FDI-Finance

  • Mexico’s development policy after World War II was based on nurturing a domestic industry to keep out foreign (mostly U.S.) goods and services to the extent possible. U.S. investment in Mexico was restricted—at best, tolerated—for many years, because it was seen as a sign of enhanced U.S. dominance. Each of these actions was influenced by the dependency/dominance relationship.
  • During the years of Mexican president Carlos Salinas de Gortari, Mexican policy moved away from the defensive nationalism that had previously characterized trade and investment policies. The restrictive foreign investment law of 1973 was revised to broaden the range of foreign direct investment (FDI) to be permitted in Mexico, previously nationalized Mexican commercial banks were privatized, and NAFTA was negotiated and implemented.
  • Much of the liberalization of FDI in the Mexican economy came at the heels of a painful economic crisis that forced Mexico to reschedule its foreign debt and reconsider its restrictions on FDI.  
  • Today, over 80% of Mexican commercial banks assets are held by foreign banks. Although these commercial banks have benefited Mexico through lending more than their domestic counterparts in times of  financial crises, their geographic expansion has excluded rural, poorer locations.
  • Financial stability has been Mexico’s outstanding economic strength thus far in the 20th century. FDI has been increasingly higher during recent years of financial stability, and the United States provided almost 50 percent of the $23 billion of FDI that Mexico received in 2007.