After successfully incorporating Fan Agency, a Peruvian corporation, we decided to write this post explaining the current Foreign Direct Investment overview in Mexico.
In general, Foreign Direct Investment (IED) is considered when:
The international norm for considering an operation as FDI is that the investor acquires at least 10% of the voting power within an enterprise.
Foreign Direct Investment is calculated in accordance to the International Monetary Fund's manual, as well as the OECD's FDI's definition.
In this context, during the first semester of 2022, Mexico received an FDI quantity of US$27,511.6 million, a variation of 12% with regard to the same period during 2021.
During the first semester of 2022, the figure is integrated in the following way.
The type of investment (financing origin)
Country of origin:
Foreign Direct Investment (FDI) has been over the years one of the most important engines for the economy in Mexico, as it helps the country’s economic growth, as well as the creation of qualified jobs. They promote technological innovation and can create greater integration into international trade.
The impact that foreign investment has on the Mexican Peso depends on the volume of investment. There could be a foreign currency exchange with a relevant volume flow within the country if so, it can alter the price with the Mexican peso. Meaning that the peso would appreciate.
FDI involves the entry of foreign exchange into the country and creates higher liquidity in it since it reverses the restriction of external financing. However, care must be taken not to cause the opposite effect, as this means an extreme exit of foreign exchange or investment flows. This will generate macroeconomic problems, such as inflation and unemployment.
Generally speaking, there are two ways in which a foreign individual or legal entity may invest in Mexico.
As you might have noticed, Foreign Direct Investment offers benefits for people seeking to invest in a country, as well as for the recipient country.
In the case of Mexico, it offers the benefits of certainty in uncertain international climates, as well as commercial opportunities due to its geographic and economic position. Additionally, it is attractive for companies seeking large, unattended markets.