MEXICO (October 3, 2023) — Following extensive research on Mexico’s economic development, workforce talent, and public governance, and drawing insights from Milken Institute’s Global Opportunity Index (GOI), a new report by the Milken Institute, titled 'Mexico’s Competitiveness as a Strategic Trade Partner', outlines the importance of enhancing the US-Mexico trade partnership.
In 2023, Mexico surpassed China in imports of goods to the United States for the first time in modern trade history. This change doesn’t happen overnight. In fact, both countries’ trade activities have been steadily on the rise, to about 7.8-fold since NAFTA was enacted in 1996. This trend, coupled with US-China’s increasingly heightened tension, global supply chain challenges, and the recent push on nearshoring by the current administration, has made Mexico the top trade partner for the US. The report, which is also published in Spanish, serves as a primer on Mexico’s competitiveness as a US economic partner and provides a unique perspective on Mexico’s strengths and weaknesses at the national and sub-national levels.
“Mexico has long been a key trade partner for the United States, with the value of imports exceeding US$ 463 billion in 2022,” said Maggie Switek, PhD, Director of Regional Research at the Milken Institute. “Recent geopolitical events and global supply chain challenges have made it an opportune moment for the US to amplify its trade partnership with Mexico. Our findings show the high remaining potential of capitalizing on this partnership.”
Switek, who heads all projects related to economic opportunities and growth across regions and communities in the US and abroad, has also worked in academia and consulting, developing a broad range of expertise in labor, development, public policy, antitrust, and economic well-being. She underscores the growing importance of regional cooperation between the US and Mexico.
“As Mexico’s advanced technology production capacity increases, we think the development of a North American regional semiconductor ecosystem would offer Mexico an excellent opportunity to create jobs and strengthen its economy,” said Switek. “However, this also means that Mexico has to meet the requirement of providing specialized workforce and improve its public governance structures, two areas in which Mexico is currently falling behind.”
Interestingly, Mexico was one of the few countries that did not experience a pronounced dip in Foreign Direct Investment (FDI) inflows during the pandemic. Mexico’s Secretariat of Economy announced a 48 percent year-on-year increase in FDI during the first trimester of 2023, and more project investments have been announced recently, with Mexico placing ahead of Brazil in 2021 new FDI project announcements by value.
“Our report offers valuable insights for investors considering expanding their Mexican footprint, as well as policymakers interested in strengthening US-Mexico relations,” said Switek. Investors, business leaders, and policymakers can incorporate the report’s key takeaways to develop a more streamlined business and investment strategy to take advantage of the growing Mexico-US trade relationship. The report is co-authored by Switek, Lawson Mansell, and Leilani Jimenez.
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About the Milken Institute
The Milken Institute is a nonprofit, nonpartisan think tank focused on accelerating measurable progress on the path to a meaningful life. With a focus on financial, physical, mental, and environmental health, we bring together the best ideas and innovative resourcing to develop blueprints for tackling some of our most critical global issues through the lens of what’s pressing now and what’s coming next.