Competitive advantages for investing in Mexico Mexico: a ...€¦ · Competitive advantages for...

Binational Center Library / Texas A&M International University

Competitive advantages for investing in Mexico

Mexico: a leading economy

A country with competitive sectors

2

ProMéxico’s strategies


Mexico: an important global actor

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1. Mexico is a democracy.

2. Mexico is one of the largest economies in the world.

3. Mexico has great macroeconomic stability.

4. Mexico is an open economy.

5. Mexico has young, talented and highly-skilled people.

6. Mexico is a leader in advanced manufacturing.

7. Mexico is the next global logistics high value added hub.

8. Mexico is a world within a country.

9. Mexico is a reliable and attractive destination for investment.

10. Mexico is ready to increase its productivity through its structural reforms.


Competitive advantages for investing inMexico

4


Exportsplatform

Internalmarket

Humancapital

Advancedmanufacture

Macroeconomicenvironment

Mexico’scompetitiveadvantages

5 competitive advantages

5


Forecasts

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Fuente: Goldman Sachs. The N-11: More Than an Acronym. Documento de economía mundial No: 153. Marzo de 2007/ HSBC/ACCENTURE.1/ Pronóstico de Goldman Sachs / Fondo Monetario Internacional.

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World’s largest economies

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Goldman Sach’s ForecastGross Domestic Product

(Billion USD)

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Gross Domestic Product(Billion USD)

Goldman Sachs estimates thatMexico will be the 5th largesteconomy by 2050.

According to Accenture, Mexicowill be one of the Big Six in2025.

According to HSBC Mexico willbe the 8th largest economy in theworld by 2050.

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Manufactures Oil Primary Inflation

Solid macroeconomic environment

7Source: INEGI / Bank of Mexico.

Evolution of inflation, exports and international reserves in Mexico

(2000- 2013)

Reserves record: 176 billion dollars

Exports record: 380 billion dollars

Reserves


FDI flows into Mexico (1999-2013*)

8Source: Ministry of Economy. General Directorate of Foreign Investment. */ Figures to September 2013.

Record-high

MUSD

15,453

35,188

-

5,000

10,000

15,000

20,000

25,000

30,000

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013


363

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4,432

6,474 5,758

8,256

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8,464

15,045

12,139

25,597

-

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1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mexico’s FDI Outflows(million dollars)

9Source: UNCTAD

Record-high


10

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Positive Ratings

* Scores that are below the dotted line are investments with high degree of risk or speculation.

Source: Fitch Ratings, Standar & Poor’s Rating Services, Moody’s Investor Service.Binational Center Library / Texas A&M International University

11Source: DataMarket, c J.P. Morgan Emerging Markets Bond Index .

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EMBI plus (emerging markets)

Mexico Argentina Brazil Turquia South AfricaTurkey

Mexico in the EMBI+


Exportsplatform

Internalmarket

Humancapital

Advancedmanufacture




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Our FTAs give privileged access to 61% of the world’s GDP.

Mexico has access to 45 countries through its free trade agreements(1.2 billion people).

Number of countrieswith privileged access*

We are commited to free trade

13Sources: Brazil; China: Colombia:; United States: ; Chile: Direcon; Mexico: Ministry of Economy.


Source: SCT.

LázaroCárdenas

ManzanilloVeracruz

Tampico

Altamira

Guanajuato

Monterrey

Guadalajara

SLP

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A country with great infrastructure

Mexico has:

• 63 border crossings.

• 68 international ports.

• 64 international airports.

• 16,700 miles of railroads.

• 230,000 miles of roads.


Fuentes: SCT/ US Department of Transportation.15

A country part of NAFTA• +50 border crossings

with the US.• NAFTA market= 18

trillion USD.• 16 trillion EU.

• Bilateral trade with theU.S.= 1 million dollarsper minute.

• 1 million people and300 thousand vehiclescrossing the borderdaily.


Pacific Alliance

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• Elimination of 100% of tariffs.• 92% immediately and the other 8% in the

next 15 years or sooner.• Elimination of visas between members.• Platform for student and academic mobility.• Unification of stock exchanges.• Homologation of health and regulatory

certifications.


México And the TPP

17

The 12 countries of the TPP represent:• 38% of global GDP.• 23% of world exports.• 28% of world imports.• 11% of the world’s population.

In negotiation

P4 (Brunei, Chile,New Zealand andSingapore)


Exportsplatform

Internalmarket

Humancapital

Advancedmanufacture




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Source: US Census Bureau: http://www.census.gov/population/international/data/idb/informationGateway.php ; INEGI, 2011; Population Projections forMexico 2005-2050, CONAPO. *Population (in millions) by age group.

118 million inhabitants with a median of 27 years. 52 million in the labor force. According to forecasts, there will be more than 83 million people of

productive age by 2020.

Mexico’s population pyramid (2030)*

Male Female

Demographics are on our side

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Mexico’s demographic bonus


Human capital: our main strength

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“The main reason to invest in Mexico isits human capital”John Rice, Vicepresident of GeneralElectric.

“The experience of Mexican engineersis one of the reasons we cotinue todevelop new projects in the country”Young Ju Lee, President of Samsung.

“Mexico has unique competitiveadvantages, but its flexible and creativehuman capital is the one that highlightsthe most”Pierre Beaudoin, President and CEO ofBombardier.


Exportsplatform

Internalmarket

Humancapital

Advancedmanufacture




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Source: Competitive Alternatives 2012, KPMG; Global Benchmark Report 2011, of the Danish Industry Confederation;Manufacturing Outsourcing Cost Index 2010, Alix Partners.

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According to KPMG, in 2011Mexico had an average costadvantage of 21% (over 19

industries), compared to the US.

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ico

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The Alix PartnersManufacturingOutsourcing CostIndex ranksMexico as thebest country(better thanBRIC’s).

The mostcompetitivecountry in termsof costs andtaxes, accordingto GlobalBenchmarkReport.

Most competitive total costs


Mexico ranks 20th inHarvard and MIT'sAtlas of EconomicComplexity.

• It acknowledges that Mexico can retain large amounts of productiveknowledge.

• Mexico manufactures and exports a large number of sophisticatedproducts.

• Manufacturing accounts for 80% of our exports.Source: INEGI/ Presidency/ Harvard and MIT, Atlas of Economic Complexity/ OECD. 23

Mexico is an exporter of sophisticated products


A sophisticated economy

No. Country % GDP1 South Korea 30.4%2 Germany 28.1%3 Mexico 17.2%4 China 15.0%5 France 13.2%6 Italy 12.9%7 United Kingdom 11.1%8 Japan 9.9%9 Canada 7.3%

10 Turkey 7.0%11 South Africa 5.8%12 United States 5.1%13 India 4.5%14 Indonesia 4.1%15 Argentina 3.7%

Medium and HighTech Exportsas a percentage of GDP (2011)

24Source: IHS Data – Global Insight; ProMéxico’s Analysis. Data in USD Real terms, 2005, considering de G20 countries.

Medium Technology (MT):• Specialty Chemicals• Machinery, Equipment, Appliance• Electrical Industrial Machinery• Motor Vehicles & Parts Total• Motorcycles & Transport. Equipment• Railroads & Equipment

High Technology (HT):• Aircraft & Spacecraft• Advanced materials• Computers & Office Machinery• Communication Equipment• Medical, Precision & Optical


Automotive

Mexico is the 8th vehicle producer in theworld. And the 4th exporter globally of new light

vehicles in the world. We export almost three times more than Brazil

and India combined. We are a strategic supplier to the North and Latin

American automotive markets. In 2011, Mexico was the leading autoparts

supplier to the United States. Eleven of every 100 light automobiles sold in the

United States are manufactured in Mexico. 84 of the top 100 autoparts companies in the world

have production facilities in Mexico.

Source: OICA/ Global Trade Atlas/ AMIA/ Ward’s Automotive Reports/ AASA, 2011.25

Ford’s plant in Hermosillo,Mexico, is the only facility in theworld to produce the newFusion model and the LincolnMKZ.


Electric-electronic

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• Mexico is the leading homeappliance exporter in LatinAmerica.

• And the 6th globally.• It is the leading flat television screen

exporter in the world.• The second refrigerator exporter.• The 4th global exporter of computers.• 8 of the top 10 transnational electronics

manufacturing services (CM’s) haveoperations in Mexico.

According to KPMG, electronicsassembling costs in Mexico are

15% lower than in the UnitedStates.

Source: Global Trade Atlas/ KPMG/ Manufacturer Market Insider.

0 20 40 60 80 100 120

MexicoRussiaBrazil

CanadaThe Netherlands

FranceUnited Kingdom

ItalyUSA

GermanyAustralia

Japan

Cost Index

Electronics assembling(US=100)


Mining

Fuente: The Silver Institute/ Cámara Minera de México (CAMIMEX)/ Global Trade Atlas/Metals Economics Group/ INEGI.27

• According to Behre Dolbear,in 2013 Mexico was ranked5th best destination forinvestment in miningprojects.

• Mexico is the leading country in LatinAmerica and the 4th globally in termsof receiving investments for miningexploration in nonferrous minerals.

• Mexico is the leading silver producerand exporter globally.

• The second global fluorite producerand third bismuth producer.

• The second gold producer in LatinAmerica.


Mexico’s major goals and strategies

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ProMéxico

México

FDIattractionInternationalizationExports

promotion

GENDER EQUITYKEEP GOVERNMENT CLOSE TO PEOPLEDEMOCRATIZATION OF PRODUCTIVITY

3. Education

4. Prosperity

5. Responsibleglobal actor

2. Inclusiveness

1. Peace


EnhanceMexico’s

presence inNorth America

Foster Mexico’sbonds with

Latin Americaand the

Caribbean

Diversifyexports to the

Asia-Pacificregion

EnhanceMéxico’s FTA

with the EU

ProtectMexico’s

interests in theglobal markets

5 strategies for boosting our commerce

PROMÉXICO

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What Do We Offer in ProMéxico?

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ProMéxico

Boosts activities aimed topresent an overview ofinternational business andtrade. It also seeks toencourage enterprises andstrategic sectors to reachinternational markets andpromote the country'simage.

Assists clients to reach aspecific goal, throughtraining, personalassistance or consulting.

Brings companies togetherand link them to private orpublic organizations andacademia, among others,with specific goals that areusually project-related.

Simplifies the execution orincreases the appeal of aproject, whether for export,FDI or internationalization,through incentives, studiesor by opening markets.

Development of programs and projectsDCC/ ACT Model/ Softlanding/ Aftercare/ Roadmaps/ Clusters articulation/ MOMA/ PROCEI


www.promexico.gob.mx

[email protected]

@ProMexicoTW

(713) 984-4598

4507 San Jacinto St., 3rd. Floor

Houston, TX 77004

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