Over the past two decades,foreign direct investments in Mexico have made a tremendous,positive impact on the Mexican economy. While oil and gas,remittances and tourism have been the three top industries in Mexico,manufacturing for export has now become a major source for economic expansion. Many foreigners would claim Mexico to be a “third-world country”; however,a demographic revolution is breaking down the rich-poor divide allowing for hard-working parents to have the means to,not only,provide the necessities for their families,but much more. Despite what the media may depict,Mexico has seen declining crime and birthrates along with increasing education rates. All of this can be credited to the influx of job opportunities in manufacturing companies,allowing for Mexicans to find work at home,without having to go abroad.
From the mid-1960’s,when the manufacturing industry first installed itself,Americans were hired and brought into Mexico real estate to manage the companies,due to the lack of qualified nationals available to run the positions themselves. Now,the vast majority of these companies are run by young,educated,professional nationals. The blanket stereotype of Mexico’s link to illegal immigrants is now declining and the new reality of middle class,hardworking and wealthy Mexican families is rising.
Due to relaxed restrictions in Mexico,during the 1980’s manufacturers or “maquiladoras” became prominent throughout the country. The United States accounted for 73.4% of all manufacturing imports from 2000-2003,and was a huge source for the industry. The manufacturing industry has become a fundamental part of the Mexican economy,also reflecting in manufacturing employment rates,which rose from 4.1% in 1980 to 28.3% in 2002.
Over the past ten years,Mexico’s gross domestic product rate has doubled rendering a conspicuous increase in U.S. exports to Mexico as the country’s middle class grows,providing more opportunity for U.S. firms to widen their sales to Mexican consumers. As of today,U.S. consumer-related revenues generated through exports from the United States to Mexico are over $50 billion dollars,annually. As,the Offshore Group (an innovative outsourcing company) explained,“The most dynamic exporters in Mexico are in-bond assembly plants. Maquiladoras main point of contact with the Mexican economy is through hiring labor. They purchase few inputs in Mexico and sell virtually none of their output domestically.” Therefore,it is easy to see that the United States is the primary source for inputs and is the main destination market for their sales.
Inflows from direct foreign investment are radically modernizing the Mexican economy,also aiding by generating employment revenues. Direct foreign investments benefit Mexico in two important ways 1) providing domestic work for unemployed Mexicans and 2) leads to positive socio-economic change. While some may argue that rich Americans take advantage of cheap,Mexican labor,it is important to consider the cost of living is significantly less and that the manufacturing industry is providing more jobs and opportunities to Mexicans that would otherwise be unemployed.
Regardless of what type of investment you are considering to make,it is obvious that there is a lot of positive change happening in Mexico. What was once a third-world country is now a haven for foreign investment. While Americans have been watching their money disappear and deplete itself in the stock market,other smart investors have placed their money elsewhere,in stable,conservative investments here in Mexico. From middle-aged couples looking to retire,to serious investors trying to make the most of their money,Mexico is a great place to put your capital. Not to mention it harbors some of the most beautiful beaches and pristine nature in the world. It is where the investors come to play.