It’s possible that the largest foreign investor in Mexico is not who you think that it might be.
Much has been written lately about Mexico’s burgeoning manufacturing economy. The automotive industry, in particular, has been the subject of innumerable articles and analyses that have appeared in the pages of trade, economic and industry publications both in physical print and on-line. Likewise, it has been duly noted that OEMs from Japan, Germany and Korea have recently made sizable investments for the purpose of initiating or boosting production of passenger vehicles to sell product within the NAFTA trade zone, the wider Americas or even to ship across the ocean to the EU and, specifically, to their home countries’ consumers. There is one nation, however, that has been quietly directing a steady and constant flow of investment capital in the direction of the US’ southern neighbor and NAFTA partner for the last two decades. Surprisingly, and, without having made much international fanfare, Spain has become the largest foreign investor in Mexico.
Consider the fact that, in 2014, Spanish businesses invested a total of US$ 6.8 billion dollars in Mexico. This sum falls only slightly short of the almost US $7 billion dollars that was funneled into the country’s entire manufacturing sector last year. As the largest foreign investor in Mexico, Spain’s participation in the economic growth of the country has a profile that differs notably from that of the nations noted above. For instance, in the financial sector, the Spanish powerhouse, Grupo Santander, has recently announced that, this year, its Mexican investment portfolio will expand in much the same economic terms that it did during 2014. Santander will direct approximately US$ 10 billion towards Mexican government approved infrastructure projects, as well as will mobilize another US$ 5 billion to participate in growth related to providing access to capital to small and medium-sized Mexican enterprises.
Another company that has enabled Spain to achieve the position of the largest foreign investor in Mexico is Grupo Fenosa. Fenosa is a leader in the global energy sector that has recently made large financial commitments to expand the infrastructure by which it distributes natural gas throughout Mexico. Specifically, Fenosa has plans to bolster its capabilities in the Mexican capitol, as well as to begin operations needed to supply natural gas needed to power industrial and overall economic growth in the state of Sonora and portions of Sonora’s southern neighbor, Sinaloa.
According to experts, Spain has become the largest foreign investment in Mexico because of its natural historic, linguistic and cultural affinities that it shares with the country. Also, almost equally important to these important considerations, however, is the fact that Spanish businessmen have arrived at the conclusion that security issues of the recent past were transitory in nature. In the collective, the largest foreign investor in Mexico views the country as a market in which it can gain favorable returns on its investments due to Mexico’ solid fiscal state, and the stable and business friendly legal and regulatory framework that it has put into place over the last several decades.
As the largest foreign investor in Mexico, Spain invested six more times the capital in the country in 2014 than did the United States, as well as more than the combined investments of both the EU and Canada combined. Of all global direct investment made in the entirety of Latin America, nineteen percent of the total aggregate sum found its way into the Mexican economy. It is not only Mexico’s largest foreign investor, Spain, that views Mexico as a good economic bet, the rest of the industrialized world does too.
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