Nearshoring, a trend that is reshaping the global economy, present an excellent opportunity for Mexico. This practice, which involves relocating production to nearby countries to reduce costs and delivery times, has already had a significant economic impact in the country. With investments exceeding $13 billion from around 20 companies, including automotive giants like Tesla and BMW, Mexico is positioning itself as a key player in this new regional production model.
Benefits of Nearshoring for Mexico
Nearshoring offers tremendous opportunities for economic growth in the short, medium, and long term. According to the Council of Global Companies (CEG), this strategy could generate between 2 to 4 million jobs by 2030, as well as attract annual investment of between $30 and $50 billion. Additionally, Mexico’s GDP is expected to increase by 1.5% to 2.5% in the long term, while labor productivity could improve by up to 30%.
This outlook promises a substancial boost for key sectors of the Mexican economy, with a particular focus on advanced manufacturing, technological innovation, and the development of new industries.
Key Areas to Maximize Potential
To fully capitalize on these opportunities, the CEG has identified seven strategic areas of action, including:
- Human capital development: Investment in education and training will be crucial to prepare the workforce of the future and ensure competitiveness in advanced sectors.
- Critical infrastructure: Improving connectivity and modernizing the transportation system will be essential to facilitate trade and logistics, ensuring companies can operate efficiently.
- Sustainable energy: Transitioning to clean energy sources will not only drive sustainability but also attract environmentally conscious investments.
- Innovation and reasearch: Fostering an innovation-driven environment and promoting the development of new technologies and solutions will position Mexico at the forefront of emerging industries.
- SME integration: Strengthening local supply chains by enabling the participation of small and medium-sized enterprises (SMEs) will create a more resilient and diverse ecosystem.
- Security and rule of law: Providing a reliable and secure environment for investors is fundamental to ensuring the stability and growth of companies seeking to establish operations in Mexico.
Challenges to Overcome
Despite its vast potential, Mexico faces several challenges that must be addressed to fully leverage nearshoring. The Organization for Economic Cooperation and Development (OECD) has identified three critical areas: increasing investment in infrastructure and education, expanding tax bases, and improving the use of taxes such as property taxes. Additionally, it is vital to simplify the process for starting new businesses and promote the formalization of SMEs.
Nearshoring also presents an opportunity to enhance women’s participation in the labor market a key factor in diversifying and strengthening the Mexican economy.
Mexico at the Center of Global Nearshoring
As the world reevaluates globalization, regionalization is becoming a more attractive option due to risk associated with the pandemic and geopolitical tensions. In this context, Mexico is uniquely positioned to capitalize on the relocation of supply chains to North America. With a window of opportunity estimated at around six years, the time to act is now.
REFERENCES:
- Salazar, S. I. (2023, 19 septiembre). Challenges and Opportunities in Nearshoring: Mexico 2030 Vision. Noro. https://noro.mx/en/business/economics/challenges-and-opportunities-in-nearshoring-mexico-2030-vision/
