Mexico's Investment Boom | Hacker News Reader

Mexico's Investment Boom

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26 pointspaulpauper25 comments

I think a lot of HNers seem to forget that barely 25 years ago it was very common to see "Made in Mexico"/"Hecho en Mexico" products in North America.

It was our original China/"Factory of the World".

That only changed in the early 2000s when China was admitted to the WTO, and low wage manufacturing (eg. Maquiladoras) shut down and moved to China.

Now that Chinese manufacturing costs roughly rival those in Mexico, a number of industries such as Chemicals and Machining have returned.

Yup - and those Mexican factories are owned by Chinese firms. Hopefully they will employ / contribute positively towards Mexico's economy.

> those Mexican factories are owned by Chinese firms

Not really.

The bulk of FDI in Mexico comes from the US, EU, Canada, UK, and Japan [0]

The China factor plays well in the news but German (Siemens, Schneider) and Spanish (SEAT/Volkswagen) have a massive historical presence in Mexican industry, and at the end of the day, NAFTA/USMCA makes it very easy for American companies to operate within Mexico (and vice versa).

[0] - https://www.proyectosmexico.gob.mx/en/why_mexican_infrastruc...

Those look like pre-pandemic numbers.

https://www.freightwaves.com/news/chinese-manufacturer-inves... says 5 Billion, so perhaps the landscape is changing rapidly.

Even in 2023 China's FDI in Mexico is tiny [0]. The 5 largest FDI contributors are US, Spain, Germany, Argentina, and Japan.

Take the L dude. A couple high profile assembly plant openings don't signify a massive change in foreign investment patterns in a country with a Trillion Dollar GDP

[0] - https://www.cefp.gob.mx/publicaciones/documento/2023/cefp045...

Nope. Most of mexico, and latin america, is owned by europeans. Just tiny netherlands alone invests and owns more of latin america than china. Always wondered where the dutch get their money.

The myth about china's money is entirely that. Myth spread by propagandists. When you look at the numbers, europeans are buying up most of the world.

Look at brazil. The dutch pump more money into brazil than the US.

https://www.statista.com/statistics/749238/fdi-brazil-by-cou...

But you won't see that in the news. If you do it won't be portrayed in a threatening manner. It's always the chinese or the japanese or the arabs buying up everything. When the numbers tell you otherwise.

No. Maybe a large portion of the Foreign investment is owned by Europeans but "most of mexico and latam" are definitely not owned by Europeans. Have you ever spent any time in LATAM?

I was recently surprised to learn that Grupo Modelo (the beer group that makes Corona) is actually owned by a Belgian corp.

No. From Wikipedia:

On June 12, 2008, The Wall Street Journal stated that Anheuser-Busch InBev, which owned a non-controlling 50% stake in the company, might attempt to acquire the remaining 50%.[3] On June 29, 2012, it was announced that Anheuser-Busch InBev would acquire the remaining 50% stake for an all-cash price of $20.1 billion.[4] On January 31, 2013, the US Department of Justice filed an antitrust suit in an attempt to prevent the buyout. The matter was settled, and the two companies merged in June 2013,[5] with the transfer of all United States rights to Constellation Brands.[6] As a result, all the company's brands are made (in Mexico) by an unrelated company. In the United States, Grupo Modelo brands are distributed by Constellation Brands.

https://en.m.wikipedia.org/wiki/Grupo_Modelo

Doesn't a Belgian corp (InBev) own the Mexican Grupo Modelo in Mexico?

And in the rest of the world too excluding the US.

1 USD would get you 25 Mexican pesos (MXN) in April 2020. Today, it will only get you 16.80 MXN.

That’s a huge jump in value for the peso, that’s impressive.

I would think the 2020 number was more due to the pandemic craziness. It was ~18 in January 2020, then shot up to 25 that April. Now it's back to 16.80

I think they will prosper if they can fix cartel issue. Cartel is hurting Mexico by a lot.

Cartel violence largely occurs in the parts of Mexico not seeing the rise of investments.

For example, Monterrey and Nuevo León in general has always been fairly calm and it is a major hub globally for automotive, power electronics, and machining.

Most of the rise of criminalization in Mexico can be tied to the economic crises of the 1994-96 (peso crisis), 2001-03 (factories moving from Mexico to China), 2008-09 (collapse of automotive industry in the US, and then COVID (8.3% GDP contraction - one of the worst globally).

Whenever the Mexican economy recovers, criminality tends to recede.

It really is a big issue. I'd say the biggest one, everywhere you go. Getting rid of drug-related crime and violence would double Mexico's GDP in a few years.

Source: Mexican.

I'm not denying it's an issue - it's a massive issue for massive swaths of Mexico.

In fact, Mexico could be growing even faster if organized crime is brought under control.

The fundamentals in Mexico are fairly strong (relatively high median household income, access to the largest market globally, decent enough social indicators) and good governance can carry it forward dramatically.

That said, we in the US could help much further by actually sanctioning Cartel organizations en masse, instead of doing it haphazardly as we are today. Similar economic warfare forced the Italian and Japanese governments to drastically crack down on organized crime in the 90s and 2010s respectively.

They're linked, but don't you think general corruption is even more damaging to Mexico? In cdmx we're quickly running out of water in major part due to corruption. Anyways, most cartel activity I've heard about from friends has been on highways, outside of major cities.

They both enable each other, after all bad people do plenty of bad things, not just one.

Cartel violence is present even is large urban centers, ask anybody who runs a moderately successful business.

True, although I always had the impression that the violence in large urban centers leaned towards "organized crime" and less "cartel" but that's just my impression.

> Whenever the Mexican economy recovers, criminality tends to recede.

Or could it be that whenever criminality recedes, the Mexican economy recovers?

Homicide rates seem to spike 1-2 years after a recession in Mexico, or at least based on comparisons of GDP Growth rate contractions and homicides per 10k [0][1].

And this does make sense - if you don't have a job, the cartel's offer is fairly competitive.

Also, those areas that tend to be the most violent are also part of the now largely defunct Maquiladora belt.

[0] - https://www.macrotrends.net/global-metrics/countries/MEX/nor...

[1] - https://www.macrotrends.net/global-metrics/countries/MEX/mex...

At least in mexico, criminal violence is definitely tied to poverty.

There's not much interest in fixing it at the current federal government.

Maybe things will change with the Mexican elections this year but I doubt it. The front runner is a protege of the current populist president.

Paradoxically, too much blind faith in the free market sometimes leads to bad decision making. You don’t want your prophets to believe too deeply in their own divinity. You want a bit of cynicism at the top, a bit of understanding that there really isn’t any perfect system. I think that explains why leftist leaders (such as Obrador) sometimes make the best stewards of capitalist economies. (Bolivia under morales might be another example)

Mexico's fourth transformation is sure going strong :)

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