Foreign direct investment and its effect in Mexico

by Advance Real Estate 21 de March, 2023 727 Views

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One of the most crucial issues for Mexico’s economy and development is investing in resources from other countries. Throughout the first half of 2022, foreign direct investment (FDI) increased up to 50%¹ over the previous year. The countries with the largest share were the United States (39.1%), Spain (10.8%), and Canada (7.1%).

Bringing foreign capital to the country is centered on location, myriad commercial treaties, economic progress, and stability. However, this level of investment needs support to maintain and steadily grow.

Investing in foreign capital: what are the forecasts?

In early 2022 it was estimated that foreign direct investment in Mexico attracted more than $US27 billion¹, according to Solili’s data. In order of participation, the following industries received distribution:

Mass media (24.2%)
Financial services (19.4%)
Transportation (17.2%).

A global UNCTAD² analysis found that this recovery significantly improved foreign direct investment in 2021.

Nonetheless, the report also highlighted that investors’ trust in the infrastructure sectors remained intact due to long-term financing alternatives, recovery incentives, and foreign investment programs.

Furthermore, the survey on the Expectations of Economic Specialists in the Private Sector predicted a potential growth in the FDI of Mexico by 2023. It stated that it could reach US$29.965 billion³, even if it maintained its lower 2022 growth rate.

In this framework, a key factor encouraging foreign investment in Mexico and other economies is international project finance agreements, growing 53% in number and 9% in value³.

The outcome of higher foreign investment in Mexico

The World Investment Report 2022 data showed Mexico ranking as the tenth largest recipient of FDI⁴ worldwide in 2021 and fifth among developing economies. This indicates confidence in the national economy and its advantageous conditions for foreign investment.

Those companies investing in our country can reduce operating costs compared to if they had installed in other locations. Additionally, they benefit by locating on the border of the United States and Central America with access to young and highly qualified human capital.

Therefore, these investments help improve GDP. This is because there is a proportional increase in new jobs, technology transfer, more competitive salaries, and greater opportunities for Mexican investors, businesspeople, and entrepreneurs.

To contribute even more, at Advance Real Estate, we provide foreign companies with lease spaces suitable for running their operations in the major industrial cities of Mexico. Contact us and get the perfect location for your company’s operations.

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Advance is a leading company in the acquisition, leasing and operation of industrial and logistics assets, with presence in 12 cities within Mexico and a portfolio of 11.5 million sf of industrial space.

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