenfield investment and higher educational attainment reflects the EU’s potential as a partner in advancing human capital development. By continuing to channel investment toward sectors and activities with higher skill requirements and complementing this with targeted support for training and education activities, EU investors can play a key role in fostering labour market development in LAC countries.
3.3.12. Sectors receiving EU greenfield FDI are associated with lower shares of women
As discussed earlier, greenfield FDI in LAC tends to be concentrated in male-dominated sectors. EU greenfield investment follows a similar pattern, with less emphasis on manufacturing and mining, but a strong focus on the energy sector – another area with a predominantly male workforce. Data also show that EU-affiliated firms in the region tend to pay lower average wages in sectors with a high share of female workers, such as education, retail, and professional and technical services. A notable exception is the financial and insurance services sector, where wages are among the highest and the gender distribution is more balanced. These patterns suggest that, without deliberate efforts to apply a gender lens to investment strategies, EU greenfield FDI risks reinforcing existing occupational and wage inequalities between men and women.
Additional analysis based on micro-level data from household surveys reveals significant cross-country variation in the gender distribution within EU greenfield FDI–intensive sectors (Box 3.7). In many cases, the share of women employed in sectors receiving EU FDI is lower than in the rest of the economy. For example, in Argentina women represent only 28% of workers in EU FDI sectors compared to 49% in other sectors; in Brazil 27% versus 49%; in Peru, 35% versus 43%; and in Uruguay, just 19% compared to 48% (Figure 3.38).
Gender distribution in sectors receiving EU FDI compared to other sectors
Note: The selected sectors account for at least 80% of the jobs created by EU FDI in the country and include a minimum of five sectors, based on fDi Markets statistics over the five years preceding the most recent available household survey. The results shown in the graph are weighted averages for these sectors, using each sector’s share of total EU FDI-related job creation as a weight. For the remaining sectors – those receiving little or no EU FDI – simple (unweighted) averages are reported. For further detail, please see Box 3.7.
Source: Based on Financial Times (2025[3]), FDI Markets (database), https://www.fdimarkets.com/; OECD (2023[30]) Key Indicators of Informality based on Individuals and their Households (KIIbIH) database, https://www.oecd.org/en/publications/extending-social-protection-to-informal-economy-workers_ca19539d-en.html.
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Note: FDI data are matched to workers’ sectors of employment using ISIC Rev.4 at the 2-digit level, which limits the possibility to disaggregate subsectors and identify specific areas covered by the EU-LAC Global Gateway Investment Agenda. For example, it is not possible to distinguish electric vehicles within motor vehicles or renewable energy within power generation. Sectors marked with * include subsectors that are aligned with the initiative; however, not all activities within these sectors are necessarily covered. For Argentina, computer programming activities includes jobs classified under national CAES code 62000.
Source: OECD elaboration based on ISIC Rev. 4 and OECD household surveys.