Japanese Foreign Direct Investment in Mexico and the Impact of the Global Crisis

Abstract

This paper aims to analyze the evolution and main characteristics of Japanese Foreign Direct Investment in Mexico, since Japan has been the main source of investment in Mexico coming from Asia. Attracted by Mexico´s liberalization trade policy since the eighties, Japanese subsidiaries already established in the United States transferred some of their production activities into Mexico, contributing to the leading automotive and electronic exporting sectors. Both the North American Free Trade Agreement and the Japan-Mexico Economic Partnership Agreement have incentivized the location of Japanese plants in Mexico. Given the concentration of Japanese Foreign Direct Investment in the manufacturing exporting sector, it is playing a role in the formation of production networks with connections not only to North America but to Asian countries as well.

Economic Relationships between Latin America and Asia: A New Research Frontier

“…He argues that while the danger of collaborating and creating a competitor is diminished, the challenge of selling products from developing countries is maintained and limits the success of the international joint venture. Falck Reyes (2012) analyzes in detail the evolution of Japanese foreign direct investment in Mexico. She documents how Japanese firms increased investments in the 1980s with the transformation of the economy as pro-market reforms were implemented and especially after the North American Free Trade Agreement was established in 1994, facilitating the expansion of export-led assembly plants (maquiladoras).…”