Since trade and investment have been established under NAFTA, U.S. investment in Mexico has grown considerably reaching an accumulated amount of $73.5 billion between January 1994 and December 2002. These investments account for 66.6 percent of Mexico's total reception of FDI over the same period. U.S.' investment performance in Mexico during the NAFTA era, has seen strengthened its position as an investor nation in Mexico.

• It is worth highlighting that in 2001, U.S.' FDI in Mexico reached a record amount of $19.8 billion. These investments not only surpassed by far all-annual amounts registered since 1994, they also accounted for an annual growth rate of roughly 74 percent.

Despite the economic slowdown performance, U.S.' FDI in Mexico totalled $7.1 billion during 2002, while U.S.´ capital flows toward other emerging economies was reduced significantly.

By providing the certainty and predictability that investors need to do business, NAFTA has turned Mexico into a competitive location for global FDI. In the last years, Mexico has become one of the largest recipients of FDI among emerging markets, and today, no major investment in North America from the U.S., Europe and Asia takes place without considering Mexico in its strategic planning.

Mexico's Investment Attractiveness
FDI Confidence Index

Under NAFTA, FDI flows to Mexico have averaged US$ 14 billion annually – greater than the US$ 3 billion annual flow it had during the 1980's. More than 65 percent of these investment flows concentrate on manufacturing activities, which have helped transform the Mexican industry.

The U.S. is Mexico's largest source in FDI. In 2002, 14,404 companies with U.S. capital were operating in Mexico.

Production partnerships have contributed to create a more integrated and competitive market. Since NAFTA, joint ventures among Mexican, U.S. and Canadian firms have contributed to the regional boom in industrial sectors such as: automotive, electronics and textiles.

NAFTA has provided incentives for U.S. and Canadian firms with investments in other regions to relocate their production in North America. Clear rules and geographic vicinity of NAFTA partners have worked further to enhance North America's dynamic trade performance. Businesses in the region benefit from working in relatively the same time zone. This allows a better coordination of production processes, distribution and sales of goods and services throughout the region:

• It facilitates lower inventories
• Reduces transportation costs
• Reduces time of travel for executives (no jet-lag)
• Increases security in trade operations

These combined advantages have encouraged foreign investors to make Mexico a strategic manufacturing global center.

US FDI IN MEXICO