Mexico is one of the emerging countries most open to foreign direct investment, the world's eleventh-largest FDI recipient. In 2022, Mexico was the second largest recipient of FDI in Latin America. According to UNCTAD's World Investment Report 2023, FDI inflows increase by 11.9% to USD 35.3 billion. In the same year, the total stock stood at USD 649.2 billion, equivalent to around 45.9% of the country’s GDP, witnessing an increase in fresh equity investment and reinvested earnings. Net cross-border M&A sales soared to USD 8.2 billion, a significant leap from the less than USD 1 billion recorded in 2021. A notable transaction included Univision Communications (United States) acquiring the media, content, and production assets of Grupo Televisa for USD 4.8 billion. The announced value of greenfield investment more than doubled, reaching USD 41 billion. Tesla (United States) has intentions to invest USD 5 billion in a manufacturing facility in Mexico. According to the latest governmental figures, investments mostly come from the United States (46.7%), Spain (13.7%), Canada (7.4%), Japan (4.6%), and Germany (4.5%). The manufacturing sector holds 47.6% of FDI stock, followed by financial services (14.6%), trade (7.5%), and mining (5.9% - data National Commission of Foreign Investments). Data from the OECD show that, in the first semester of 2023, FDI flows to Mexico totalled USD 29 billion, down from USD 31 billion recorded in the same period one year earlier.
As a member of USMCA, OECD, G20, and the Pacific Alliance, Mexico is very well integrated into the world economic order, making it an attractive country for FDI. Additionally, Mexico enjoys a strategic location, a big domestic market, a wide variety of natural resources, a relatively well-qualified workforce and a diversified economy. However, in recent years, Mexico's competitiveness has suffered from the rise of organised crime and a lack of reforms in the energy sector and in tax regulations. Corruption and administrative inefficiency have also been major issues and the business climate continues to suffer from safety risks in the country. Foreign investments are mostly concentrated in towns neighbouring the U.S. border (where many assembly factories are located), as well as in the capital. Thanks to its robust tourism industry, the Yucatan Peninsula also receives substantial foreign investment. FDI flows to the country fluctuate strongly depending on the arrival and departure of large international groups. The current Mexican FDI framework, primarily governed by La Ley de Inversion Extranjera and its regulations, mandates a pre-approval process for direct and indirect investments by foreign investors obtaining a majority share in Mexican companies engaged in "strategic activities" or holding assets valued around USD 1.1 billion. On December 7, 2023, the U.S. and Mexican governments signed a Memorandum of Intent ("MOI") to collaborate on enhancing foreign investment screening. Both nations have committed to forming a bilateral working group to share information and best practices, aiming to assist Mexico in establishing a CFIUS-like screening system and enhancing the collective security of the United States and Mexico. According to theEconomist Business Environment, Mexico ranks 42 out of the 82 countries reviewed for their investment climate. Furthermore, the country ranks 58th among the 132 economies on theGlobal Innovation Index 2023and 68th out of 184 on the2023 Index of Economic Freedom.
