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Mexico is the third-largest host country for U.S. direct
investment in global processed-food and beverage industries,
and it also has attracted foreign
direct investment (FDI) in production agriculture. Many of these investments
were initiated following implementation of the North
American Free Trade Agreement (NAFTA) in 1994. The agreement contains many provisions designed to facilitate
foreign investment, including equal treatment of foreign and domestic investors
and prohibition of certain performance standards—such as a minimum amount
of domestic content in production—for foreign investments. However, Mexico
really began to open up to foreign investment in the 1980s, when the country
first relaxed and then eliminated rules limiting foreign ownership of Mexican
businesses to a 49-percent share.
U.S. and Mexican government data provide different pictures of the size of
U.S. direct investment in Mexico's processed-food and beverage industries.
According to the U.S. Department of Commerce, the stock of these investments
equaled $8.2 billion in 2007—more than twice its 1996 level and 20 times
its 1984 level (in nominal terms). U.S. authorities do not report similar statistics
for production agriculture, mainly to protect the confidentiality of individual
companies, but the stock of U.S. direct investment in Mexican crop and livestock
production may run in the hundreds of millions of dollars.
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Data from Mexico’s Secretariat of the Economy describe the net inflow
of FDI from all countries into the Mexican food, beverage, and tobacco industries.
Between 1999 and 2008, these industries received net inflows of FDI equaling
approximately $18 billion. During this period, annual net inflows exceeded
$1 billion except for 2001. Production agriculture in Mexico received net inflows
of FDI totaling $282 million from 1999 to 2008. These figures do not account
for depreciation, exchange rate fluctuations, or income generated from existing
investments.
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Mexican statistics for 2004-08 also provide insights into the composition
of these investments. The soft drink, brewing, and dairy-product subsectors
received the largest net inflows of FDI. Investments in excess of $100 million
were also made in the manufacturing of animal feeds, biscuits and cookies,
chewing gum, candy, and other products for human consumption. During this period,
the United States accounted for 35 percent of net inflows of FDI in Mexico’s
food, beverage, and tobacco industries, while the European Union was responsible
for 47 percent.
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