Last Update:11/17/2023
Mexico is one of the most competitive countries for productive investments worldwide due to many factors, such as:
- A strategic geographical position.
- Competitive costs, with a young and talented population.
- Size and strength of its internal market.
- Macroeconomic and political stability.
- Economic growth.
- Ability to manufacture high technology products.
- Open economy that ensures access to the most important markets worldwide through a network of free trade agreements.
According to the World Investment Report 2022 published by the United Nations Conference on Trade and Development (UNCTAD), in 2021, Mexico ranked 10th place as foreign direct investment recipient, and 5th among developing economies.
According to figures of the Ministry of Economy, in the third trimester of 2023, Mexico received foreign direct investment of more than USD 32.9 billion, most of it invested in the manufacturing industry. Even more, foreign direct investment flows have performed favorably during the last 10 years, with a total amount of USD 300 billion in the period 2011 – 2021, destined primarily to the manufacturing, financial, mining, commercial, construction, real estate, tourism, media, professional services and transport sectors.
In this same period, the countries with more investments in Mexico were: firstly, its partners in USMCA (United States and Canada), followed by a significant number of European countries (Netherlands, Spain, Belgium, Germany, United Kingdom, Luxemburg and Switzerland), and Asian countries (Japan).
As an expert in international economics and trade, I can confidently attest to the significance of Mexico's position as one of the most competitive countries for productive investments globally. The evidence supporting this claim is rooted in a combination of strategic factors that make Mexico an attractive destination for foreign direct investment (FDI).
Firstly, Mexico's strategic geographical position plays a crucial role in its competitiveness. Located at the crossroads of North America and Latin America, Mexico serves as a gateway for businesses looking to access markets in both regions. This geographical advantage facilitates efficient trade and logistics, making it an appealing choice for international investors.
Competitive costs, coupled with a young and talented population, further contribute to Mexico's appeal. The country offers a cost-effective labor force while boasting a demographic advantage with a sizable population of skilled and youthful workers. This combination enhances productivity and innovation, making Mexico an attractive destination for various industries.
The size and strength of Mexico's internal market are additional factors that bolster its competitiveness. With a large and diverse consumer base, businesses can establish a solid foundation for growth by tapping into the domestic market. This aspect adds resilience to the economy and provides a stable platform for investors seeking long-term returns.
Macroeconomic and political stability are critical considerations for any investor, and Mexico excels in both areas. The country has demonstrated a commitment to sound economic policies and political stability, creating a favorable environment for business operations. This stability is a key driver for foreign direct investment, assuring investors of a secure and predictable business environment.
Economic growth is another compelling factor that enhances Mexico's appeal. The consistent growth of the Mexican economy reflects its adaptability and resilience, creating opportunities for investors to participate in a dynamic and expanding market.
The ability to manufacture high technology products positions Mexico as a key player in the global supply chain. This capability is driven by a skilled workforce and a commitment to technological advancement, attracting investments in industries that require advanced manufacturing capabilities.
Crucially, Mexico's open economy is underpinned by an extensive network of free trade agreements, ensuring access to vital markets worldwide. This openness is validated by its ranking in the World Investment Report 2022, where Mexico secured the 10th position as a foreign direct investment recipient and the 5th among developing economies. This report, published by the United Nations Conference on Trade and Development (UNCTAD), serves as empirical evidence of Mexico's appeal to international investors.
Examining the data provided in the article, the figures from the Ministry of Economy for the third trimester of 2023 highlight the continued influx of foreign direct investment into Mexico, amounting to over USD 32.9 billion. The majority of these investments are directed towards the manufacturing industry, underscoring the country's strength in this sector.
Over the past decade, foreign direct investment flows have consistently performed favorably, reaching a substantial total of USD 300 billion from 2011 to 2021. These investments have been distributed across various sectors, including manufacturing, financial services, mining, commercial activities, construction, real estate, tourism, media, professional services, and transport.
Analyzing the geographical sources of foreign direct investment, the countries within the USMCA (United States and Canada) stand out as the primary partners, reflecting the close economic ties within the North American region. Furthermore, a notable number of European countries, including the Netherlands, Spain, Belgium, Germany, the United Kingdom, Luxemburg, and Switzerland, have made significant investments in Mexico. Additionally, Asian countries, with Japan at the forefront, contribute to the diverse sources of foreign direct investment.
In conclusion, Mexico's solid and open economy, supported by a strategic geographical position, competitive costs, a robust internal market, stability, and sustained economic growth, positions it as a compelling destination for productive investments. The evidence presented, including data from reputable sources such as UNCTAD and the Ministry of Economy, substantiates Mexico's status as an attractive and competitive player in the global economic landscape.
