Mexican manufacturing sector receives bulk of country’s foreign direct investment
While FDI flowed significantly into several areas of the economy, the Mexican manufacturing sector was the biggest magnet for foreign funds through the first three quarters of 2015.
The influx of foreign direct investment into the robust Mexican manufacturing sector totaled approximately US $21.5 billion between January and September of the current calendar year. This amounts exceeds the total registered over same period of time in 2014 by a considerable margin of forty-one percent. Foreign direct investment in the Mexican manufacturing sector at that time rose to a level a bit beyond US 15.3 billion. The addition of the January – September 2015 numbers brings the total amount of foreign direct investment captured by Mexico during the administration of current president, Enrique Peña Nieto, to almost US $91.9 billion according to the government’s Ministry of Economics.
Two Big Deals
Among the investments made in Mexico derived from foreign capital during January – September 2015, two large capital injections, in particular, stand out:
Firstly, a major player in the US telecommunications sector, AT&T, purchased approximately US $2.4 billion dollars’ worth of stocks in Mexican telecoms Iusacell and Unefon. The purchase of a stake in Iusacell by AT&T was designed to bring greater price competition into the Mexican wireless market. The partnering by the two companies resulted in the creation of a North American Mobile Service area capable of covering 400 million potential customers in the Mexico and in the United States.
With the investment of US $3 billion in the Mexican telecommunications service provider, Unefon, the company will be able to deploy a high velocity mobile network in Mexico that will be capable of serving 100 million customers. It is projected that the network will be operational by 2018.
Another large dollar FDI received by Mexico between January and September of 2015 was captured as the result of one of the most prominent firms in the Mexican manufacturing sector, glass producer Vitro, selling one of its business units to a US firm for the sum of US $1.2 billion.
The Mexican manufacturing is the big draw
Although foreign direct investment as of the end of the third quarter 2015 was spread over a diversity of companies and industries, it was the Mexican manufacturing sector that, by far, the biggest draw for foreign capital. A breakdown of where the FDI went consists of the following activities and percentages:
- Manufacturing – 51.5%
- Telecommunications – 13.5%
- Financial Services – 10.8%
- Retail – 8.9&
- Construction – 6.3%
- Other Sectors – 9%
Where did the money come from?
During the period under consideration, in terms of percentage, the lion’s share of foreign direct investment that entered Mexico did so as a result of activities pursued by its neighbor to the North. The United States was responsible for 57.7% of FDI registered through three quarters, while Spain followed with 9.2%, Japan with 4.3%, France with 3.8% and the Netherlands with 3.6%. Seventy-two other countries combined to inject 21.4% of total January – September 2015 FDI into the Mexican economy.