2023-08-10 14:17:52
Evidence is mounting that Mexico and other Latin American countries are a major beneficiary of a reshaping of global supply chains that is seeing companies find ways to get closer to the US economy, a process known as “nearshoring”.
Mexico’s total exports rose 5.8% year-on-year in May to $52.9 billion, the second-highest reading on record, the country’s statistics office said on Tuesday.
Latin America’s second-largest economy continues to benefit from an increase in sales of manufactured goods, which accounted for 88.6% of all exports so far in 2023. Much of this corresponds to car shipments to the US, which jumped 31% in value from a year ago.
Mexico, particularly the northern states, is a favorite destination for companies looking to position their operations or link up with suppliers closer to the US, which often means moving production capacity from China to Mexico. Sometimes, too, Chinese companies set up shop in Mexico to avoid US tariffs.
In another sign that corporate nearshoring efforts are contributing to the country’s export boom, foreign direct investment from Mexico rose 48% in the first quarter from a year earlier, rising to $18.6 billion, according to preliminary data released today. by the Ministry of Economy of Mexico last month.
So-called nearshoring is currently all the rage in Mexico, where new factories are springing up along the US border, built by US companies that are scaling back their operations in China. But nearshoring is also benefiting countries in Latin America that are not as close to the US.
Global technology companies are increasingly hiring workers in Chile, Guatemala, Uruguay and other South and Central American countries to handle technology tasks like software coding. Some of these countries may be thousands of miles from the US border, but they’re just a few time zones away from much of the US and Europe, making them ideal for handling anything that can be done over the phone or computer.
Joe Biden declared in a speech given yesterday that his economic policy is creating an American manufacturing renaissance in the United States (click here for more information). It is possible that a large part of the gains will benefit the countries of Latin America.
By Economic Editor
Angolan portal
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