Despite the grisly death toll (50,000 dead since 2007) and horrifically public nature of the violence in Mexico’s drug war, business is good in Mexico. The city of Monterrey, situated a mere 40 miles from where 49 decapitated corpses were found on the side of a highway last month, is booming. The Financial Times reports that Monterrey’s home state of Nuevo León is experiencing its biggest foreign investment surge in history. It is expected to receive $2 billion in direct foreign investment this year.
Against the backdrop of the remorseless violence between gangs, the police, civilians and the army, Mexico has become an increasingly important logistical center for exporting to the United States and to the rest of Latin America. The big reason Mexico is attracting money is because the country has become more competitive compared to China. Wage inflation has nearly closed the wage gap separating Mexican and Chinese labor costs, and rising transport costs make it more expensive to base operations in Asia.
And the violence does not seem to be affecting the foreign companies flocking to the land of the eagle and the snake:
But what about the violence? Alejandro Hope, a security expert at the Mexican Institute for Competitiveness in Mexico City and a former high-ranking government intelligence official, argues that foreign companies in Mexico are sometimes physically close to the violence but are also largely immune to it. Although a Mexican subsidiary of PepsiCo was attacked with fire bombs last month, there does not appear to be a trend towards attacking multinationals.
“Organised crime doesn’t know what to do when it comes to multinational companies,” Mr Hope explains. “It has made a business of extorting small and medium-sized Mexican companies but, when it comes to multinationals, the drug lords don’t even know who to call.”
As horrifying and tragic as Mexico’s drug war may be, it’s encouraging to see that it hasn’t deterred businesses from taking advantage of the country’s economic strengths. It is also interesting to note that Mexican opinion remains resolute for law and order and against the cartels. Mexicans want their country back and they are prepared to fight to clean it up.
Americans have special reasons to be thankful that employment is booming in Mexico. A healthy economy south of the border reduces immigration pressure on the north. Mexico is not a basket case, and it is not a bottomless well of destitute migrants seeking work in the US. It is one of the world’s more dynamic economies and as its fertility rate continues to drop and its population continues to stabilize, it will look less and less Central American and more and more North American.
Mexico is likely to be an important and valued partner for the US in the 21st century, and Americans should welcome and support the increasing prosperity there.