America stretches from northern borders of Mexico to the southern tip of south
America. The three major countries of Latin America are Mexico, Brazil and
is one of the emerging countries most open to foreign direct investment. Mexico
is the world’s fifteenth largest FDI recipient. FDI flow to the country
fluctuate strongly depending on the arrival and departure of large
international consortium. Foreign direct investment plays an important role in globalized
economy, especially trade oriented ones like Mexico. FDI is paramount to Mexico
because of the ‘maquiladora’ sector or manufacturing plants that manufacture
goods for export. These manufactured exports are pivotal to Mexico’s position
in the global trade. With free trade agreements signed with around 40
countries, Mexico is one of the most trade liberalized economy in the world.
More than 90% of Mexican trade flows under free trade agreements. As an example
of their market strength, when considering U.S. imports of textiles and
apparel, Mexico ranks as the third largest supplier behind Vietnam and India. In
recent years, Mexico’s competitiveness has suffered from the rise of organised
crime called cartels system, most heard about is the Sinaloa cartel and lack of
reforms in the energy sector and tax regulations. Corruption and
administrative inefficiency have also been a major factor.
– With labour costs at par with Asia based manufacturing and a strategic
location between North and South America, Mexico is the next best thing for
those looking to enter or expand their supply chains in the Americas market.
– The Government is positively oriented towards foreign investment (economic
reform efforts, new investment opportunities, etc.).
– Young, skilled workforce.
– abundance of natural resources allowing
for the development of all types of industrial sector at competitive rates.
Mexico’s weak points include:
– Despite growth in the banking
sector, interest rates are high for SMEs.
– Mexico’s economic stability is highly tied to the U.S. economy.
– Violence involving criminal organisations presents a risk in parts of Mexico
– Some sectors are reserved exclusively for the Mexican State or Mexican
– The large size of the country may present some distribution or supply chain challenges.
is the largest recipient of FDI in Latin America and the eighth largest
recipient worldwide. The major investors of Brazil are the United States, Spain
and Belgium. Major sectors that attract FDI are finance, beverages, oil & gas
and telecommunications. The plan of rebate launched by the Government is attracting
investors. The investment norms in Brazil are liberal that allow foreign
investors to have a majority share in the creation of their venture.
– Extensive raw materials, a large pool of workers at all levels of expertise,
a large domestic market and a diversified economy.
– Export sector provide an investment opportunity, as the weak Brazilian real
can make Brazilian products cheaper for foreign buyers.
– Crackdown on corruption and crony capitalism could benefit investment in the
Brazil’s weaknesses include:
– Despite being open to world trade, several barriers cripple trade.
– Foreign investments are restricted.
– Foreign investors have encountered obstacles with regulation framework.
ranks fifth amongst the South American countries in terms of FDI influx. The main
investors in Argentina are the United States, Spain and the
Netherlands. Argentina has untapped natural resource and its workforce is competitive.
Foreign investors can invest in all sectors of the economy on equal footing
with national investors. The current investment rules are liberal and investor
– The country is copious with natural resources.
– A middle class with strong purchasing power.
– Educated and skilled population.
– Government is oriented towards pro-market reforms.
– A fragile and undercapitalised
– Insufficient power and energy
– High rate of inflation.
– Vulnerable financial market.