Friday, July 19, 2024

IDB Joins Forces with Mexico to Promote Nearshoring

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On July 6th, the Inter-American Development Bank (IDB) announced support for plans by the government of Mexico to promote nearshoring, or the relocation of companies closer to end markets, to help foster sustainable development, especially in the country’s south-southeastern states.

In a joint news conference with Mexico’s Finance and Public Credit Undersecretary Gabriel Yorio, IDB Vice President for Countries Richard Martínez emphasized the commitment of the Bank and its private-sector arm, IDB Invest, to help Mexico take advantage of enormous new opportunities resulting from the reconfiguration of global supply chains.

Over the next three years, IDB Invest can provide an estimated $1.75 billion to $2.25 billion in short and long term financing and mobilized resources for new industrial parks, investment in anchor companies (including relocation expenses) and for developing innovative mechanisms to finance small and midsize companies (SMEs) working in global supply chains.

According to preliminary data from an IDB study, nearshoring could add $78 billion annually in additional exports from Latin America and the Caribbean in the near and medium term. Mexico could see the biggest gains, adding $35.3 billion annually in exports of goods alone.

“Latin America today has a unique opportunity to attract investment, and nowhere is this opportunity bigger than in Mexico. That’s due to its geographical location, the United States-Mexico-Canada Agreement (USMCA), its abundant human talent, the complexity of its products, and its growing participation in global supply chains,” said Vice President Martínez. “It is an honor for us at the IDB Group to partner with Mexico’s government to promote nearshoring policies to contribute to the whole country’s sustainable growth.”

On July 7, Vice President Martínez will embark on a two-day visit to the Tehuantepec Isthmus’s interoceanic corridor alongside with officials from Mexico’s Finance Secretariat; IDB Invest CEO James P. Scriven; IDB General Manager of the Country Department for Central America, Haiti, Mexico, Panama and the Dominican Republic, Fernando Quevedo; and the IDB Group’s Representative in Mexico, Ernesto Stein.

The visit will identify concrete opportunities for the IDB Group to support Mexican government initiatives for regional growth by attracting investment and fostering the development of industrial parks and logistics platforms, strengthening the insertion of SMEs into global supply chains, supporting talent development and territorial planning, and helping reduce social and economic gaps.

Mexico’s South-Southeast region lags the rest of the country in several areas. The poverty rate is approximately 59%, compared to 27% in the North, whereas work productivity is half that of the North. Other challenges include lower productive capacity, wider gender gaps in the labor market, and a higher degree of difficulty adapting to climate change.

Integrating the region into global supply chains will help close social and productivity gaps, attract investment, and create new opportunities in areas including manufacturing and agribusiness.

About the IDB Group

The IDB Group is the leading source of development finance for Latin America and the Caribbean. It helps to improve lives by providing financial solutions and development expertise to public- and private-sector clients. The Group comprises the IDB, which has worked with governments for more than 60 years; IDB Invest, which serves the private sector; and IDB Lab, which tests innovative ways to enable more inclusive growth. Access our virtual tour.

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