For many decades, a high degree of political risk discouraged foreign investment in Latin America. Recent years have witnessed major changes in the nature and extent of Latin American country risks, with a dramatic reduction of political risks, and a new focus on economic risks. At the same time, there has been a vast opening up of investment opportunities where Canadian corporations can transfer modern technology and business practices that exceed the capabilities of domestic corporations, creating country- and industry-specific competitive advantages. However, Latin American countries still rank very poorly in the factors underlying international competitiveness, with the result that labor-intensive export facilities are more likely to be located elsewhere, in spite of Latin America's low wage levels.
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