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Competitive advantages for investing in Mexico
Mexico: a leading economy
A country with competitive sectors
2
ProMéxico’s strategies
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Mexico: an important global actor
3
1. Mexico is a democracy.
2. Mexico is one of the largest economies in the world.
3. Mexico has great macroeconomic stability.
4. Mexico is an open economy.
5. Mexico has young, talented and highly-skilled people.
6. Mexico is a leader in advanced manufacturing.
7. Mexico is the next global logistics high value added hub.
8. Mexico is a world within a country.
9. Mexico is a reliable and attractive destination for investment.
10. Mexico is ready to increase its productivity through its structural reforms.
Binational Center Library / Texas A&M International University
Competitive advantages for investing inMexico
4
Binational Center Library / Texas A&M International University
Exportsplatform
Internalmarket
Humancapital
Advancedmanufacture
Macroeconomicenvironment
Mexico’scompetitiveadvantages
5 competitive advantages
5
Binational Center Library / Texas A&M International University
Forecasts
02,0004,0006,0008,000
10,00012,00014,00016,00018,000
EU
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Fuente: Goldman Sachs. The N-11: More Than an Acronym. Documento de economía mundial No: 153. Marzo de 2007/ HSBC/ACCENTURE.1/ Pronóstico de Goldman Sachs / Fondo Monetario Internacional.
20501
5th
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World’s largest economies
14th
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Goldman Sach’s ForecastGross Domestic Product
(Billion USD)
6
Gross Domestic Product(Billion USD)
Goldman Sachs estimates thatMexico will be the 5th largesteconomy by 2050.
According to Accenture, Mexicowill be one of the Big Six in2025.
According to HSBC Mexico willbe the 8th largest economy in theworld by 2050.
US
A
Chi
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Ger
man
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Fran
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Bra
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Rus
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Italy
Indi
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Can
ada
Aus
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Mex
ico
Sou
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orea
Binational Center Library / Texas A&M International University
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2000
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2012
2013
Billi
on d
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rs
Perc
enta
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n
Manufactures Oil Primary Inflation
Solid macroeconomic environment
7Source: INEGI / Bank of Mexico.
Evolution of inflation, exports and international reserves in Mexico
(2000- 2013)
Reserves record: 176 billion dollars
Exports record: 380 billion dollars
Reserves
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FDI flows into Mexico (1999-2013*)
8Source: Ministry of Economy. General Directorate of Foreign Investment. */ Figures to September 2013.
Record-high
MUSD
15,453
35,188
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Binational Center Library / Texas A&M International University
363
4,404
891 1,253
4,432
6,474 5,758
8,256
1,157
8,464
15,045
12,139
25,597
-
5,000
10,000
15,000
20,000
25,000
30,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Mexico’s FDI Outflows(million dollars)
9Source: UNCTAD
Record-high
Binational Center Library / Texas A&M International University
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A3Baa1
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BBB+ BBB+
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BBB-
BBB+ BBB+
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BBB-
Positive Ratings
* Scores that are below the dotted line are investments with high degree of risk or speculation.
Source: Fitch Ratings, Standar & Poor’s Rating Services, Moody’s Investor Service.Binational Center Library / Texas A&M International University
11Source: DataMarket, c J.P. Morgan Emerging Markets Bond Index .
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EMBI plus (emerging markets)
Mexico Argentina Brazil Turquia South AfricaTurkey
Mexico in the EMBI+
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Exportsplatform
Internalmarket
Humancapital
Advancedmanufacture
Macroeconomicenvironment
Mexico’scompetitiveadvantages
5 competitive advantages
12
Binational Center Library / Texas A&M International University
8
12
1720
45
1
Num
bero
fcou
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s
Our FTAs give privileged access to 61% of the world’s GDP.
Mexico has access to 45 countries through its free trade agreements(1.2 billion people).
Number of countrieswith privileged access*
We are commited to free trade
13Sources: Brazil; China: Colombia:; United States: ; Chile: Direcon; Mexico: Ministry of Economy.
Binational Center Library / Texas A&M International University
Source: SCT.
LázaroCárdenas
ManzanilloVeracruz
Tampico
Altamira
Guanajuato
Monterrey
Guadalajara
SLP
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A country with great infrastructure
Mexico has:
• 63 border crossings.
• 68 international ports.
• 64 international airports.
• 16,700 miles of railroads.
• 230,000 miles of roads.
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Fuentes: SCT/ US Department of Transportation.15
A country part of NAFTA• +50 border crossings
with the US.• NAFTA market= 18
trillion USD.• 16 trillion EU.
• Bilateral trade with theU.S.= 1 million dollarsper minute.
• 1 million people and300 thousand vehiclescrossing the borderdaily.
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Pacific Alliance
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• Elimination of 100% of tariffs.• 92% immediately and the other 8% in the
next 15 years or sooner.• Elimination of visas between members.• Platform for student and academic mobility.• Unification of stock exchanges.• Homologation of health and regulatory
certifications.
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México And the TPP
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The 12 countries of the TPP represent:• 38% of global GDP.• 23% of world exports.• 28% of world imports.• 11% of the world’s population.
In negotiation
P4 (Brunei, Chile,New Zealand andSingapore)
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Exportsplatform
Internalmarket
Humancapital
Advancedmanufacture
Macroeconomicenvironment
Mexico’scompetitiveadvantages
5 competitive advantages
18
Binational Center Library / Texas A&M International University
Source: US Census Bureau: http://www.census.gov/population/international/data/idb/informationGateway.php ; INEGI, 2011; Population Projections forMexico 2005-2050, CONAPO. *Population (in millions) by age group.
118 million inhabitants with a median of 27 years. 52 million in the labor force. According to forecasts, there will be more than 83 million people of
productive age by 2020.
Mexico’s population pyramid (2030)*
Male Female
Demographics are on our side
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Mexico’s demographic bonus
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Human capital: our main strength
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“The main reason to invest in Mexico isits human capital”John Rice, Vicepresident of GeneralElectric.
“The experience of Mexican engineersis one of the reasons we cotinue todevelop new projects in the country”Young Ju Lee, President of Samsung.
“Mexico has unique competitiveadvantages, but its flexible and creativehuman capital is the one that highlightsthe most”Pierre Beaudoin, President and CEO ofBombardier.
Binational Center Library / Texas A&M International University
Exportsplatform
Internalmarket
Humancapital
Advancedmanufacture
Macroeconomicenvironment
Mexico’scompetitiveadvantages
5 competitive advantages
21
Binational Center Library / Texas A&M International University
Source: Competitive Alternatives 2012, KPMG; Global Benchmark Report 2011, of the Danish Industry Confederation;Manufacturing Outsourcing Cost Index 2010, Alix Partners.
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According to KPMG, in 2011Mexico had an average costadvantage of 21% (over 19
industries), compared to the US.
Mex
ico
UK
Net
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Can
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Fran
ce
Italy
US
A
Ger
man
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Aus
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Japa
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21.0%
5.5% 5.3% 5.0% 3.9%2.1%
0% -0.1% -3.7% -9.4%%
cos
t adv
anta
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lativ
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the
US
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The Alix PartnersManufacturingOutsourcing CostIndex ranksMexico as thebest country(better thanBRIC’s).
The mostcompetitivecountry in termsof costs andtaxes, accordingto GlobalBenchmarkReport.
Most competitive total costs
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Mexico ranks 20th inHarvard and MIT'sAtlas of EconomicComplexity.
• It acknowledges that Mexico can retain large amounts of productiveknowledge.
• Mexico manufactures and exports a large number of sophisticatedproducts.
• Manufacturing accounts for 80% of our exports.Source: INEGI/ Presidency/ Harvard and MIT, Atlas of Economic Complexity/ OECD. 23
Mexico is an exporter of sophisticated products
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A sophisticated economy
No. Country % GDP1 South Korea 30.4%2 Germany 28.1%3 Mexico 17.2%4 China 15.0%5 France 13.2%6 Italy 12.9%7 United Kingdom 11.1%8 Japan 9.9%9 Canada 7.3%
10 Turkey 7.0%11 South Africa 5.8%12 United States 5.1%13 India 4.5%14 Indonesia 4.1%15 Argentina 3.7%
Medium and HighTech Exportsas a percentage of GDP (2011)
24Source: IHS Data – Global Insight; ProMéxico’s Analysis. Data in USD Real terms, 2005, considering de G20 countries.
Medium Technology (MT):• Specialty Chemicals• Machinery, Equipment, Appliance• Electrical Industrial Machinery• Motor Vehicles & Parts Total• Motorcycles & Transport. Equipment• Railroads & Equipment
High Technology (HT):• Aircraft & Spacecraft• Advanced materials• Computers & Office Machinery• Communication Equipment• Medical, Precision & Optical
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Automotive
Mexico is the 8th vehicle producer in theworld. And the 4th exporter globally of new light
vehicles in the world. We export almost three times more than Brazil
and India combined. We are a strategic supplier to the North and Latin
American automotive markets. In 2011, Mexico was the leading autoparts
supplier to the United States. Eleven of every 100 light automobiles sold in the
United States are manufactured in Mexico. 84 of the top 100 autoparts companies in the world
have production facilities in Mexico.
Source: OICA/ Global Trade Atlas/ AMIA/ Ward’s Automotive Reports/ AASA, 2011.25
Ford’s plant in Hermosillo,Mexico, is the only facility in theworld to produce the newFusion model and the LincolnMKZ.
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Electric-electronic
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• Mexico is the leading homeappliance exporter in LatinAmerica.
• And the 6th globally.• It is the leading flat television screen
exporter in the world.• The second refrigerator exporter.• The 4th global exporter of computers.• 8 of the top 10 transnational electronics
manufacturing services (CM’s) haveoperations in Mexico.
According to KPMG, electronicsassembling costs in Mexico are
15% lower than in the UnitedStates.
Source: Global Trade Atlas/ KPMG/ Manufacturer Market Insider.
0 20 40 60 80 100 120
MexicoRussiaBrazil
CanadaThe Netherlands
FranceUnited Kingdom
ItalyUSA
GermanyAustralia
Japan
Cost Index
Electronics assembling(US=100)
Binational Center Library / Texas A&M International University
Mining
Fuente: The Silver Institute/ Cámara Minera de México (CAMIMEX)/ Global Trade Atlas/Metals Economics Group/ INEGI.27
• According to Behre Dolbear,in 2013 Mexico was ranked5th best destination forinvestment in miningprojects.
• Mexico is the leading country in LatinAmerica and the 4th globally in termsof receiving investments for miningexploration in nonferrous minerals.
• Mexico is the leading silver producerand exporter globally.
• The second global fluorite producerand third bismuth producer.
• The second gold producer in LatinAmerica.
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Mexico’s major goals and strategies
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ProMéxico
México
FDIattractionInternationalizationExports
promotion
GENDER EQUITYKEEP GOVERNMENT CLOSE TO PEOPLEDEMOCRATIZATION OF PRODUCTIVITY
3. Education
4. Prosperity
5. Responsibleglobal actor
2. Inclusiveness
1. Peace
Binational Center Library / Texas A&M International University
EnhanceMexico’s
presence inNorth America
Foster Mexico’sbonds with
Latin Americaand the
Caribbean
Diversifyexports to the
Asia-Pacificregion
EnhanceMéxico’s FTA
with the EU
ProtectMexico’s
interests in theglobal markets
5 strategies for boosting our commerce
PROMÉXICO
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What Do We Offer in ProMéxico?
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ProMéxico
Boosts activities aimed topresent an overview ofinternational business andtrade. It also seeks toencourage enterprises andstrategic sectors to reachinternational markets andpromote the country'simage.
Assists clients to reach aspecific goal, throughtraining, personalassistance or consulting.
Brings companies togetherand link them to private orpublic organizations andacademia, among others,with specific goals that areusually project-related.
Simplifies the execution orincreases the appeal of aproject, whether for export,FDI or internationalization,through incentives, studiesor by opening markets.
Development of programs and projectsDCC/ ACT Model/ Softlanding/ Aftercare/ Roadmaps/ Clusters articulation/ MOMA/ PROCEI
Binational Center Library / Texas A&M International University
www.promexico.gob.mx
@ProMexicoTW
(713) 984-4598
4507 San Jacinto St., 3rd. Floor
Houston, TX 77004
31
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