A strategic location with close proximity to the US and Canada, a competitively priced and skilled workforce and an open economy make Mexico an increasingly attractive option for foreign companies.
In terms of trade Mexico leads Latin America and is the country with the most free trade agreements in the world, currently standing at 45. It also has one of the most business-friendly environments of any large emerging economy and performs much better than the powerful BRIC countries (Brazil, Russia, India and China) in many aspects.
You might like to listen to this in-depth BBC radio documentary:
MINT: The Next Economic Giants, Mexico – Brave New World
Indeed, many analysts now consider Mexico to be one of the most competitive countries in the world in the manufacturing sector and its location next to the United States, still the world’s largest market, and its links with other expanding Latin American economies give it important advantages.
Understandably, it is an attractive option for direct foreign investment, which reached historic levels in 2013, and showed a 17 percent increase in the first quarter of 2014 over the same period in 2013. The number of international companies operating in the country is rising. They are active in sectors such as electronics, automobiles, computers and software, smart phones and even aerospace. In turn, major Mexican companies in the telecommunications, construction, food and manufacturing sectors are also investing abroad.
The Mexican economy is no longer so dependent on oil and has a healthy and complex manufacturing sector. In 2011, medium and high tech exports accounted for 19.3 percent of GDP, placing it third in a global table behind Germany and South Korea (source: ProMexico)
Here are some of Mexico’s most important manufacturing sectors:
• Automobiles
Mexico is now the world’s eighth largest vehicle producer and the fourth largest new light car exporter. Many of the world’s major vehicle brands have plants in Mexico and the country manufactures and assembles cars, motorcycles, industrial vehicles and parts. In June, Daimler and Nissan announced that they will build a new plant with an output capacity of 300,000 cars in the state of Aguascalientes, following brands such as Volkswagen, Fiat, Honda, Mazda, BMW, Mercedes-Benz and Audi. Volkswagen considers Mexico key to its North America expansion plans and its strategy for becoming the world’s largest car company.
Eighty-four of the world’s top auto parts companies also have factories in Mexico (source ProMéxico).
• Electronics & Appliances
Mexico is the world’s leading producer of flat screen TVs. It also dominates the refrigerator and domestic appliance sector in the Americas and is the sixth globally. When it comes to smartphones it is ranked second in the world and fourth in the world for computer exports.
• Software Development & IT
Mexico is one of the top four IT software developer countries in the world. As an example, the area around Guadalajara in Jalisco is an important information and digital technology hub (source: Americas Quarterly) and exports related to this sector grew by 15 percent in 2012. With 600,000 people already employed in the sector nationwide, Mexico is poised to become the capital of the information technology outsourcing industry in Latin America.
• Aircraft & Aerospace
Mexico has become a leading player in the global aircraft and aerospace industries with over 190 companies already active in the sector, including Rolls Royce, Zodiac Aerospace, Gulfstream, Fokker and Bombardier.
• Medical, Precision and Optical Equipment
Mexico is the largest exporter of medical instruments and equipment in Latin America and fifth in the world.
Video via ProMexico
