Mexico’s states are struggling to capitalise on the nearshoring trend, with foreign investment failing to meet expectations. During the first three quarters of 2024, the 32 states attracted $35.737 billion in Foreign Direct Investment (FDI). However, only 5.8% of this figure, equating to $2.060 billion, was new capital – the lowest amount seen in a decade and a 45.6% decrease compared to the previous year.
This stagnation in new foreign investment highlights a missed opportunity to benefit from nearshoring, a trend driven by disruptions in global supply chains and growing uncertainties in international markets. Instead, 86% of the FDI came from reinvested profits, pointing to a lack of fresh capital inflows.
Tourism-focused states such as Baja California Sur and Quintana Roo attracted the largest share of new foreign investment, accounting for 55% of the total. This indicates that nearshoring activities are not spreading as anticipated across Mexico.
Other states, including Chihuahua, Jalisco, Nuevo León, Yucatán, and Nayarit, did receive foreign investments, but a significant portion was directed into sectors such as tourism, rather than manufacturing or other nearshoring opportunities. Notably, Nuevo León – often seen as a prime candidate for business relocations – saw its largest investment in wholesale trade for trucks and automotive parts, rather than in nearshoring-related industries.
Mexico’s foreign investment challenges
In terms of sector focus, Jalisco received investments in beverages, agriculture, and tourism, with limited activity in manufacturing. Chihuahua made notable strides in the auto parts and vehicle manufacturing sectors, yet the overall investment trend across the country is concerning.
Several states – such as Tamaulipas, Colima, Puebla, Aguascalientes, and Mexico City – experienced a decline in new foreign investments, suggesting a potential outflow of capital. Furthermore, Durango, Morelos, and Tlaxcala received no new foreign investments, while eleven other states attracted less than $10 million each. This reflects a growing disinterest from foreign investors, compounded by shifting political landscapes in both Mexico and the United States.
For Mexico’s states to tap into the full potential of nearshoring, addressing internal challenges such as governance, infrastructure, and political stability is crucial. A stronger focus on these areas would help create a more attractive environment for foreign capital, fostering economic growth and resilience in the face of global market shifts.
