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Canadians Bet on Mexican Mining and Manufacturing

Canadians Bet on Mexican Mining and Manufacturing

Posted by Ricardo Vázquez on September 18, 2014

Mexico is a country that has been historically characterized for being a receptor of international capital, through Foreign Direct Investment (FDI) in particular, and Canada is known as the fourth investment source to Mexico, only below the US, Netherlands and Spain.

Since the North American Free Trade Agreement (NAFTA) started, in 1994, Mexico has received a great boost in the flow of foreign capital, highlighting the participation of its two main members, the US and Canada.

In particular, in the period from 1999 until 2014, the investment of Canadian companies that came to Mexico increased to $17,823.5 millions of dollars, which represented 4.9% of the total of the FDI in Mexico on that period, according to the information of the Secretary of local Economy.

The productive mexican fields that Canadian companies are most interested in are mining, manufacturing industry, financial services and services of temporary accommodation, in that order. The four activities are the 83.2% of the Canadian capital in Mexico.

In particular, mining makes up for 41.8% of the total in that period, with a cumulative investment of 7,464.9 millions of dollars. Meanwhile, the manufacturing business makes up for 21.6% of the total, with investments of 3,850 millions of dollars.

The financial and insurance services with 2,493.4 millions of dollars, the equivalent of 14% of the total. Regarding the temporary accommodation services, and preparation of food and drinks, the flow of capital has a total of 1,025 millions of dollars, that represent 5.7% of the total.

Despite the high concentration of the Canadian companies in this four productive activities, they also have a strong presence in fields such as commerce, agriculture, forestry, generation and transmission of electric energy, construction, transportation, information in the mass media, real state services, professional services, scientific and technical, educational services, spreading services, cultural and sports activities, among others.

Canadian capital is present in the 32 federative entities of the country, but between the Federal District, Durango, Sonora, Querétaro, and Low South California, they have three fourths of their flow of capitals productive cumulative in the period said before.

In the same way, in the same period the arrival of 3,403 companies with Canadian investment has been registered, the equivalent of 3.3% of the total of companies with foreign investment in the country. By units, the companies of Canadian origin are only behind the American and Spanish companies.

During the period said, the years 2007 and 2008 were the most active, 485 and 450 companies arrived in Mexico, respectively, while  in 2011 there were 401 units.

With the structural reforms that Mexico will have, such as the energy, telecommunications, financial, and among others, the appetite of foreign capital has increased for Mexico.

However, the recent fiscal reform changed several activities such as mining, that’s why he investment in this sector may vary. This last part is important because the investment of Canadian companies has been constant in the mining sector in recent years, specially from 2008 on.

During 2013, Mexico received 35,188.4 millions of dollars of FDI, from which 1,372.5 millions came from Canada. Speaking about the first trimester of 2014, Mexico received 5,820.8 millions of dollars form FDI, but in that case Canada didn't contribute to this amount, it even showed an exit of capital of 171.4 millions of dollars.

According to the Economic Commission for Latin America and the Caribbean (ECLA), Mexico is the second most attractive country to foreign investment in Latin America. 

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