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News Article

Mexico Among Countries with Most Foreign Direct Investment

By María Fernanda Barría | Tue, 07/06/2021 - 09:18

Mexico has gained a prominent place among the Top 10 countries with the most foreign direct investment (FDI), reported the United Nations Conference on Trade and Development (UNCTAD)in its recent report. 

The "World Investment Report 2021" elaborated by UNCTAD places Mexico at number nine with over US$29 billion in FDI. The report suggests that FDI flows in several regions such as Latin America and the Caribbean have struggled as their economies faced the decline in export demand due to the global health contingency and the reduction of commodity prices that have affected investment decisions. "FDI in Latin America and the Caribbean dropped 45 percent to $88 billion, the steepest decline among developing regions. FDI inflows to Brazil, Colombia, Chile, and Peru plummeted, while those to Mexico fell less sharply (15 percent to $29 billion). In 2020, flows to transition economies shrank by 58 percent to $24 billion."

The report explains that inflows to Mexico were more resilient in comparison with the rest of the countries in the region. However, 60 percent of inflows were generated during the first quarter of the year, when reinvested earnings are typically registered. "FDI fell 63 percent over the last three quarters of the year compared during the same period in 2019, affected by the growing uncertainty over the government's economic agenda, its commitment to fiscal austerity, the collapse of fixed investment and GDP contraction (-8.2 percent)," the report states. 

As previously reported by MBN, Mexico's Ministry of Economic data shows that FDI has grown 14.8 percent during 1Q2021 compared to the same period last year. The number represents the highest FDI recorded amount in the first quarter in the country's registered history, when it began in 1999. 

Mexico attracted US$11.86 billion in total, a significant increase compared to 1Q2020's haul of US$10.33 billion. Reinvested profit from foreign companies operating in Mexico represent 59.2 percent. The new investment represents 18.6 percent and intercompany payables going from parents to subsidiaries amount to 22.2 percent.

Manufacturing remains a pillar for FDI, attracting 46.6 percent in total. Finance and Insurance services attracted 14.6 percent. The mining, trade and energy industries received 13.9 percent, 11.5 percent and 3.4 percent, respectively. The hospitality sector attracted 3.2 percent, and the remaining sectors 6.8 percent. The bulk of this investment came from the US with 42.5 percent, followed by Spain's 12.1 percent. Luxembourg, the UK and Canada also contributed significantly to the preliminary FDI results.

The report highlights that the leading countries of FDI are the US, Hong Kong, China, Singapore, India, Luxembourg, Germany, Ireland, Mexico and Sweden.

The data used in this article was sourced from:  
UNCTAD, MBN, Ministry of Economy
María Fernanda Barría María Fernanda Barría Junior Journalist and Industry Analyst