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Why invest in Mexico?
April 17th, 2012
1
Accenture’s formula for profitable growth
Geographic expansion
is one of the main
growth strategies for
high profitable growth
companies.
Mexico represents an
excelent business case
for those companies.
SOURCE: ACCENTURE, The formula for profitable growth.
2
Key considerations for investors
1. Macroeconomic
environment
2. Open economy
3. Economic
sophistication
4. Total manufacturing
costs
5. Engineering
graduates
6. Demography
7. Domestic market
8. Workforce quality
9. Democratic system
10.Human
Development
3
Solid macroeconomic environment and
champions of free trade
$400.0
140%
$350.0
120%
$300.0
100%
$250.0
80%
$200.0
60%
$150.0
40%
$100.0
20%
$50.0
0%
Billion dollars
160%
$0.0
1987
SOURCE: INEGI and Central Bank.
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Prepayment
of debt
1985
Investment
grade
1983
NAFTA
Floating
exchange rate
1981
GATT
Percentage
EVOLUTION OF THE INFLATION, EXPORTS AND INTERNATIONAL RESERVES IN MÉXICO
(1980-2011)
Manufactures
Oil
Primary
Inflation
International reserves
4
We are champions of free trade
Our FTA’s reach 2/3 of the world’s GDP.
 Part of the world’s
largest economic
block (NAFTA).
 NAFTA
market= 17
trillion USD.
 And we are the
gateway to
Latin
America.
With 10 trade agreements,
Mexico has privileged
access to 44 countries
(one billion people).
AltamiraPhiladelphia (USA)
7 days
Number of FTA’s and countries
Altamira-Belem
(Brazil)
10 days
ManzanilloArica (Chile)
9 days
Countries with FTA
SOURCE: IMF, OMC, Sea Rates.
5
We have a high economic complexity
Mexico ranks in the
top 20 of Harvard’s
Atlas of Economic
Complexity
•
•
Recognizes that our
country
holds
vast
amounts of productive
knowledge
We manufacture and
export a large number of
sophisticated goods
•
•
115,000 engineers graduate every year from science and technology programs.
80% of Mexican exports in 2011 were manufactured goods.
SOURCE: INEGI, Presidency and Harvard/MIT, Atlas of Economic Complexity.
6
Most competitive total costs
Source: Competitive Alternatives 2012, KPMG; Global Benchmark Report 2011, of the Danish Industry
Confederation; Manufacturing Outsourcing Cost Index 2010, Alix Partners.
Japan
-0.1% -3.7% -9.4%
Australia
0%
Germany
2.1%
Italy
France
Canadá
Netherlands
UK
5.5% 5.3% 5.0%
3.9%
USA
Baseline
21.0%
Mexico
The Alix Partners
Manufacturing
Outsourcing Cost
Index ranks
Mexico as the
best country
(better than
BRIC’s).
According to KPMG, in 2011
Mexico had an average cost
advantage of 21% (over 19
industries), compared to the US.
% cost advantage relative to the US
The most
competitive
country in terms
of costs and
taxes, according
to Global
Benchmark
Report 2011.
7
Where will the future growth be?
Economies that represent more than 1% of global GDP
MIST
Mexico
Indonesia
South Korea
Turkey
BRIC
Brazil
Russia
India
China
8
The main global indexes are also saying it!
KEY VARIABLE
INDEX
1. Macroeconomic
Environment
WEF, The Global Competitiveness Report 2011-2012,
Macroeconomic Environment Index
2. Open Economy
World Bank, Doing Business 2012, Ease of Doing Business
3. Economic complexity
Harvard University and the MIT, The Atlas of Economic Complexity
4. Total Manufacturing Cost
Alix Partners, Manufacturing Outsourcing Cost Index
5. Domestic Market
WEF, The Global Competitiveness Report 2011-2012, Domestic
Market Size Index
6. Demographic Bonus
United Nations, World Population Prospects, The 2010 Revision
7. Workforce quality
FDI Benchmark, Labor availability and quality of the Automotive
OEM’s: Skills, attitudes and productivity
8. Engineering graduates
UNESCO, Institute for Statistics/ International Monetary Fund.
Engineering, manufacturing and construction graduates per capita
2009
9. Democratic System
The Economist, Democracy Index 2011
10. Human Development
United Nations, Human Development Index
9
Mexico is a well positioned country
COUNTRY
Brazil
Russia
India
China
B
R
I
C
Mexico Indonesia
M
I
South
Korea
S
Turkey
T
1. Macroeconomic environment
2. Open economy
3. Economic complexity
4. Total manufacturing cost
5. Domestic market
6. Demography
7. Workforce quality
8. Engineering graduates (per capita)
9. Democratic system
10. Human Development Index
Equal or above Mexico
Below Mexico, but close
Clearly under Mexico
Source: 1. Macroeconomic Environment: WEF The Global Competitiveness Report 2011-2012, Macroeconomic Environment/ 2. Open Economy: Doing Business 2012, Ease of Doing Business/ 3. Economic Sophistication: The Atlas of Economic
Complexity, Harvard University/ 4. Total Manufacturing Cost, Manufacturing Outsourcing Cost Index, Alix Partners/ 5. Domestic Market: WEF The Global Competitiveness Report 2011-2012, Domestic Market Size Index/ 6. Demographic Bonus: UN
World Population Prospects. The 2010 Revision. Forecast of total dependency rate in 2025 (population <15 & 65+ years) (15-64)/ 7. Labor availability and quality of the DFI Benchmark, Automotive OEM, Skills, attitudes and productivity/ 8. Engineering
Graduates (per capita): UNESCO Institute for Statistics, International Monetary Fund. Engineering, manufacturing and construction graduates per capita 2009/ 9. Democratic System: The Economist, Democracy Index 2011/ 10. Human Development
Index: UN, Human Development Index.
10
Mexico will be one of the top 10 economies
World's largest GDP measured
by PPP
(Billion Dollars)
•
11th place
2011
•
Goldman Sach’s Forecast
Gross Domestic Product
(Billion Dollars)
5th place
20501
•
Goldman Sachs
estimates that
Mexico will be the 5th
largest economy by
2050.
According to
Accenture, Mexico
will be one of the Big
Six in 2025.
According to HSBC
Mexico will be the 8th
largest economy in
the world by 2050.
Source: Goldman Sachs. The N-11: More Than an Acronym. Global Economics Paper No: 153. March, 2007/ HSBC.
1/ Goldman Sachs forecast / International Monetary Fund.
11
Thank you!
www.promexico.gob.mx
[email protected]
@ProMexicoTW
+52 (55) 54 47 7000
Camino a Santa Teresa 1679,
Col. Jardines del Pedregal
CP 01900, México, D.F.
12
We have a favorable economic performance
México ranks as a low-risk country in the
Market Overheating Index, published by
The Economist, which grades 27
countries.
.
Total debt by country
(%GDP)
80
67
60
40
41 36
61
50 52
47
21
34
28
20
0
Canada
France
Mexico
2000
Spain
USA
2010
Mexico’s International Reserves
Russia
Venezuela
South Korea
Saudi Arabia
Poland
Colombia
China
Chile
Philippines
Peru
Egypt
Thailand
Singapore
Vietnam
Turkey
Indonesia
India
Hong Kong
Brazil
Argentina
Hungary
Malaysia
Taiwan
Pakistan
Mexico
Czech Republic
South Africa
(billion USD)
Source: The Economist, http://www.economist.com/node/21522520 / OECD/ Mexico’s Central Bank
13
Demographics are on our side
Population Pyramid, 2005
(millions)
Men
Population Pyramid, 2005
(millions)
Women
Population Pyramid, 2030
(millions)
 112 million inhabitants with a median of 26
years.
 47 million in 2010 were in the labor force.
 According to forecasts, there will be more than 60
million people of productive age by 2030.
Men
Women
Source: Oxford Economics, Creating Jobs in a Global Economy; INEGI, 2011; Population Projections
for Mexico 2005-2050, CONAPO.
Men
Women
14
Our highly skilled labor force produce
complex goods
Mexico is the largest exporter in Latin
America.
• Almost 40% of Latin America’s total trade.
• 80% of exports were manufactured goods.
More than 115,000 engineers graduate
every year from science and technology
programs.
• Which exceeds the number of graduates in countries
such as Germany, Canada, United Kingdom and Brazil.
Mexico ranks in the top 20 of
Harvard’s Atlas of Economic
Complexity report, which
recognizes that our country is
able to hold vast amounts of
productive knowledge, and that
we manufacture and export a
large number of sophisticated
goods.
350 billion USD=
The Index of Technological
Sophistication of Mexican
export products (3.25) is the
highest in Latin America and
above India (2.61). (OECD)
Mexican exports in
2011.
SOURCE: Global Trade Atlas/ National Institute of Statistic and Geography (INEGI by its
name in Spanish), Statistics on Mexico’s foreign)/ Mexico’s Central Bank, 2012.
15
ProMéxico’s strategy
Manufactures
Added
value
Agroindustry
(integral)
Mining
(integral)
•
Aerospace
•
Automotive
•
E&E
Services
Renewable
energies and
energy
efficiency
•
Creative
industries
•
IT
Life Sciences
Infrastructure, educative services and economic policy
Sectors
Primary
Economy
Secondary
Economy
Tertiary
Economy
16
Mexico’s Road Maps
Supports the design of regional
strategies for the development of
highly competitive sectors.
.
Identifies international business
opportunities for this sectors.
Focuses on innovation.
17
Solid macroeconomic environment:
no coincidence
EVOLUTION OF THE INFLATION, EXPORTS AND INTERNATIONAL RESERVES IN MÉXICO
(1980-2011)
Manufactures
Oil
Primary
International reserves
Inflation
165
$400.0
150
$350.0
$300.0
105
$250.0
90
$200.0
75
Billion dollars
120
$150.0
60
45
$100.0
30
$50.0
15
0
$0.0
1987
1989
SOURCE: INEGI and Central Bank.
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
Prepayment
of debt
1985
Investment
grade
1983
NAFTA
Floating
exchange rate
1981
GATT
Percentage
135
18