Latin America and the Caribbean

LEO 2008 Chapter 3 - Business for Development


Chapter 3 - Business for Development

Multinationals, Telecommunications and Development


Since the early 1990s, foreign direct investment has increased dramatically worldwide. Latin America has been a major recipient of such investment, notably in conjunction with privatisation in the region during the 1990s. The emergence of new Latin American multinational corporations means that the region has also become a source of such investment, especially in the 2000s. The importance of both inward and outward foreign direct investment is particularly visible in the telecommunications, a sector dominated in Latin America by two multinationals, one from each side of the Atlantic. Many countries in the region have taken great strides in building modern telecommunication infrastructure thanks to the combined effects of technological progress, the spread of mobile telephony and the market-seeking thrust of the leading competitor’s investment behaviour. The strength of a few corporations has, however, given rise to concerns over the nature of competition in the sector. Greatly expanded user access to telecommu8nications services increases the contribution of this sector to economic growth, but key challenges remain in establishing and ensuring contestable markets that will close international and domestic digital gaps between rich and poor segments of the population and provide telecommunications services to all. Effective access-promotion policies with clear and stable rules are needed together with well-regulated, open and competitive markets that promote innovation and encourage multinational corporations to maximise their collective contribution to the region’s long-term development


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