Public Policies Are Essential to Attract FDI: Morgan Stanley
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Public Policies Are Essential to Attract FDI: Morgan Stanley

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Rodrigo Andrade By Rodrigo Andrade | Journalist & Industry Analyst - Mon, 10/31/2022 - 11:48

Mexico’s privileged geographical position, sharing a border with one of the world’s largest economies, makes the country one of the most attractive places for companies to invest in. To take advantage of this position, Mexico and the US should implement policies that encourage foreign direct investment (FDI), reports investment and financial service firm Morgan Stanley.

The firm highlighted that the 2024 Mexican elections will be key to meet the levels of Foreign Direct Investment (FDI) the country expects, since public policies play a critical role in attracting it. “The direction of public policies should be oriented to provide security for investments, strengthen the rule of law, provide reliability to infrastructure and support the skills of human capital,” reads a report by Morgan Stanley.  

The firm also highlighted that these investments should start their productive activity during the first couple of years of the new administration.  Morgan Stanley Research suggests that the global economy will enter a trend called “slowbalization,” which would increase the frequency of trade among regional partners. The first stage of this transition is already taking place as it involves the growth of companies that already have a presence in Mexico, a phenomenon that has mainly been seen in the country's north. The second phase consists of the entrance of new manufacturing companies into Mexico. 

Nearshoring is proving to be one of the most important trends for Mexico’s economy as it allows manufacturing companies to set up their production plants much closer to their headquarters and their consumers. Companies seek to develop an economic, reliable and sustainable supply chain to supply North America. 

Since the COVID-19 pandemic, the global supply chain has not ceased to face disruptions. Two-thirds of the countries with the most important markets are currently suffering a contraction, including the EU, the UK, China, Japan and South Korea, as reported by MBN. 

Under these circumstances, having the right public policies to promote FDI is essential, wrote Alfredo Nolasco, CEO, Society for the Promotion and Representation of Latin America-SPYRAL, for MBN. “We need to rethink what public policymakers, economic development entities, and private businesspeople are doing to advance value chains and analyze in more detail if our perception is in line with reality. In other words, what are we doing to crystalize the nearshoring opportunities into tangible and realistic outcomes,” wrote Nolasco. 

Photo by:   Ulrike Leone

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