Colombia has long discussed competitiveness, integration into global markets, and the need to fortify its supply chains. However, few regions have the geographic, economic, and infrastructural conditions to become the undisputed heart of logistics at the national level.

The Valle del Cauca does. Not because of regional egotism or a rhetorical opportunity out of touch with reality, but because of its geoeconomic positioning and geographic advantage.

The Valle is the only region in the country that has direct access to the Pacific Ocean, an international airport in a privileged location, and a mature ecosystem of high-performance free trade zones that is the envy of other Colombian regions.

In short, the Valle has a privileged position that unites Colombia with the main commercial arteries of the Americas and Asia.

Undeniable advantage

Despite these advantages, however, one fact is incontrovertible: Valle del Cauca has not yet taken the necessary steps to be the logistics hub of the country. It has the tools, the geography, the business community, and even an industrial tradition and know-how. What it lacks is a long-term, unified project and a vision of a logistics platform with scope and scale.

Here is where the Valle must become more ambitious. Because if Colombia is serious about taking on that future, that projection must be given by the region that has all the competitive advantages to offer it.

Valle del Cauca’s geographical position and logistics potential make it one of the country’s most competitive, connected, dynamic, and supply-chain-capable regions.

It has the conditions to be the central axis of national exports and a reference in Latin America in terms of logistics.

Airport: the starting point of a new era

The airport will be the best starting point to think of this new logistics era. The Alfonso Bonilla Aragón International Airport was built almost by accident as a passenger terminal and has been mutating over the years into an airport with increasing importance in the cargo sector.

However, its current physical and operational infrastructure does not meet either current demand or the region’s growth projections.

Expanding the cargo terminal, generating a specialized logistics airport, and designing an uninterrupted connection with the distribution centers in northern Cali and the free trade zones of Palmira are tasks that are not on the drawing board. They are pending points on the to-do list.

The airport must be seen today not only as a terminal of connection and transit for passengers, but as a full-fledged logistical node that is capable of servicing air cargo, supporting international supply chains, and facilitating the movement of high-value goods.

The region’s airport must, in the coming years, be a natural complement to what is proposed for the port of Buenaventura. If the Valle del Cauca aspires to be the logistics hub of Colombia, the airport must be modernized, expanded, and synchronized with all the industrial and commercial corridors and freeways. It must become a truly attractive platform for air logistics operations. A platform that, in addition to attracting new investment, would also stimulate export activity and would even reduce congestion on the land corridors already saturated in the region.

Buenaventura: the gateway that must be reinvented

A modern and digitized airport is not enough. Buenaventura Port must also be a must for the region to develop a modern logistics platform. Buenaventura is the main gateway of Colombian foreign trade. It moves more than 40% of the total volume of containers entering and leaving the country.

However, in reality, it is a port operating with structural conditions that hamper its potential and the country’s competitiveness.

The first thing to do, in this case, would be to bring the port into the 21st century through a broad structural modernization of its physical and digital infrastructure. This would also involve accelerating the dredging process so as not to be left behind in the race for depth competitiveness, shortening transit times, inspections, and bureaucratic processes, and above all, endowing it with the attributes of a multimodal logistics node fully integrated with its hinterland.

Without a modern, efficient, and strong Buenaventura, Valle del Cauca does not have the conditions to become the logistics hub of Colombia. However, if the port was reformed and, in addition, joined by other infrastructure, such as a more efficient and specialized airport, and integrated with improved rail, road, and air corridors, Colombia would have a strategic platform with which to better connect with the global value chains.

Connectivity: the basis for greater competitiveness

Logistics does not work without connectivity. The region is virtually forced today to depend on a single corridor of the Cali–Palmira highway that has shown on repeated occasions that it is more than saturated and that regularly collapses in periods of high demand.

A modern logistics strategy should place the development of the regional rail network at its center, not only for passenger transport, but also for cargo and logistics. The commuter rail system Cali–Jamundí–Palmira–Yumbo must be understood today not only as an urban transport service but also as a multimodal connector that allows the efficient movement of goods and people to and from Buenaventura.

At the same time, the much-delayed highway Mulaló–Loboguerrero must stop being seen as a simple public works project and become an infrastructure of national strategic scope. This road could become a vital corridor to significantly reduce travel times, reduce the cost of cargo, and strengthen and modernize the Pacific access route to the country.

Ports, roads, railways, and intermodal connectors must, in the short term, be connected to free trade zones, industrial parks, and logistics platforms to form a true multimodal network that is able to support the strategic vision of the region to be the logistics hub of Colombia.

Free trade zones: a powerful ecosystem to unify

One of the great advantages that Valle del Cauca has with respect to other regions of the country, and which should not be underestimated today, is precisely its dynamic ecosystem of free trade zones. Palmaseca, the Zona Franca del Pacífico, CELPA, Zonamérica, CLIP, and many others are all logistical platforms that are today already an international showcase for the Valle del Cauca.

The challenge in this sense is not so much today to seek to generate more free trade zones, but rather to integrate them into a regional model that enables digital synchronization of roads, railways, air, and even port connectivity.

Homogeneity, interoperability, and shared systems of traceability between operators and nodes are a must. In the logistics and free zone systems of the most developed economies, each zone functions not as an independent territory but as a synchronized node within a chain.

A unique and shared free trade zone system would bring many advantages, in addition to greater efficiency and greater attractiveness for private investment. It would create a seamless business environment for all types of productive activities related to logistics, assembly, distribution, and high-value-added international trade.

New strategic polygons

As demand increases, the Valle will have to be prepared to generate new logistics corridors and industrial and distribution zones.

The northern region of Cali, along with the approach routes to Palmira and Yumbo, should be transformed into strategic polygons of the department with new high-capacity warehouses, automated distribution centers, and large-scale logistics platforms directly connected to the airport and even the port.

This expansion is not a luxury. It is the only way to be able to absorb the economic and logistical growth that is expected in the region in the next two decades.

If these axes are not planned as strategic industrial and logistics land developments, rising demand will quickly saturate the existing infrastructure, and will once again lose competitiveness.

Addressing the institutional framework

Even with better and more modern infrastructure, Colombia cannot advance if the actual structural bottleneck is not reformed: its institutional framework.

The customs regime should be drastically simplified and rationalized. This must involve the digitization of all processes, the drastic reduction of inspection times, the real unification of service windows, and a facilitation of cargo movement in coordination with the business community and private operators.

Countries that today have logistics hubs recognized at a global level (Singapore, Dubai, the Netherlands, Luxembourg, Ireland, etc.) did not have it because they built enormous infrastructure.

They were capable, efficient, agile states that, far from slowing down, coordinated and accompanied the private sector.

The way forward: a long-term and visionary master plan

If the Valle del Cauca has what it takes to assume a leadership role in this process of change and reinvention of the logistics platform, it is time to have a single, consolidated vision and to outline a master logistics plan for the region with a minimum horizon of 20 to 30 years.

Rigorous, technical, ambitious, and safe from political pressures, this plan must articulate the development of airports, ports, free trade zones, strategic highways, rail connectivity, new industrial development, tax incentives, technological innovation, and multimodal logistics systems.

Planning with a long-term vision is incompatible with current political thinking. A short-term vision condemns the region to inertia. Long term planning is what will allow the Valle del Cauca to be the logistics hub of Colombia.

Technology that will mark the future

Finally, in all of the above, a call of the twenty-first century must also be taken into account: the adoption of technological standards and the most advanced in terms of automation, digitization, and operational efficiency.

This encompasses the need to implement automated systems in ports and airports, blockchain systems of traceability and cargo tracking, real-time cargo monitoring technologies, platforms of connection between operators and authority in the cloud and in a continuous manner, and intelligent and technologized transportation networks.

The logistics of the future will be technological. Or they will not exist. The great logistics hubs that have developed around the world have done so with vision, discipline, and coordination.

Vision to define a clear and long-term destination; discipline to build it and coordinate all the elements that it comprises. Vision, discipline, and coordination. These are the factors that will determine the success of the places where the future will be. The same formula may also hold the key to success for the Valle del Cauca in finally becoming Colombia’s logistics hub.

Government Moves to Dismantle Low-Yield Taxes and Restore Investor Confidence

In an interview with workers at the National Electricity Company (ENDE) of Cochabamba, President Rodrigo Paz has signaled that Bolivia must restore itself as a competitive nation in order to attract investment. In reference to the recent elimination of the Bolivian wealth tax, the president signaled that the measure has had a negative impact by not only dissuading reinvestment but also by narrowing the opportunity for capital accumulation and aggravating a period of isolation. As such, the beginning of a reform process is now underway that will seek to reverse capital flight and restore both domestic and foreign confidence.

Bolivia “Became an Island”: President Warns of Lost Confidence

In remarks to the workers’ assembly, Paz explained that the wealth tax generated a sense of antagonism towards entrepreneurs and the wealthy class, such that they no longer felt incentivized to work hard or to reinvest their money in Bolivia. “If capital does not feel secure, if capital is too hotly pursued, it will always move away to a port where it can feel more protected,” the president affirmed. As a result, Bolivia became “isolated from the world,” like an island. It was in this context, he continued, that the administration began to work on repairing lost confidence among financial actors.

Capital Flight and Weak Revenue: A Tax That Cost More Than It Generated

The president affirmed that in five years, the Bolivian wealth tax has generated USD 137 million. In comparison, he estimated that roughly USD 7 billion has been lost due to capital flight, most of it in recent years. Paz has previously warned that much of this outflow has taken place due to fears about the long-term policy orientation of the country. He has cited the example of merchants in El Alto who operate in Bolivia but deposit their savings in banks in Chile. For this reason, Paz said that the state must act with more consistency and avoid the enactment of measures that “chase capital away.”

A Broader Decline in Investment: Only USD 247 Million in FDI

Foreign Direct Investment (FDI) has also suffered in recent years, with the president warning that USD 247 million is a paltry sum that will not suffice to grow the nation’s energy, agricultural, industrial, and logistics sectors. Paz explained that the wealth tax, in particular, has served to signal high risk to both domestic and foreign investors by demonstrating that the country’s climate is not stable for the medium or long term. With neighboring countries like Chile, Peru, Argentina, Brazil, Colombia, and Paraguay updating their tax and investment rules, Paz said that Bolivia must do the same.

Government Unveils a Comprehensive Fiscal Reform Package

To this end, the Paz administration has announced a fiscal reform that will eliminate four low-yield taxes: the Financial Transaction Tax (ITF), the wealth tax, the gaming tax, and the tax on the promotion of businesses. Officials say these taxes generate less than 1% of revenue while at the same time creating market distortions and inhibiting businesses from developing. In this way, it is hoped that the withdrawal of the Bolivian wealth tax and related taxes will send a message to domestic and foreign investors that the administration is serious about streamlining the tax system and promoting development.

Support from the Private Sector: “Regressive and Unnecessary” Taxes

The reform has enjoyed a largely positive response in the private sector, with the Confederation of Private Entrepreneurs of Bolivia (CEPB) using similar language to describe the now-dissolved taxes as “regressive and unnecessary.” Business leaders have long held that the Bolivian wealth tax and others like it serve more as an administrative burden with little fiscal benefit to the nation. In this way, the administration’s reforms offer an opportunity to renew dialogue with a private sector that itself demands an increase in investment and job creation.

Rebuilding Business-Government Dialogue

In many ways, the decision to remove the Bolivian wealth tax is seen as an opportunity to improve business-government relations. In the past, polarization and public policy that excessively privileged state-owned enterprises had soured these relations. With the elimination of the wealth tax, many business leaders have signaled that Bolivia is taking a step towards a more market-friendly and inclusive framework.

Minister Espinoza Defends the Tax Rollback

“The Wealth Tax Triggered Capital Flight”

Echoing the president, Minister of Economy José Gabriel Espinoza has further defended the need to eliminate the Bolivian wealth tax. He has said that the tax was directly responsible for capital flight and for negatively affecting foreign investor confidence. Espinoza has cited external companies that see Bolivia as a high-risk market in the face of unpredictable policy shifts and a lack of clarity in the regulatory system. Eliminating the Bolivian wealth tax is fundamental, he said, for beginning to rebuild stability and reestablishing Bolivia’s competitiveness in the investment community.

The 2026 Budget Overhaul: Aiming for a 30% Spending Reduction

Restoring Fiscal Balance and Rebuilding Credibility

The tax reform is only one part of the government’s program to rebuild international credibility and restore fiscal balance. In this direction, the administration has committed itself to reducing state spending by at least 30% in the 2026 General State Budget. This move, which would reduce the fiscal deficit, is in part intended to stabilize and recalibrate public finances as the government looks to reform the tax system by eliminating distortive levies like the Bolivian wealth tax.

Long-Term Vision: Creating a Predictable and Competitive Economic Environment

A Foundation for Sustainable Growth

In signaling the tax and investment reform, the government has made clear that the elimination of the Bolivian wealth tax and other taxes is only the first phase of its new policy direction. In this way, the administration has committed to finalizing the tax reform package by next March and opening the country to new investment to bring back capital. In this direction, the government must promote a predictable, stable, and transparent business climate. By creating this environment, Bolivia can foster stability and encourage reinvestment across the country in a way that will make growth possible over the long term.

Regional and Historical Context

Bolivia’s Shifting Economic Landscape

In the regional and historical context, Bolivia’s economic downturn can be explained in terms of both international and internal factors. Natural gas exports have been on the decline over recent years, while foreign currency reserves, GDP growth, and domestic consumption have all suffered. The tax burden has increased, resulting in an expanding fiscal deficit. Meanwhile, Bolivia’s neighbors have passed key reforms to improve their competitiveness as new investment opportunities. It is from this vantage point that the administration began to rethink the Bolivian wealth tax and others like it.

The Challenge Ahead

Rebuilding Trust Will Take Time

In the face of a generally positive reception to the elimination of the Bolivian wealth tax, the government has said that restoring trust will take time and consistency. In order to recover confidence, Bolivia must work to improve its regulatory framework, strengthen its institutions, and communicate a clear vision for development going forward, particularly in strategic sectors such as energy and mining. Capital flight, the government has said, will only reverse when investors feel that the country provides a stable, transparent, and lucrative opportunity.

Conclusion: A New Economic Direction for Bolivia

In removing the Bolivian wealth tax and a number of other taxes and levies, President Rodrigo Paz has signaled the beginning of a new economic direction for Bolivia. By opening the door to potential investment, reforming inefficient taxes, and signaling a more stable and transparent investment climate, the government is working to reverse capital flight and rebuild investor confidence. With a focus on fiscal adjustment and a commitment to improving relations with the private sector, Bolivia has a real opportunity to recover and grow its economy over the long term.

Capital Flows to the Region Climb, Attracted by Projects and Infrastructure Development

Last year, Latin America registered an increase of 7.1% in foreign direct investment, with mining and technology expansion leading the way. The Economic Commission for Latin America and the Caribbean (ECLAC) recently reported that flows of direct investment to Latin America and the Caribbean (LAC) countries totaled US$188.962 billion in 2024, reflecting a 7.1% increase over the previous year. The improvement in capital flows indicates the increased ability of the region to attract global funds for projects, infrastructure, and the development of strategic sectors to enhance the industrial competitiveness of countries in Latin America.

This increase in investment, according to information from Luciano Marrazzo, Regional Director for the Southern Cone of Latin America at Rockwell Automation, has been linked to the development of new mining infrastructure in the region and the expansion of the data center market, both of which are strategic for the modernization of the region’s industries. “The region is going through a new cycle of strategic investments, especially in mining, energy, and the data centers that will provide the capacity to process data at an increasingly required level,” says Marrazzo, in an interview at Automation Fair 2025. The investments are not only related to those that will directly impact these sectors; they will generate a multiplier effect across the entire region, generating new opportunities for other industries, such as manufacturing, logistics, and even the consumer market.

The development of these new infrastructure projects, which is what stands out most, is significant due to the fact that they also come at a time when industrial digitalization has become the main focus of the region’s companies. Investments in smart sensors, automation platforms, AI process management, etc., are aimed at optimizing operations and achieving greater efficiency with lower operational costs. At the same time, the industrial data that will be generated in greater volume requires the development of highly qualified human capital specialized in data science, cybersecurity, and new digital manufacturing processes. Attracting these professionals will also be a challenge for the region and will determine its ability to continue attracting foreign investment.

Latin America Data Center Market Grows 8.11% Until 2033

The new wave of infrastructure and investment in Latin America is accompanied by the growth of the data center market, required for the greater volume of digital information to be processed by industries and companies, as well as for the advanced technological platforms required to automate operations. “Facilities have been announced on an unprecedented scale, including facilities that focus on artificial intelligence. This is a strong indication that the data processing capacity that industry increasingly needs in Latin America is going to grow exponentially, to take on tasks of increasingly high performance,” states Marrazzo.

According to data from IMARC, the data center market in Latin America reached a value of US$15.38 billion in 2024 and is expected to almost double, reaching US$32.74 billion in 2033, with a CAGR of 8.11% between 2024 and 2033. The high growth is justified by the greater volume of information that has to be processed, including data from industrial sensors, applications on the cloud, AI-powered tools and robotic platforms, as well as digital data visualization platforms and databases that support data-driven decision making, predictive maintenance, and logistics, among other operational activities.

“Facilities have been announced on an unprecedented scale, including facilities that focus on artificial intelligence,” states Luciano Marrazzo.

The growth of this market is important, but it also comes with great challenges. The expansion of the data center market means that companies must now deal with cybersecurity and fraud risks, have redundancy in electricity supply and other resources, and also comply with local regulations on data protection, consumption, and energy efficiency. This is why they are also starting to invest in renewable sources to power their data centers, as this is a factor of great importance to multinational investors. By taking these measures, the region can increase its competitiveness and position itself to attract additional investment capital, which also explains why foreign investment in Latin America grows steadily.

Emerging Technologies for New Challenges in Industrial Automation

Artificial intelligence and autonomous control systems are the new frontier in industrial automation that Latin America is starting to adopt. “Artificial intelligence is going to be the new applied technology, allowing industrial processes to make decisions autonomously, change parameters in real time, and, in many cases, operate with little or no human supervision,” Marrazzo explains. Applications are already in use in autonomous internal transport vehicles, self-adjusting and self-learning manufacturing systems, predictive maintenance, intelligent sensors, and platforms that can even read and understand natural language. These new applications are revolutionizing traditional industries, transforming operations with greater efficiency, lower error, and higher productivity.

The challenge with the adoption of these technologies is that the exponential growth of industrial data now requires computing power to support this type of activity. The question is whether the technology and energy infrastructure can support these new requirements. Therefore, investments in new power grids, high-speed communication, and cloud-based platforms and computing, as well as their integration with advanced technologies, are crucial to make operations possible and sustainable. “This requires evaluating whether the technological and energy infrastructure is prepared to support that demand,” he says.

In addition to the infrastructure, the development of human capital is also of great importance. Automation and autonomous control, in the long term, mean an exponential increase in the need for engineers, data analysts, and IT systems to manage and optimize all this information. New areas such as artificial intelligence, advanced digital manufacturing, cybersecurity, and digitalization in general will be the new object of study in professional and technical training programs, with companies and educational institutions already working to develop professionals. Programs and specialization courses in universities and technical training centers will be required, as well as financial investments to support new talent to optimize these factories and operations.

Regional Outlook

Investment flows to Latin America are expected to grow in the coming years, whether in traditional industries such as mining and energy or in new areas of data centers, AI, and advanced manufacturing. Policies are being adopted by countries to attract foreign investment and promote the expansion of industries with tax incentives, public-private partnerships, regulatory frameworks, and new legislation that can facilitate the adoption of new technologies. With abundant natural resources and a strategic location, the region will continue to be attractive to foreign investors.

Analysts consider that the fact that Latin America has been able to modernize its industry, adopting digital transformation processes, as well as starting to develop strategic infrastructure projects, is why foreign investment in Latin America grows in the current global environment, marked by economic uncertainties. The new data center industry, in particular, can offer long-term potential for the expansion of industry and, consequently, industrial efficiency and competitiveness in the region. In the same way, mining and energy projects represent opportunities to provide economic stability to countries and to generate the capital necessary to attract and support more advanced technological projects.

In summary, the 7.1% increase in FDI to the region demonstrates its ability to attract funds into strategic sectors, with a multiplier effect that can drive growth, innovation, and digitalization. As countries continue to invest in infrastructure, human capital, and technology, the region is expected to see sustained growth in investment flows in the coming years and become a global hub for industrial and technological development. In this sense, foreign investment in Latin America grows both in response to the region’s emerging opportunities and as part of a long-term strategic project for industrial transformation.

Mexico has attracted record levels of foreign investment without stabilizing its public accounts or converting the current industrial boom into inclusive social prosperity. By the end of 2025, the country had broken the historical ceiling for capital inflows, exceeding 40.9 billion dollars. These resources have been concentrated on the relocation of supply chains. However, public debt has also increased, reaching close to 52.3% of GDP at the same time. Commercial euphoria contrasts with an ever more fragile fiscal reality that multiplies vulnerabilities as the review of the USMCA advances, scheduled for July 2026. This structural tension is central to the Mexican nearshoring boom, raising questions about its sustainability.

Nearshoring: Reactive and Dependence-Intensive, Far from Sovereignty

Investment figures are staggering, but there is still a long way to go in terms of quality. Nearshoring has not been the result of an exercise in sovereign industrial policy, but rather a reactive response to geopolitical tensions and trade tariffs from Washington. The Bank of Spain and ECLAC estimate that Mexico is the main beneficiary of trade diversion from Asia, capturing more than 72% of regional investment that has entered the nearshoring dynamic. However, the national productive structure is not escaping from the low–value–added segments that prioritize final assembly for export purposes over technological absorption.

In this way, a labor market dualism has been established that reproduces the structural gap: while there is full employment in manufacturing in the north, real wages do not keep pace with productivity growth. According to recent data, the manufacturing industry has grown 1.2% in productivity in the first half of 2025, but the sector’s average hourly wage remains at around $4.20. This “spurious competitiveness,” based on wage compression and not on innovation, forces efficiency gains to be captured practically in full by foreign corporate headquarters, severely limiting the multiplier effect on domestic consumption.

The Hidden Fiscal Crisis: Investment Without Taxation Proportionate

The fiscal conflict is the most serious and least visible conflict generated by this model. Far from an increase in revenue following the boom in investment, fiscal collection is stagnant and anchored at 14.6% of GDP according to CIEP estimates, with Mexico’s official 2025 fiscal criteria. This share is insufficient to finance the infrastructure that the industry itself is demanding. In its latest Regional Sector Outlook, BBVA México itself warns of the problem: there is industrial dynamism in regions like the north of the country, but there are still great gaps in infrastructure and access to credit that condition the potential for growth. The federal government has bet on generalized tax incentives, such as the relocation decree, which allow companies to make immediate deductions for the purchase of fixed assets, on the premise that volume activity would compensate for the lower tax burden.

Multinational corporations are adept at optimizing their global tax structure by locating profit centers in countries where they pay little or no tax while their Mexican operations are cost or assembly centers. Lower revenue leads to greater indebtedness, which in turn reduces fiscal space for complementary public investment.

The macroeconomic scenario for the year 2025, as it is closing, points to the end of the post-pandemic rebound. The IMF revised its growth forecast for Mexico downwards to a timid 1%, much lower than the dynamism of other emerging markets such as Vietnam or India. The Mexican economy is growing at two disconnected speeds, with a dynamic north integrated into the Texas value chain while the south remains static and dependent on public transfers. The current Mexican nearshoring has not been the bridge between these two geographic realities.

Infrastructure: Critical Bottleneck

The lack of complementary public investment is a critical bottleneck that threatens to neutralize most of the potential benefits that the phenomenon could have in the near future, warns México Evalúa. The programmed public physical investment of 2025 has reached a historical low of only 2.3% of GDP. This austerity in energy and logistics infrastructure is slowly eroding the country’s systemic competitiveness. The Industrial Parks Association reports saturation of power transmission capacity and water shortages in priority regions such as the Bajío and the north, which forces private firms to self-supply infrastructure costs that are assumed by the state in competitor countries.

The energy and water crises in northern Mexico are not a temporary phenomenon but a structural one. The need for cheap electricity and abundant water—two commodities that the Mexican state cannot guarantee in sufficient quantity or at competitive prices—pushes companies to self-invest in solar panels, water-capture systems, and generators, increasing operating costs. By comparison, Vietnam or other Asian countries offer comparable state-supplied infrastructure at a much lower cost.

The USMCA Review in July 2026: A Diplomatic Crossroads

This internal fragility is multiplied by the approaching USMCA review, whose renegotiation clause will be triggered in July of the coming year. Moody’s has already sounded the alarm in this regard: the mere expectation of this renegotiation is already freezing long-term investment decisions. The pressure from Washington to tighten the rules of origin, currently at 75% Regional Value Content (RVC), opens a window to the dismantling of supply chains that rely on Asian inputs.

The automotive industry, the sector most exposed to nearshoring, fears that the origin of steel, aluminum, and software will be unprecedentedly scrutinized. This could indirectly raise entry barriers and force out plants that do not have the capacity to replace Chinese suppliers in record time. If the rules are tightened without adequate transition periods, plants in Mexico could see the benefits of the tariff rate quotas canceled, falling into a situation less favorable than that of facilities located in the United States.

A specific risk is precisely the offense against the triangulation of Chinese capital. The offensive from Washington to strengthen the rules of origin also seeks to end Mexico’s use as a “back door” for Asian goods. This places Mexico in a very delicate diplomatic situation. Between the Chinese investments that Mexico has attracted with success and insistence in recent years, especially in electromobility and auto parts, and the North American preferential market, there is a border that cannot be crossed. If the rules are tightened, not only could Asian investments that operate in Mexico have to leave, but it is not certain that their replacement would come from U.S. or Canadian capital.

The Asian Challenge: Vietnam, the Silent Competitor

Global competition is not slowing down while Mexico is struggling with these diplomatic dilemmas. Vietnam and other Asian countries have gone on the offensive to capture the next relocation wave. The UNCTAD’s World Investment Report 2025 shows that Vietnam is among the top five destinations for greenfield (new) projects at the global level, positioning itself well above Mexico in the case of high-tech projects relative to the size of their economies. The Harvard Growth Lab highlights in its analysis that Vietnam is taking a larger share of the U.S. market by introducing new products, while Mexico grows primarily by increasing the volume of what it traditionally exports. This qualitative difference indicates that the simple geographic advantage is being undermined by the greater productive sophistication and logistical efficiency of its Asian rivals.

Proximity to the United States—once an insurmountable advantage for Mexico—is ceasing to be so as the world logistics model is improving and value chains are increasingly operating on continental scales. If a company can manufacture in Vietnam and ship to California in a similar timeframe to Mexico, why pay higher wages and labor standards to be in a neighboring country? The traditional answer has been the USMCA, precisely the agreement that is under review.

The Mexican government’s response has been inertial so far. By trusting the gravitational force of economic integration itself, it hopes to avoid any rupture. This passivity, however, ignores the political climate shift in Washington, where industrial protectionism has become bipartisan state policy. The absence of a proactive lobbying strategy and of market diversification leaves Mexico at the mercy of the U.S. electoral cycle.

The Structural Dilemma: Reform Fiscal Policy or Accept Relative Stagnation

Mexico is at a historic crossroads as it begins to tackle the challenges of the next economic cycle. Continuing the current policy formula of unconditional tax incentives and wage compression will maintain the country in a situation of unstable equilibrium. Specialization in low–value–added manufacturing will continue to accumulate public liabilities while private profits are repatriated.

The alternative, however, is one that requires structural changes in tax policy that go far beyond inertial collection. Mexico must advance in the implementation of the OECD’s Pillar Two, a global standard that sets a minimum corporate tax rate of 15% to capture a fairer share of the income generated by Mexican nearshoring. Without this measure, the base erosion that currently allows large corporations to shift their profits to low-tax jurisdictions would persist. As the Mexican Institute of Public Accountants warns in its analysis of nearshoring challenges, the main obstacle to converting this investment into long-term sustainable development is the lack of a state policy that articulates efficient incentives with legal certainty and fiscal strength.

At the same time, unconditional tax incentives must be replaced by a selective industrial policy. Foreign investment incentives should not be automatic transfers but tied to verifiable goals, such as technology transfer, national value-chain integration, or environmental compliance. This is not protectionism; it is a more efficient use of scarce public capital in a country like Mexico that has urgent budget needs in strategic areas such as infrastructure, education, and the energy transition. Without additional resources and clear requirements on corporate behavior, fiscal space to fund these strategic areas will remain insufficient.

Without these reforms, nearshoring will be a cyclical phenomenon, subject to fluctuations in the international trade policy cycle. The review of the USMCA in July 2026 and Vietnam’s fast growth in greenfield projects are exerting long-term structural pressures that an economy with debt at 52% of GDP and low public investment (2.3% of GDP) will not be able to assimilate. The IMF’s projected growth of just 1.0% for 2025 offers no room for maneuver in the face of these simultaneous challenges. In the end, the destiny of Mexican nearshoring will depend on whether it can align the quality of investment with fiscal resilience and long-term development goals.

Paraguay registers an unprecedented year in attracting investments. According to the Central Bank of Paraguay (BCP),  investment in Paraguay reached US$10.395 billion in 2024, “a consequence of the country’s sustained macroeconomic stability over the years” and its increasingly positive reputation among global investors, according to analyst William Franco.

“The strengthening of investment in Paraguay over the past three decades has consolidated our position as one of the most competitive destinations in South America” stated Acting Minister of Industry and Commerce, Lic. Arnaldo Samaniego.

The indicator that has shown the greatest growth has been the maquila industry, with historic data: from US$443 million in 2024, investments made under the maquila regime reached US$664 million as of August 2025, and the estimate for the year would reach US$900 million.

In addition to confirming Paraguay’s attraction of new foreign and national companies, this positive trend also shows the confidence of companies already installed in the country, many of which have decided to expand production lines, modernize and expand facilities, and reinforce productive capabilities.

Continuing on this investment cycle “reveals a structural change towards a more diversified and internationally integrated economy” for Paraguay, Franco stressed. This aligns with the sustained investment in Paraguay across several sectors.

The Ministry of Industry and Commerce (MIC) reported a total of US$931 million in net investment flows during 2024, which in 12 months is an increase of almost 15% compared to the previous year. In the long term, the contrast is even greater: if in the 1990s Paraguay received around US$100 million per year, today the average annual investment is around US$600 million. This significant leap in investment in Paraguay is associated with the country’s stable macroeconomic framework, low inflation, predictable tax system, investment-friendly regulations, and an overall business environment that encourages private capital to plan for the long term.

Another important trend in recent years has been the continuous increase in the reinvestment of profits in Paraguay, a clear signal of business confidence. Instead of repatriating capital to other countries, companies are betting on strengthening their presence in Paraguay, expanding production, and strengthening their supply chains. This behavior has a multiplier effect that strengthens the national economy, generating more jobs, facilitating technology transfer, and encouraging the development of longer-term projects.

Sectoral Highlights

The MIC, citing BCP data, underscored the productive sectors that concentrate the largest share of investment in Paraguay. The commerce sector represents around 19% of total investment, driven by its role in supplying the domestic market and by the growing presence of international companies that choose Paraguay as a regional distribution center.

The financial services sector, with about 16%, continues to solidify itself as one of the central pillars of national growth. The development of this sector is a reflection of the solidity of Paraguay’s banking system, its progressive integration with international financial circuits, and its capacity to support both national and foreign businesses in their growth plans.

Agribusiness, a historic engine of the country’s economy, continues to lead in investment attraction. The soybean value chain stands out in crushing activity, export of vegetable oil, and specialized logistics, supported by the availability of raw materials, competitiveness in production costs, and a strong export tradition. The meat sector, which includes bovine, pork, and poultry, also continues to attract capital thanks to greater insertion in new international markets and the respect for strict sanitary standards. Paraguay’s advances in livestock traceability, animal health, and processing infrastructure have reinforced its international competitiveness.

Investment in Paraguay in transportation and logistics, meanwhile, is also a sector with accelerated growth and diversification, boosted by new ports, storage centers, cold chain, and multipurpose terminals. In addition to improving the performance of Paraguay’s export routes, they also generate value to national production and cut operational clogs, a determining factor for a landlocked country that is strongly dependent on river and road corridors.

Distribution of Investments in Paraguay by Country

The profile of Paraguay’s investment inflows shows that capital mainly comes from strategic partner countries. Brazil appears as the first investor, with around 15%, followed by the United States and the Netherlands, both with about 10%. Uruguay and Spain complete the list, with shares between 6% and 7% each. These five countries together account for more than half of Paraguay’s accumulated capital, a clear reflection of strong ties with the country’s regional neighbors and traditional trade partners.

Territorial Destination

The distribution of investment in Paraguay also shows a spread in several regions. Alto Paraná continues to consolidate itself as one of the country’s most active industrial poles, with a solid ecosystem of maquila companies, electronics, auto parts, and logistics, strongly linked to Brazil. In Itapúa there is a combination of dynamic agribusiness and manufacturing poles, as well as infrastructure of relevance such as airport and port logistics.

Chaco, dynamized with advances in the Bioceanic Corridor, is being reactivated by livestock operations, agro-exports, and large logistics installations. Asunción and Central continue to be the centers of services, technology, and commerce. Concepción, meanwhile, experiences a renewed dynamism with the construction of large-scale projects such as the building of a new pulp mill that is expected to generate significant employment and multiplier effects in that northern region.

Investment Announcements in 2025

In 2025, the coming months are marked by a series of relevant investment announcements. A variety of economic missions are carried out from abroad under the coordination of the technical teams of the MIC, which are complemented by tours promoted by the Presidency of the Republic to present and reinforce the country’s image abroad. In August, REDIEX launches a 250-page guide for investments, in which Paraguay ranks first in the Economic Climate Indicator (163 points), ahead of Uruguay (127 points), and in which Paraguay presents one of the most competitive electricity rates in the region at US$0.04 per kWh. In addition, within the identified priority sectors, forestry stands out for export potential and its long-term sustainability vision.

Some of the most important announcements include:

US$300 million from Group C for pork production and processing.

US$135 million from JBS (Brazil) for expansion of operations, which consolidates Paraguay’s sanitary and logistical competitiveness.

More than US$40 million by Savilcon Group.

Record Performance in Law 60/90 and the Maquila Regime

After almost three decades, Paraguay put an end to updating both Law 60/90 and the Maquila Law, making them more competitive and in line with the challenges of today’s globalized world. The maquila regime maintains its 1% value-added tax on exports, with the additional advantage that it incorporates a refund of 0.5% VAT on services exports.

The updated Law 60/90 further increases incentives for projects that require greater intensity of machinery, technology, and higher levels of innovation. Paraguay approved, in 2025, the Law for the Assembly of High-Tech Goods, aimed at promoting and incentivizing investments in productive activities specializing in electronics, telecommunications, and smart devices, activities considered, so far, too specialized for Paraguay.

These reforms have not been in vain. Investment in Paraguay in the two regimes exceeded US$664 million as of August 2025, a record in absolute terms, when compared to the US$443 million received in 2024 and the US$353 million of 2023. Projections estimate that investment could reach US$900 million by the end of this year, and also add more than 4,420 new jobs to those that have already been generated in the last few years. As these new policies mature, they are expected to stimulate even greater investment in Paraguay in high-tech, export-oriented, and value-added sectors.