Foreign Direct Investment is the capital that enters the country through three routes: reinvestment of profits, new investments and intercompany transactions.
Foreign Direct Investment (FDI) aims to create a strategic economic and business link between a foreign investor and a host country that is lasting, brings a number of benefits to the host country like a transfer of technology, the creation of employment and specialization of the work force, thus increasing the productivity of the host economy. In most cases there is a wage increase and a boost to international trade (exports and imports, therefore increasing the competitiveness of the business sector.
According to World Investment Report 2019, created by the United Nations Conference on Trade and Development (UNCTAD), Mexico is 12th out of the 20 top FDI host economies, and is considered a developing country.
This is due to the Foreign Direct Investment patterns in 2019, with FDI of 32.9 billion dollars, 4.2% higher than the figure for the same period in 2018 (31.6 billion dollars).
Of the aforementioned total, 17.5 billion dollars (53%) came from the reinvestment of profits; 12.8 billion dollars (29%) were from new investments, and 2.6 billion dollars (7.9%) from intercompany accounts.
Of the FDI flows recorded, 15.5 billion dollars went to the manufacturing industry, 5.3 billion dollars to financial and insurance services, 3.2 billion dollars to commerce, 1.8 billion dollars to mass media information, 1.8 billion dollars to mining, 1.3 billion dollars to the generation of electric energy, water and gas, and 4.3 billion dollars went to the remaining sectors.
The investments mentioned come mostly from the United States, considered Mexico’s strategic partner, followed by Spain, Canada, Germany and Italy.
As the United States invests around 12.1 billion dollars in Mexico, Carlos Pfister, General Director of Promofin, believes that it is essential to promote actions at a local level that consolidate the business sector in order to strengthen confidence and certainty for new foreign investments in Mexico. New investments can come from both individuals and companies that seek to establish themselves in the country, from the contribution of capital stock to Mexican companies to the transfer of shares from Mexican investors to foreign investors.
There are currently several alternatives, such as specialized advisors that help the business sector structure and consolidate companies and create links with reputable foreign investors.
Oradel Industrial Center is generating Foreign Direct Investment by attracting manufacturing companies that export goods and services.