FDI: Mexico loses attractiveness for foreign investment

The Foreign Direct Investment Confidence Index (FDI) of Kearney 2020 showed that Mexico has left the list of the Twenty Five most important priority locations in the world. Mexico was dropped from the list for various reasons.

For example, the small historical growth, the transformations in the "rules of the game" and the lack of clarity in the regulation. Added to this is the fact that several private works have been paralyzed

So, one of the examples that we find is the transformation of rules that delayed the Energy Reforms, in the stages of exploration, production and new projects for the production of renewable energies and this situation affected the result.

The cancellation of the Texcoco Airport and the brake on private investments, such as the Constellation Brands plant in Mexicali, also undermine credibility in a rule of law.

FDI: economic consequences for Mexico

José Luis de la Cruz, director of the IDIC, notes that we have three reasons that distanced the IDE from Mexico. Initially the financial crisis of the industry. Second, T-MEC, since the companies already predicted that we would have pertinent changes in the automobile business.

Since companies have been looking for other destinations to apply their financial capital. Finally, we have an environment that is not conducive to business, since several countries do not have available resources.

This is not the first time that Mexico has been left out of the list, in 2011 the country was not in the group of countries listed. In 2019, Mexico was very close to being left out of the index, in twenty-fifth position. Mexico's best place in the index was in 2000 when the country was ranked third.

Emerging and frontier markets will suffer much more at the hands of COVID-19. A confluence of factors is at play. They include inadequate medical infrastructure, limited fiscal options, and significant debt overhang. All this considering the highest levels of poverty in general.

The first place in the ranking was, for the eighth consecutive year, for the United States, followed by Canada, Germany, Japan, France, the United Kingdom, Australia, China and Italy.

Only three emerging economies made it into the index this year, these were China (8), the United Arab Emirates (19) and Brazil (22). Although China remains the best-ranked emerging market in the index, it fell to its lowest position this year. This reflects that investors believe that Mexico is a less attractive destination for the FDI compared to other countries.

Also read:

Understand more about the tariff crisis