Northeast and Bajío Lead Regional Competitiveness in Mexico: IMCO

Mexico’s competitiveness is being built at a regional rather than state level, with economic, productive and business decisions in one area directly influencing neighboring territories, according to the Regional Competitiveness Index 2026 released by the Mexican Institute for Competitiveness (IMCO).

The study identifies the Northeast and Bajio regions as the country’s strongest performers in attracting and retaining investment and talent, underscoring the growing importance of regional ecosystems amid global supply chain reconfiguration.

IMCO evaluated six regions using 40 indicators grouped into four sub-indexes focused on investment and talent, based on data through the end of 2024. While no region yet offers optimal conditions in infrastructure and security, some have succeeded in consolidating integrated productive ecosystems that support business continuity and expansion.

The Northeast Emerges as Mexico’s Most Competitive Region

Against this backdrop, the Northeast stands out as the country’s top-performing region, setting the benchmark for regional competitiveness nationwide.

The Northeast ranked first overall in the index, and leads three of the four competitiveness pillars. IMCO said this performance positions the region as the most attractive area in Mexico for business installation, operation and expansion, as well as for the mobility and retention of skilled human capital.

According to the analysis, the region benefits from an integrated economic ecosystem in which coordination among states generates positive spillover effects and strengthens collective competitiveness. Despite ongoing security challenges, corporate spending on security and a relatively stable perception of conditions allow productive activity to continue operating under functional parameters.

Innovation and Industrial Capacity Bolster the Bajio Region

Following closely behind the Northeast, the Bajio region demonstrates how innovation and specialization can sustain competitiveness.

Bajio remains among the top-performing regions due to its strong industrial base and high levels of innovation. IMCO reported that the region records the highest number of patent applications per 100,000 economically active people, reflecting its capacity to generate applied knowledge and added value.

However, the institute warned that this innovative strength is concentrated among a limited segment of the population. The Bajio has a lower share of skilled labor compared with other regions, posing a challenge to long-term growth and the broader distribution of economic benefits.

Central Region Attracts Talent but Struggles to Retain It

While industrial hubs dominate competitiveness rankings, other regions face more nuanced challenges that affect business performance.

The Central region stands out for its strong ability to attract talent, driven by high educational coverage and a significant supply of skilled workers. Nonetheless, it faces serious limitations in retaining population, largely due to a low housing replacement rate and persistently high housing prices.

These constraints directly affect business competitiveness by increasing labor costs and limiting workforce mobility, particularly in densely populated urban areas with a high concentration of economic activity.

Southern Regions Lag Despite Strategic Advantages

In contrast to the leading regions, Mexico’s southern areas continue to struggle to convert structural advantages into competitiveness gains.

The Isthmus and Maya regions show persistent structural gaps that limit their competitiveness, despite their proximity to maritime routes and natural resource availability. IMCO documented low export levels, limited foreign direct investment and high labor informality, factors that restrict integration into national and global value chains.

The lack of energy and logistics infrastructure, combined with the absence of anchor companies and specialized talent, has kept these regions trapped in a cycle of low productivity and wages, hindering their ability to capitalize on investment opportunities.

Competing as a Region Offers Strategic Advantages for Business

Looking ahead, IMCO argues that regional coordination is no longer optional but a strategic necessity for companies operating in Mexico.

The institute concluded that competing as a region multiplies results and reduces operational risks. Interstate coordination enables the identification of critical supply chain links, shared investment in talent development and greater operational predictability, key factors in sustaining investment amid global supply chain realignment.

For the business sector, IMCO recommended advancing regional talent development schemes and strengthening productive corridors that connect leading regions with lagging areas, a strategy it said could raise national competitiveness and unlock Mexico’s full economic potential.

Nuevo Leon, Chihuahua and Coahuila Lead Industrial Development 

Mexico’s northern states act as the primary manufacturing powerhouse for automotive, home appliances, and electronics, with heavy investment in nearshoring. MBN reported that the country´s industrial development remains concentrated in a handful of northern states, led by Nuevo Leon, Chihuahua, and Coahuila, according to the Industrial Development Index (IDI) 2025, underscoring persistent regional disparities even as pockets of growth emerge nationwide. 

The study finds that these three states continue to outperform the rest of the country due to strong infrastructure, logistics capacity, a skilled labor force, and close integration with regional and international supply chains. Together, these advantages have allowed them to consolidate their position as Mexico’s most robust industrial hubs.

Baja California, the State of Mexico, and Jalisco complete the group classified as having a high level of industrial development. Their performance is supported by economic dynamism, a solid manufacturing base and connectivity to key domestic and export markets.

The IDI, backed by industrial real estate developer Finsa, shows that leading states are not only preserving their competitive advantages but also expanding them. By contrast, states with intermediate levels of industrial development are advancing more gradually and continue to face structural gaps that limit their ability to catch up.

These gaps are most evident in infrastructure quality, sustainability, security, human capital and technological adaptability. As a result, opportunities linked to nearshoring, manufacturing expansion and technological transformation are being captured unevenly across regions, the report says.

While Mexico retains a strategic position in the global industrial landscape, the study stresses that the ability to capitalize on these trends increasingly depends on local preparedness and each state’s capacity to create attractive conditions for long-term investment.

The findings highlight that Mexico’s challenge extends beyond attracting new industrial projects. According to the report, the country must also promote more balanced development to broaden its productive base, strengthen regional capabilities and narrow long-standing gaps between states.