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Can Mexico become "The New China" and emerge as the fourth-largest economy in the world? The answer is yes!

In 1978, China was a poor and backward country, ranking 44th in the global economy with a GDP of merely one-tenth of the United States. However, with the economic reforms enacted that year, a transformative journey began.

China prioritized economic growth, modernization, and enhancing the well-being of its population. The strategy adopted was straightforward: liberalize the previously socialist economic system and open up to foreign investment. This dramatic shift propelled China to become the global manufacturing hub, achieving an annual growth rate of 10%.

Currently, most investments in Mexico come from the United States, according to the CEO of Banco Base. In 2023, there was "great optimism" about what the Mexican Republic could offer. Many opportunities were capitalized on, resulting in growth in FDI (Foreign Direct Investment) and exports.

While not an easy endeavor, Mexico can replicate this success. As a nation, we must take strategic steps towards this goal:

  1. Leverage Favorable Factors: Mexico possesses several advantageous conditions that must be capitalized on. These include:

  • The synergy generated by the nearshoring trend attracts significant foreign investment and benefits from the realignment of global supply chains.

  • Geographical proximity to the United States and Canada and the Free Trade Agreement (USMCA) enhance trade opportunities.

  • Competitive labor costs, efficient transportation, and improved cash flow compared to Asian supply chains, foster agility.

  • A sizable, educated population and favorable demographics, contribute to robust domestic consumption.

  • Cultural affinity with our northern neighbors.

The convergence of these factors places Mexico in a privileged position unparalleled by any other country.

Invest in Infrastructure

To meet growing demand, the development of additional industrial parks is imperative. Private initiatives are already addressing this need. Additionally, supporting infrastructure services are essential for these parks, facilitating manufacturing, distribution, and export activities.

Addressing challenges such as saturated seaports, land crossings, and major roads, along with the crisis facing both passenger and cargo airports, is crucial. Furthermore, regions experiencing energy supply issues must be addressed to support industrial growth.

Enhance Supply Chains

While Mexico is competitive in certain industries reliant on supply chains like plastics and common steel, in others, such as stainless steel, aluminum, and textiles, we lag behind Asia by up to 30%, posing a significant disadvantage.

Serious and aggressive investment in developing our supply chains is necessary. Often, foreign companies import cheaper materials from Asia, limiting our value-added contributions. A national strategy for supply chain development may include exploring subsidy schemes similar to those in China.

Boost Manufacturing Efficiency

Mexico's GDP is one-tenth of China's, indicating a manufacturing industry 16 times smaller. China's success stems not only from robust infrastructure supporting manufacturing and trade but also from an ecosystem enabling access to capital, technology, and machinery for micro and small businesses, empowering them to compete globally alongside their supply chains.

Invest in Security

Certain border cities benefit from geographical advantages due to proximity to the United States. However, their investment potential remains largely untapped due to security concerns. Similarly, states plagued by security issues deter potential investors. 

Despite these challenges, numerous companies persist in operations within the country. However, continued or exacerbated security issues may prompt relocation decisions. Drawing from successful global examples, 

Mexico's economic improvement could significantly alleviate the extreme poverty endured by nine million Mexicans.

The opportunity is ripe, conditions are favorable, and resources are abundant. What may be lacking are intentional efforts and political will. This underscores the crux of the matter.

This revised version integrates the suggested improvements to enhance clarity, coherence, and professionalism.

To position itself competitively and maximize foreign investment and technology, Mexico must prioritize specialization in strategic areas. This includes not only focusing on high-demand fields such as data science, artificial intelligence, cybersecurity, and biotechnology, but also developing specialized competencies that complement these areas, such as financial analysis, innovation management, and sustainable design. Investment in these sectors and specialized skills will enable Mexico to capitalize on new opportunities and effectively respond to global market dynamics.

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