This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
| 1 minute read

Foreign Investment in Mexico

According to the United Nations Conference on Trade and Development, the Latin America/Caribbean region received more than $200 billion in direct foreign investment in 2022. It seems increasing political tension and commercial disputes with China shifted transnational companies' growth perspectives towards less-conflicted territories. But every region presents challenges to prospective investors. Some countries with tremendous natural resources are politically unstable. Others are fiscal paradises, but have no infrastructure. Some have cheap labor, others offer logistical advantages. However, as a base to tackle the North American market, very few can compete with Mexico, which shares a two-thousand-mile border with the US and offers good craftsmanship at an affordable minimum wage.

Those who invest in Mexico tend to focus on five things: infrastructure; productivity; corruption risk; rule of law; and public safety. While it has shown significant development in infrastructure and productivity since 1994, Mexico still struggles with security and a deeply embedded bribery culture that deters investors. It is common to seek to minimize risk by vetting potential business partners for links to corruption or organized crime before engaging in any business with them. But the risk doesn't stop there. There is an unquestionable mistrust in government officials, who are prompt to promise many things to win investment in their jurisdictions. Sadly, many companies struggle when those promises do not materialize. 

Enhanced due diligence has become a crucial tool for investors because it focuses on the people as much as on the deal. More than ever, investors want to know about their potential suppliers, business partners, and even the governor or mayor.   

Security, or the lack of it, also worries business. US officials have said swaths of Mexican territory are controlled by drug cartels, rather than the government.