Mexico | Foreign direct investment: evidence of nearshoring?

The country received 18,636 million dollars in FDI in the year's first quarter. It is a good number.

Key points

• Key points:
• Several analysts assert that this results from the country attracting more investment due to the nearshoring phenomenon. We must exercise caution when drawing conclusions and anticipating trends from a single observation. Reviewing the behavior of FDI in recent years, we see that, at the end of 2022, it had not exceeded the levels captured before this administration began.
• Ninety percent of the FDI flows received during the first quarter of this year are explained by reinvestment of profits. Growth in reinvestment by foreign companies is, of course, positive news: it shows that they have confidence in the country, something that can be explained by nearshoring.
• On the other hand, only 10 percent of FDI corresponds to new investments. In the January-March period, new direct investments -adjusting for atypical operations- fell 47 percent compared to last year's period. In other words, nearshoring has not implied, until now, a significant change in terms of the country's ability to attract new investments.
• Achieving this would require a shift in the energy policy and sending stronger signals of certainty.

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