Why Mexico's drug violence doesn't deter foreign direct investment
(Read article summary)Recent reports indicate foreign companies are not feeling the effects of the violence in Mexico and Central America, likely due to the difficulty of extorting multinational corporations.
Despite a surge in drug-related violence in the Central America and Mexico, foreign direct investment in the region does not seem to have been seriously affected.
Bank of America published a report recently stating that its operations in Mexico were not significantly affected by the violence in the country, and in doing so joined the ranks of a number of large multinational corporations to remain relatively unscathed. Recently, Nestle S.A. also issued a statement claiming that it had noticed “no significant change” in relation to the security of its goods or vehicles in Mexico.
The announcements come just two months after the Mexican government published a report showing that foreign direct investment (FDI) has actually increased slightly in the past few years. FDI totaled $31 billion from 2006 to 2010, up from $30 billion in the previous period. Interestingly, the report found that investment in the country’s seven most violent states is higher than before the “drug war” began in 2006.
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