– Juan Roberto Reyes Solís
The calender year 2024 is marked by significant global political change due to elections in nearly 70 countries. Additionally, political uncertainty and ongoing international conflicts are compelling business leaders to carefully plan their strategies across various economic, commercial, and financial projects. In all these current facts of political continuity and change, Mexico’s productive performance is exposed to a set of challenges and opportunities. According to the International Monetary Fund, Mexico has emerged as the tenth largest recipient of foreign investments globally over the past two years.. Conversely, the World Bank highlights that Mexico has become the twelfth largest economy globally and is also one of the world’s top fifteen exporters.
This achievement is due to the relative strengthening of the U.S. economy, which has sustained demand for Mexican-manufactured products..This is particularly due to the U.S.-China rivalry and other factors that have led to the transfer of industries to Mexico, thereby triggering potential growth in nearshoring. Thus there is much more to report, including the visit of foreign tourists.
As a result of these dynamics, Mexico has recently positioned itself as the main trading partner of the United States after China. At the same time, in the Latin American area it maintains an excellent profile attracting foreign investment and performance in the regional trade. In terms of tourism, Mexico is today the ninth country that generates foreign currency for this activity in the world.
According to the Ministry of Economy, the best sectors for business are energy, general consumer products, technologies, medical services, drones, electrical vehicles, robots, electronic manufacturing and infrastructure.
The current challenge for Mexico must focus on strengthening external perception to improve the image towards international markets and create a scenario that more vigorously promotes the full potential of the nation. In short, the positive reputation must be intensified and the perception of those others that are palpable as unfavorable must be reduced, especially the situation of insecurity.
However, a trend that has favored the economic scenario is found in another very attractive factor. The rising of nearshoring has gained momentum to engage production centers to geographic areas that favor the greatest use of resources and facilitate the operation and efficiency of the distribution chains of goods and services to destination markets. For Mexico, with a strong interaction in market and economy of the United States economy, the need for intermediate goods, as well as the supply of these to different industries, led to considering the vision of rethinking the logistics of numerous companies. This is how the idea of nearshoring was gradually outlined, by reconstituting production networks with resources from the regions, and relocating industries and suppliers of goods and services in the national geography.
Some of the potential benefits could be seen in the possibility of increase in foreign investments, derived from the transfer of production plants to the country and their eventual location in the different industrial parks. This circumstance could strengthen the size of industrial clusters and their business environment, leading to create new infrastructure, connectivity, service offerings and other activities associated with regional economic growth and development. In this regard, various companies located in the national territory have the opportunity to announce their expansion plans, which will trigger new projects that are associated with the relocation of productive activities. In this case, it should be highlighted that the panorama of foreign investments in the state environment is favored by a strategy of attracting and engaging industries that are integrated into the productive chains within the different clusters of the region.
These circumstances stimulate the possibility of having more specialized personnel in different productive branches, that is, a growth in the workforce derived from the location of new industries that require employees for the areas in which they participate in.
There is also a great capacity in the use of regional resources and the territorial advantages as the connection among regions inside the country. By connecting the Pacific and Atlantic Oceans through maritime ports, Mexico facilitates the movement of goods from Eastern countries to various locations within the country. It is the same case for imports and exports that are moved by train and transportation services from Central America to the U.S. market.
Finally, potential growth of exports, especially to the United States market. For numerous industries, the export potential or, where applicable, opens a door that would lead to participation in that market, establishing, in the process, an opportunity for international experience, development and deepening of business for the companies involved in this expectation. While Mexico could leverage these opportunities on a large scale, the upcoming U.S. presidential election will be crucial in determining the future economic conditions and prospects for Mexico. [COGGS]
*Author is Professor and Researcher, Universidad Anáhuac Querétaro, Mexico.
[The views expressed herein are those of the author and do not necessarily reflect the official position or endorsement of COGGS. For submission queries, pls write us to ayan@thegeoeconomics.com ]
