the Manufacturing Sector In Mexico

The Manufacturing Sector in Mexico

By Emilio Arteaga Vazquez

Foreign Investment and international trade are, to a great extent, attributable to the established manufacturing sector in Mexico.    

Mexico: A Top Foreign Investment Destination 

First, Mexico is a top foreign investment destination. According to UNCTAD’s World Investment Report 2020, Mexico is the 14th country with most foreign direct investment inflows in the world in 2019. 

Emilio Arteaga, Trade and Business Lawyer, Taxes, Mexico, International Sales
Emilio Arteaga

Top FDI Inflows in 2018 and 2019. 

Information from UNCTAD’s World Investment Report 2020.

As noted by the World Economic Forum, Mexico has a strong and positive cluster development. This feature is partially explained why almost half of Mexico’s Foreign Direct Investment inflows are related to the manufacturing sector.

Foreign Investment Inflows and Manufacturing Sector in Mexico

 The top five manufacturing sub-sectors that have attracted investment from 1999 to 2019 are (1) transport equipment (i.e. auto), (2) beverages and tobacco, (3) chemical, (4) computer, communication and measurement equipment, and (5) the food industry.  For instance, foreign direct investment in the transport equipment (or auto sector) has amounted to 79,053 million USD since 1999, which represents 21% of Mexico’s total foreign direct investment inflows as noted in the table below:

Manufacturing Investment in Mexico, Foreign Investment, Statistics, Doing Business in Mexico
Source: Mexican Ministry of Economy, January-December 2019 Report 

Same Country, Different Levels of Industrialization

Mexico has different levels of industrialization. In fact, most of the manufacturing sector has established itself in the north and the center of the country. The South of Mexico is much less industrialized, which is why the administration of Enrique Peña Nieto sought to create Special Economic Zones in the southern states (see The EconomistHow the Bottom Half Lives). However,  the current administration cancelled the Special Economic Zones policy (See Emilio Arteaga in El Universal)

For instance, the (passenger) auto industry and the OEM (Original Equipment Manufacturers) clearly show Mexico’s industrialization  throughout its territory.

Source: PROMEXICO, the extinct trade and promotion agency.

International Trade and the Manufacturing Industry in Mexico 

Establishing itself as an important manufacturing hub, Mexico is an economy with a significant presence in international trade. Mexico ranks in 12th place among world economies in both exports and imports, its trade balance amounts to 916 billion USD in 2019. 

Mexico’s Top Exports

Mexico’s main exports include (1) manufactured goods, (2) fuels and mining products, (3) agricultural products that amount a total of 461 billion USD.

Exports of Mexico in 2019, International Trade, Manufactured Goods, Manufacturing Industry in Mexico
Source: Bank of Mexico
International Trade, Mexico, Manufacturing Industry in Mexico, Export Destination

Mexico's Export Destination in 2019

In 2019, Mexico exported 461 billion USD. Unsurprisingly, Mexico’s main export destination is USA exports amounting to $371 billion USD, followed by the European Union $24 billion USD, Canada $14 billion USD, and China $7 billion USD%.
Source: Mexican Ministry of Economy

Mexican Import Statistics, Doing Business in Mexico, Origin of Imports

Mexico's Origin of Imports in 2019

As for import data, US imports amount to 205.733 billion USD, China 83.052 billion USD, European Union imports amount to 51.237 billion USD, Japan 17.963 billion USD, and  Korea 17.649 billion USD . 
Source: Mexican Ministry of Economy

US – China

Comparing the US-China trade relations, US exports more goods in value to Mexico than to China. For instance, US exports to China amounted to $106 billion in 2019, while it exported $205.77 billion USD to Mexico. 

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