An $8.1 billion investment in Mexico by a Brazilian company is good news for both countries – and a twist in the ongoing Brazil vs. Mexico economic debate.
• A version of this post ran on the author's blog, bloggingsbyboz.com. The views expressed are the author's own.
Brazil's Odebrecht plans to invest $8.1 billion in Mexico's infrastructure in the next five years (Reuters, FT).
Brazil hasn't invested much in Mexico previously. Since 1999, Brazilian companies have only invested $1.2 billion total including $61.3 million last year. The Odebrecht, [which works in fields including construction, chemicals, and engineering], investment by itself will be an increase by an order of magnitude in the economic links between the two countries.
So, even as short term economic news about both Mexico and Brazil appears to be pessimistic (confounding the whole Mexico vs Brazil debate), this investment is good news for both and a big bet on each other.
Almost half of the company's announced investment will be an ethylene plant. Another large portion will go to a hydroelectric dam and a highway. All of those announced projects are in Veracruz. Mexico indicated the Brazilian company will be involved in ethanol and sugar production. There are also discussions of Odebrecht investing in roads, airports, and other transportation infrastructure that would go beyond the planned $8 billion.
– James Bosworth is a freelance writer and consultant based in Managua, Nicaragua, who runs Bloggings by Boz.