Mexico | What about Public Policies that Foster Nearshoring?

Summary

Though nearshoring represents a great opportunity for the Mexican economy, it requires an environment that guarantees the reduction of logistic and production costs characterized by legal certainty, financial facilities and economic policies that align the incentives of foreign investors and national actors.

Key points

• Key points:
• The dynamism of Foreign Direct Investment (FDI) was mostly explained by the reinvestment of company profits, while only 13% of it is attributable to new investments.
• There are still no indications that nearshoring investment has translated into economic spillovers and, with respect to credit demand, a significant boost has not yet been observed in the commercial banking portfolio.
• In December 2023, total balances for the manufacturing sector registered a YoY growth rate (filtering inflationary and exchange rate effects) of 0.0%.
• Bank financing has contributed significantly to the development of links in the productive network that are necessary for its operation, such as transportation, industrial infrastructure and renewable energies.
• Public policies that reduce insecurity, grant access to hydraulic and energy resources and guarantee respecting the "rules of the game" for foreign investors should be implemented to foster nearshoring.

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