Economic Development Entities in Mexico: How to Maximize State Support
February 11, 2021
Incentivizing foreign investment in Mexico is a priority for many Mexican states, as the economic development this brings drives job growth and infrastructure investments throughout the country. Economic development support is primarily driven by the private sector and Mexico's state governments. In some cases, economic development agencies coordinate the region's organizations and interests to ensure connected participation of the private sector in Mexican economic development. These agencies vary in size and focus, but the overall goal is to establish a foundation for sustainable job growth and the building of durable regional economies.
Below we'll examine how these organizations can help you, and detail some of the state-led economic development organizations driving manufacturing growth in Mexico, including those in Coahuila, Guanajuato, Querétaro, Nuevo Léon, and Sonora. Once you know where to look, you can determine how you may best benefit from the incentives offered by these agencies.
Types of economic development support in Mexico
Economic development agencies have traditionally focused on promoting their region through marketing as a way to attract new manufacturers to Mexico. In fact, some agencies may provide an economic analysis of the region, or provide resources for tourism and other industries. Other economic development agencies may focus solely on manufacturing, commercial or residential development.
These agencies provide a good starting point for acquiring information about the area to inform site selection decisions. While service will vary based on the individual economic development agency, most will also offer some level of consulting for entrepreneurs and businesses looking to accelerate their growth, address specific challenges, or identify the best strategy for expansion. Other services offered by economic development agencies might include trade show or promotional support, building up infrastructure to meet the needs of new employers, and encouraging local partnerships or purchasing. Some agencies also support funding efforts through revolving loan funds, supplementing job training funding, or providing some management assistance.
Where to look
The best place to begin looking for support is that the website for the state governments you're considering approaching. Many states have a department dedicated to supporting regional growth. Below we outline a few of these state-led offerings so that you can better understand the resources that may be available to your business.
Are you interested in joining the ranks of the automotive component manufacturers in Saltillo? Coahuila's Economic Development ministry can help. The state works to support job growth in the region by attracting investment and increasing local value chains. In 2019, the state saw a direct foreign investment of more than USD $3.9 billion, creating 44,800 jobs through 79 investment projects, and was set to top that by the beginning of 2020. The administration has proclaimed its goal of working to make regulatory improvements that will increase the region's competitiveness through stronger investments.
Guanajuato's Secretary of Sustainable Economic Development provides recruitment and training services to support the state's fast-growing manufacturing base. The state is home to more than 570 international manufacturers, and this sector accounts for about 38% of the states's annual economic output. The state's effort to boost foreign investment is paying off in a big way. In Sept. 2020, Toyota announced a USD $170 million expansion to its assembly plant in Apaseo el Grande. By moving all production of its Tacoma pickup truck to Guanajuato, the automaker is generating an additional 500 jobs.
Nuevo León's Economic Ministry also provides a wide range of services dedicated to advising foreign investors. These range from job fairs and training initiatives to support with registering as a business in the state and marketing those services. This impact was seen during the 2019 Economic Census, prepared by the National Institute of Statistics and Geography (INEGI), in which Nuevo León stood out as a leader in employment opportunities. It ranked as 4th in the country for the highest number of employed people; Monterrey was listed among the top five municipalities contributing to the added value of economic entities nationwide.
Invest In Queretaro, the state's investor facing economic development arm, proudly proclaims itself as the first state in the country to obtain an AA+ investment grade rating from S&P Global Ratings. The Economic Development agency helps foreign investors orient themselves to state and federal programs, but also works to help local businesses develop their supply chains and work through export hurdles. The effort has paid off in jobs for more than 10,000 employees across 80 companies in five sectors, and growing.
Manufacturers exploring sites in Sonora will want to reach out to the state's Economic Ministry. The department notes that it works to support job creation and regional growth through a range of programs designed to increase business competitiveness. Among them is the state's Center for Incubation and Business Development, which provides advice and resources, as well as a network of contacts that support marketing and supplier connections.
A separate department, the state provides a range of loan and financing opportunities for entrepreneurs and businesses. The department has regional offices in Hermosillo, Empalme, and Guaymas.
Start stronger with economic insight
States' resources vary widely, with some easier to access or filter through than others. Moreover, some localities within these states may offer additional levels of funding or support.
Most states will have an application process that investors must work through before getting a clear sense of what specific benefits they might expect. Companies at earlier stages of site selection may find it difficult to get details on the levels of incentives they might warrant or a strong starting place for negotiation. This is where it can help to partner with an experienced advisor like Tetakawi, which can provide strong insight from which to start your negotiations with the local economic ministry.
Tetakawi has supported many manufacturers in negotiating the types of financial incentives that encourage so many companies to cost-effectively launch an operation in Mexico. With this insight, manufacturers can trust that they're getting the best benefit for a strong launch.
Ready to learn what support might be available to position your Mexico launch? Contact Tetakawi today.