Mexico is a great place to invest; it is an emergent economy; it is an economy with enormous potential; and it has several advantages that it is convenient to keep in mind. Despite being a year of intense political and electoral activity, the past 12 months have seen foreign investment of nearly $19 billion, making Mexico the fourth largest recipient of foreign investment among emerging economies, with over 63% of last year’s direct investment being provided by US firms.
The enormous confidence shown by foreign investors is due to Mexico’s range of competitive advantages. First of all, we have a solid economic stability, as a result of which Mexico’s country risk is low, falling by over a third in the period since elections. This in turn has meant that internal interest rates have reached a record low, while the Mexican stock exchange has broken 13 records this year. Mexico enjoys a strategic geographical position, making it the only emerging economy to share a border with the world’s largest economy. This is a great advantage from the logistics point of view, and the Mexicans are committed to making good use of it.
But we don’t only have more than 3,000km of border with the biggest market in the world, we have a privileged geographic position: we have 11,000km of coast, some of it on the Pacific, which gives us direct links to the Asian emerging economies; and on the other side, the Atlantic Ocean allows us to be connected with the European Union and, of course, with Latin America. Mexico is the only country that has the privilege to be part of Latin America, and at the same time it is located in North America. We have a broad network of free trade agreements, giving us preferential access to a market of a billion consumers in 44 countries. We also have very important natural resources. Mexico is the world’s fourth largest petroleum producer, leading silver maker, the main source of a wide range of agricultural products and the fourth largest biodiversity.
We have a solid democracy, with strong institutions that have proved their strength in difficult times. Mexico is a young country, with an enviable demographic bonus. The average age in Mexico is 27 years. By 2030, the economically active population, available labour and young population will be considerably larger than the combined number of retired people and young children. All these advantages are reflected in a number of positive economic indicators, and despite its difficulties, last year’s economy rose by nearly 5% of GDP. The number of formal workers, i.e. new workers affiliated to the Mexican Social Security Institute, rose by nearly 7%, equivalent to around 870,000 new jobs last year, the highest rate in a long time. Six years ago, when President Fox came to power, the Mexican government issued treasury bonds for a year, whereas today the current administration is able to issue these for 30 years, at a fixed rate of 8% in Mexican pesos.
My government’s three main goals, designed to promote Mexico’s development, are ensuring public safety and the rule of law, combatting poverty and generating employment. The members of the Cabinet who are responsible for security issues submitted a new security programme containing the guidelines to restore long-term safety in Mexico. In addition, a number of social programmes have been implemented since December, such as the Popular Insurance Scheme and the First Job Programme. I would prefer Mexican workers to remain in the country, instead of seeking work elsewhere, and I would rather have foreign investment come in search of the hard-working, productive labour force available in Mexico.
As part of the strategy of encouraging employment in areas that traditionally expel migrants, my administration is implementing actions to turn these regions into recipients of foreign investment. It is important to promote the reform of the North American Development Bank’s mandate, to ensure that funds are not only assigned to border states but also to other states, particularly those where migration is common. The Mexican government would like to see resources used not only for environmental projects but also to promote infrastructure projects in general, as well as projects with productive investment. Currently Mexico is seeking new sources of financing, to enable more states to develop and thereby provide opportunities of well-paid jobs this side of the border.
Mexico has recently signed a Memorandum of Understanding with the Inter-American Development Bank (IDB), through which IDB guarantees Mexico up to $2.5 billion dollars for financing infrastructure projects. Mexico provides enormous opportunities for private investment and infrastructure in ports, airports, roads and services. A study by Goldman Sachs predicts that Mexico could become the world’s fifth largest economy by 2040, provided it takes the necessary steps now. Mexico has all that is required to achieve this, including its resources, people, geographical location and cultural and historical identity.