Mexico foreign direct investment races ahead as Brazil sputters

Volkswagen's auto manufacturing plant in Puebla.
Volkswagen’s auto manufacturing plant in Puebla.

By Courtney Fingar / Financial Times

Mexico and Brazil dominate foreign direct investment flows into Latin America, but their FDI prospects could be heading in opposite directions. While Mexico is making hay with China’s declining cost competitiveness in manufacturing, Brazil is slipping behind.

In 2014, Mexico attracted 366 greenfield investment projects totaling an estimated $33 billion and Brazil 322 projects at $18 billion, according to fDi Markets, an FT data service.

Together they mopped up nearly 60 per cent of capital expenditure on new projects or expansions of existing facilities in Latin America and the Caribbean last year.

It is in manufacturing where a potential divide is opening up between the two countries.

Both Mexico and Brazil do far better at attracting IT investment than is often assumed, but while the shift to a services and hi-tech economy is the espoused goal of nearly every developing country — and a worthy goal on the face of it — it is extremely difficult for large countries to develop rapidly without succeeding as a manufacturing destination.

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