Even according to official statistics, Mexico averages about 100 homicides daily, and around 36 percent of the population, or 46 million people, live in poverty. This reflects a Mexico that has ceased to be the post-NAFTA emerging Latin American hope for industrial and economic development. Mexico has a tremendous geographical advantage versus China, with deeper ties to the United States. Mexico, however, remains a manufacturing blip on the screen and has to offer a significantly better deal to threaten the manufacturing superpower.
On October 15, 2024, President Claudia Sheinbaum met with 240 US and Mexican business leaders to discuss her proposals and announce investment commitments. These come largely from the private sector, and she expects to attract more over time. Unfortunately, the incumbent administration’s populist and authoritarian tendencies, combined with the strong influence of organized crime, will stifle any such industrialization that could benefit citizens and institutions.
- Touted investments are tainted by cronyism.
The initial investment commitments arranged by Sheinbaum amount to $32.9 billion. These include $15 billion from energy company Mexico Pacific to expand natural-gas production in the country. The firm—which has cooperated with the AMLO administration to obtain streamlined permits—has already invested $15 billion over the last five years.
Royal Caribbean will allocate $1.5 billion for a new tourist attraction associated with the Maya Train. This train route is a public work promoted and developed by the AMLO administration.
Amazon is set to invest $6 billion to strengthen its digital network and capabilities in Mexico. This adds to the investment of $5 billion that Amazon announced in February to build a data center in Querétaro. Technology giants, such as Google and Amazon, have decided to place their data centers in Querétaro due to its close location to Mexico City, stable energy supply, and economic-development subsidies from the local government.
While sharing little information, Sheinbaum also announced a $10.4 billion investment from state-owned oil company Pemex. This inflated the total to $32.9 billion.
- Mexico lacks transparency, accountability in institutions.
In the latest Impunity Observer podcast, I interviewed lawyer Joanna Guerra and economist Mariana Carmona. Both have built successful careers in Mexico, but despite their accomplishments, they are eager to leave. They have lost hope in Mexico for a future.
They stressed that the administrations of Andrés Manuel López Obrador (AMLO) and his successor Sheinbaum have sought to conceal the country’s situation on the ground. For example, the AMLO administration has boasted that the poverty rate—those unable to afford basic services such as medical care, education, and housing—decreased from 41.9 percent in 2018 to 36.3 percent in 2024. However, according to the National Institute of Statistics and Geography (INEGI), extreme poverty (those with less than US$2.15 to live on per day) increased by 1.5 million people during the same period.
Sheinbaum has secured an absolute majority in Congress, giving her the power to amend the constitution. Also, a judicial reform that passed a month before AMLO left office granted ruling party Morena the authority to appoint Supreme Court judges. The selection now comes from a list of candidates provided by both the executive and legislative branches.
Sycophantic media are boosting the idea that Mexico could become the new China for manufacturing, with the assumption that Mexico will be the biggest beneficiary of the US-China trade war. On our podcast, Guerra and Carmona described how critical TV programs have softened their analyses, and opposition journalists have been fired, even during live broadcasts. There appears to be a cloud of intimidation hanging over legacy media, so the pair recommend independent citizen journalism for a more frank assessment of business potential.
- Mexico is caught between trade-war foes.
At first glance, Mexico stands to gain from US-China trade conflicts. According to the independent digital outlet Behind Asia, 2020 shutdowns and supply disruptions catalyzed many US companies to seek a closer destination for manufacturing. About 40 percent lower labor costs in Mexico sweetened the deal.
To circumvent tariffs imposed by Donald Trump and Joe Biden on Chinese goods, the Asian giant has also opened its own factories in Mexico, as a gateway to expand into the Americas. The most prominent example is the newly established Chinese electric car factory BYD, which surpassed Tesla sales in Mexico last year. This is putting Mexico in the firing line.
Despite fiery electoral rhetoric, there has been relative bipartisan alignment with regards to US policy towards China. Biden has maintained and even expanded Trump’s tariffs, and Vice President Kamala Harris has not proposed to depart from that approach.
That being said, Trump has threatened to reform the United States-Mexico-Canada Agreement (UMSCA) to impede the entry of Chinese goods. Disentangling such goods would be a messy affair for Mexico.
The Central American Alternative?
US businesses and investors can relocate operations to Central America, although similar problems exist there too. In the Northern Triangle—El Salvador, Guatemala, and Honduras—major investors can benefit from a tax exemption through Harris’s initiative to mobilize private funds and mitigate emigration.
If Mexico believes it meets the criteria to become the desired destination for global industries, it is mistaken. High and growing rates of corruption, crime, and poverty are significant factors that deter foreign investment and plant placement amid competing jurisdictions. Far from ushering in a new era, Mexico’s unfavorable conditions are generating a downward spiral: a brain-drain exodus of Mexico’s most qualified workforce.
If AMLO, Sheinbaum, and their organized-crime partners continue to dominate the country, Mexico will miss the opportunity to drive economic development and attract foreign investment.
The opinion of this article is foreign to Noticiero El Vigilante
