Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview
Agriculture accounts for approximately 4% of the GDP and employs13.5% of the active population, however, the scarcity of creditcontinues to penalize this sector.Mexico ranks amongst the worlds largest producers of coffee, sugar,corn, oranges, avocadoes and limes.Mexico is the worlds 5th biggest producer of beer and its numbertwo exporter.It is amongst the worlds leading producers of many minerals,including silver, fluorite, zinc and mercury, and its oil and gasreserves are one of its most precious possessions: Mexico is theworlds fifth largest producer of oil.The oil company PEMEX is the second most powerful company inLatin America, according to the industry journal AméricaEconomŕa.Cattle farming and fishing are also important economic activities.
The aerospace sector has grown sharply in the last five years, due tothe presences of almost 190 companies, such as Bombardier, Goodrich,the Safran group and Honeywell, which together employ 30 000 people. Mexico is also one of the 10th major car producers. The hi-tech, information and software development sectors are alsoexperiencing a real momentum, driven by the quality of the workforce,clusters and low operating costs, which allow for the establishment ofcall centers. The tertiary sector contributes to around 60% of the GDP and theconstruction sector is coming up again due to real estate investments.
Mexico became the 12th world economic power. Although theGDP fell sharply in 2009 (-6.5%), the GDP is predicted to rise byabout 4% in 2010. Resumption of exports, especially car sales and US tourism areencouraging signs. The general economic outlook is relatively good. According tothe different rating agencies, Mexico enjoys the investment gradestatus. The Doing Business 2010 report considers it the best countryto do business in in Latin America; nevertheless, the growingsecurity issues discourage investments and tourism. The corruption and inefficiency of Mexican bureaucracyare also among the countrys weaknesses
Mexico is one of the emerging countries most open to foreign directinvestment. Over the last few years, its competitiveness has been slowed down dueto the increase of organized crime and a lack of reforms in the energy,professional and financial fields.The areas where foreign investments are concentrated the most are theborder towns with the United States (where assembly factories arelocated), as well as the capital. The Yucatan peninsula continues to receive foreign investments thanksto its tourism appeal. These investments come especially from the United Statesand Spain (mainly from the banking sector). The sectors receiving significant foreign investments are finance, automobile industry and electronics services.
The major investors in Mexico were the Netherlands with 7.461 milliondollars, or 52% of total FDI and the United States with up to 30% for theyear 2010. This reflects Heinekens significant acquisition of the beer operationsof the Mexican group Femsa. Spain, on the other hand, has significantlyreduced its investments in the country. The 14.362 million dollars of FDI in 2010, Mexicos appeal has againincreased, compared to the last two years. According to the 2010 global competitiveness report of the World Economic Forum, Mexico ranked 28th in terms of foreign investor confidence.
The Mexican Government has created an open and safe environment forforeign investors. The recently undertaken economic policies should allow investors tomanage the safety of their operations despite the unfavorable globalexternal environment. Public treasury funds have been made available to private companiesthat have been heavily affected by the crisis. In November 2008, the Mexican government saved the Vitro company,one of the worlds biggest glass producers, which was having liquidityproblems because of its debts. The amount disbursed to save it was evaluated at 100 bn $. The cement corporation, Cemex, in turn registerd a 15 bn $ debt, a debt which is higher than the value of the company, due to the collapse of the world construction sector.
Mexico forms a bridge between North America and LatinAmerica due to its geographical location; Mexico has an extensive variety of natural resources allowingfor the development of all types of industries at competitiveprices; Mexico is very open to direct foreign investments; Labor costs are not high and in general, there is a skilledlabor force; Positive structural reforms have been made during thecurrent presidential term; Mexico is the worlds 8th tourist destination.
The country depends excessively on its partnership with theUnited States; There is a high level of corruption; During the last few months, violence has increased especially thedrug cartels; The country is encountering significant structural problems(economic and social).
Mexico is one of the countries that most depends on foreigntrade. Foreign trade represents around 60% of its GDP. Mexico has 11 free-trade agreements with 43 countries of theworld. It is a member of NAFTA - the free-trade agreement thatunifies the United States, Mexico and Canada, since 1994. The country signed a free trade agreement with the EuropeanUnion in 2000 and a commercial agreement with Japan cameinto force in April 2005.
The United States buys 80% of Mexicos exports. Its mainexport partners are the NAFTA and the European Union. The main export goods are electrical and electronicequipment, vehicles, mineral fuels, oil and machinery. Its three main import partners are the NAFTA, China andJapan. It mainly imports electrical and electronics equipment,machinery, vehicles and plastic products. In 2010, Mexican exports increased by 32% on the previousyear. During the same period, international car sales increasedsharply by 76.8%, which may also represent a threat ofdependency for the Mexican economy.
Visit us to download for related reports Market Opportunities of products and Services inMexico Export and investment sector opportunities in Mexico Overview of Trade Regulations, Customs and Standardsin Mexico Mexican Investment guide for beginners Business and Project Financing in Mexico Business Travel Advisory in Mexico
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