So far this year, foreign and multinational companies have announced plans to invest more than US $39 billion in Mexico in what is known as foreign direct investment (FDI).
Between Jan. 1 and May 31, private firms announced their intention to invest $39.2 billion in Mexico, according to the Economy Ministry (SE).
The SE expects the funds to flow into the country in the next two to three years, it said Sunday.
The ministry said that there were a total of 127 investment announcements in the first five months of the year. The projects announced are expected to create more than 54,000 new jobs.
Just over half of the total investment — 51% — will come from the United States, Mexico’s largest trade partner and source of FDI. Mexico’s next biggest investors based on announcements made so far this year are Germany (14% of the total) and Argentina (11%).
The lion’s share of the money — 56% — will go to the manufacturing sector, while the mass media, commercial and transport sectors will receive 13% each, the SE said.
The ministry highlighted that 16% of the expected new investment will go to Querétaro, 12% to México state, 9% to Nuevo León and 5% to Coahuila. The other 58% will be divided between Mexico’s 27 other states and Mexico City.
The largest investment announcements in the first five months of 2024 were those made by Coca-Cola bottler and convenience store owner FEMSA ($9.96 billion); Amazon Web Services ($4.96 billion); and DHL Supply Chain ($4 billion).
Femsa, the owner of the Oxxo chain of convenience stores and 17 Coca-Cola bottling plants in Mexico, among other assets, said in February that its outlay would go to “organic growth initiatives in our key businesses.”
Amazon Web Services announced in February that it would open a cluster of data centers in Querétaro.
The SE on Sunday highlighted the three largest investment announcements in the second half of last month.
It noted that Evergo, a Dominican Republic-based company that operates charging stations for electric vehicles, intends to invest $200 million in Mexico, while United States contract manufacturer L&T Precision announced a $143 million investment.
The third foreign direct investment announcement mentioned by the SE was the plan by Japanese air conditioner manufacturing company Daikin, which plans to invest $122 million in Mexico.
The FDI announced in the first 5 months of the year is over $3 billion more than the total foreign investment recorded in 2023.
FDI in Mexico was $36.06 billion last year, according to SE data, while investment announcements totaled well over $100 billion.
The SE reported last month that foreign investment in Mexico hit a new record high in the first quarter of 2024, with Mexico FDI increasing 9% annually to exceed US $20.3 billion.
But only 3% of the FDI Mexico received in the first three months of the year — around $600 million — was new foreign investment, while 97% was reinvestment of profits by foreign companies and investors that already had a presence in the country.
However, based on the recent announcements made by foreign companies, the “new investment” percentage of Mexico’s FDI should increase significantly in coming years.
Scores of companies — including automakers Tesla and Kia, steelmaker Ternium and energy firms Mexico Pacific Limited and Woodside — made large investment announcements last year.
Just last week, the CEO of Mexico Pacific, Sarah Bairstow, told the El Financiero newspaper that the company she leads would invest an additional $15 billion in liquefied natural gas projects in northern Mexico in the next two to three years, doubling its outlay in the country to $30 billion.
Mexico News Daily
Where is the study of the impact on the water supply?
I don’t see un this or any of the other articles about foreign investment what is the benefit to Mexico. In a capitalist country. Foreign ownership and the means of productions should be just as feared as in a communist regime where the mrans of production are government-owned or worker-owned. Foreign investment for mere jobs is a akin to prostitution.
Robert Burns comments regarding foreign ownership are interesting. Although his rambling complaint lacks any attempt to offer a solution, we must assume he is advocating more domestic ownership – since he also ruled out government or worker ownership. Are investments by huge publicly traded corporations better if that company is listed on the Mexican Stock Exchange rather than those investments by corporations listed on the NYSE or EURONEXT or NASDAQ or Shanghai? His comment that “foreign investment for mere jobs is akin to prostitution” opens a fascinating potential for an interesting conversation. Does he advocate that that Mexican workers should turn down all jobs if the employer is traded anywhere but Mexico City?
The impact of the significant FDI into Mexico can be a double-edged sword. While it promises economic growth and job creation, it also poses challenges, particularly related to water resource management and equitable distribution of benefits. Careful planning, investment in infrastructure, sustainable practices, and inclusive policies will be essential to maximize the positive impacts and mitigate potential downsides. Referring to comments above, while more Mexican ownership or nationalization schemes might offer some advantages, such as greater control over resources and potential for redistribution, they also come with significant risks and challenges, including potential inefficiencies and reduced foreign investment. A balanced approach that combines strong regulatory frameworks, public-private partnerships, and targeted social programs may offer a more sustainable and inclusive path to benefiting poorer communities in the long run. The key is to ensure that economic policies are designed to promote inclusive growth, equitable distribution of wealth, and sustainable development. Businesses are not investing in Mexico to lose money.