Canadian investors are noticing a trend that perceptive Americans have seen already: a booming Mexico is a great place to invest. The Globe and Mail reports:
Too much attention is given to the country’s horrific, drug-related murders and the hot-button issue of illegal immigration to the U.S. Not enough is given to Mexico’s continuing economic emergence and a series of reforms, some still in the works, that can set the country on a long-term path of increased growth….
That, coupled with nearly four dozen international free-trade agreements, is bringing international investment – and stoking a young, growing Mexican middle class with more buying power. In February, New York Times columnist Thomas Friedman said that Mexico “will become the dominant economic power in the 21st century.” [...]
Mexico already instituted an overhaul of its labour laws last year. Now, it’s talking fiscal reform, which may position the country better for the long run, but cause short-term discomfort through higher taxes in some areas. Energy reform – “the most important of them all,” says Guido Giammattei, a portfolio manager for the RBC Emerging Markets Equity Fund – would allow the state-owned oil company to partner with foreign concerns and create a wave of capital investment.
Quite right. The young administration of President Enrique Peña Nieto is making promising reforms to promote foreign investment, and made noticeable progress in the struggle against the cartels. We should stop looking at Mexico through blood-tinted glasses, noticing only stories of violence, drugs, and failure.
Mexico is well-placed to take advantage of China’s slowdown and America’s slowly improving economy.
As businesses look to return operations to North American shores, this success story looks likely to continue. Canadians are smart to look south, at the US as well as Mexico, for promising investment opportunities.
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