A country has positioned itself as the favorite destination for foreign investors in the region, boosting its economy with figures that outshine its neighbors. In Latin America’s challenging economic context, foreign investments stand out as an indispensable tool for growth and development. These capital contributions generate employment, modernize key sectors and foster trade. In this scenario, identifying the leading country that attracts foreign investment is crucial to understanding the region’s economic dynamics.

The Regional Leader in Foreign Direct Investment

Foreign direct investment (FDI) is one of developing countries’ most crucial external financing sources. Recognizing its significance, Brazil has implemented policies and strategies that have solidified its position as the primary recipient of foreign investments in Latin America. According to data from the Economic Commission for Latin America and the Caribbean (ECLAC), Brazil has consistently attracted significant foreign capital.

In 2024, Brazil’s Central Bank figures indicated an increase of USD 5.72 billion in FDI compared to the previous year. This growth reaffirms Brazil’s position as the region’s most attractive destination for foreign capital, surpassing major regional economies like Mexico and Argentina. Despite global uncertainties, the consistent inflow of Latin American foreign direct investment into Brazil highlights the country’s economic resilience and investor confidence.

Who Invests the Most in Brazil?

Brazil’s ability to attract foreign investment is evident from its diverse investor base. According to data from Brazil’s Central Bank, compiled by Santander Bank, the country has drawn significant investments from the following nations:

• Netherlands: 20% of total FDI
• United States: 16%
• Germany: 8%
• Spain: 7%

Other countries, including Luxembourg, Canada, and France, contribute significantly. These investments primarily target Brazil’s robust and strategic sectors, such as commerce, chemical products, financial services, and the automotive industry. The variety of contributing nations underscores Brazil’s strong appeal as a Latin American foreign direct investment destination.

Most Attractive Sectors for Investors

Several sectors in Brazil are magnets for foreign investment. Among the most appealing industries are:

• Oil and Gas Extraction (11%): Brazil continues to attract substantial investments in oil and gas, thanks to its vast reserves.
• Motor Vehicles and Components (9%): The automotive industry remains a critical pillar of Brazil’s economy, drawing foreign capital to support manufacturing and innovation.
• Financial and Auxiliary Services (7%): The demand for advanced financial services and digital solutions fuels interest in this sector.
• Electricity and Gas (5%): Energy modernization efforts and Brazil’s commitment to transitioning to renewable energy make this sector highly attractive to foreign investors.

Even though FDI inflows into Brazil during the first eight months of 2023 totaled USD 37.9 billion, reflecting a 36% decline from the same period in 2022, the underlying interest in these key industries persists. Focusing on sectors like oil, automotive, and finance ensures Brazil remains competitive in Latin American foreign direct investment.

The Role of Tax Incentives and Policy Adjustments

One key factor contributing to Brazil’s success in attracting Latin American foreign direct investment is its proactive stance on tax incentives and regulatory adjustments. The government offers tax breaks and subsidies in specific industries to encourage long-term investments. These incentives are especially prominent in manufacturing, renewable energy, and infrastructure development, where substantial foreign capital has been directed.

Additionally, Brazil’s strategic economic policies aim to reduce bureaucratic barriers and streamline the process for foreign companies looking to establish a presence there. These efforts significantly enhance Brazil’s reputation as a business-friendly environment in Latin America.

The Impact of Foreign Investment in Brazil

Foreign investments have played a transformative role in Brazil’s economy. These capital flows have facilitated the modernization of critical sectors, leading to technological advancements and increased efficiency. This has generated employment opportunities across various regions, boosting incomes and improving living standards. Furthermore, foreign investments have opened new commercial avenues, strengthening Brazil’s trade ties with global markets.

Brazil has become a key player in the global economic landscape by attracting consistent Latin American foreign direct investment. The country’s focus on long-term growth and sectoral modernization ensures it continues to reap the benefits of foreign capital.

A Model for the Region

Brazil stands as a shining example of how foreign investments can drive development in Latin America. Despite global economic challenges and fluctuations in FDI figures, the country remains a leader in attracting Latin American foreign direct investment. This achievement is not merely about the volume of capital but also about the strategic allocation of resources to sectors with high growth potential.

Brazil’s proactive policies, natural resource wealth, and commitment to creating an investor-friendly environment make it a regional model for attracting foreign investment. Its ability to adapt to market changes and focus on long-term strategic planning not only positively impacts the broader economy but also reassures investors about the country’s economic future.

Brazil’s success story underscores the importance of foreign investment as a tool for growth and resilience in a region facing economic uncertainties. The country’s leadership in Latin American foreign direct investment highlights its role in shaping the region’s economic future.

Choosing the right city to open a business in Mexico is crucial to a successful business strategy.

Having a good idea and a quality product or service is essential for starting a business, but location is just as important. It determines customer flow, pricing, and the enterprise’s success. Opening a business in Mexico can vary significantly by region due to differences in regional procedures, costs, infrastructure, and industries. According to the Ministry of Economy (SE), the time required for business setup procedures ranges between 20 and 45 days, depending on the state, with average costs ranging from 3,000 to 5,000 pesos.

“The success of a venture goes beyond a good idea. Factors like location, infrastructure, and the fastest-growing economic sectors are key pieces every entrepreneur should thoroughly analyze before leaping,” said Alejandro Sena, CEO of DineroMx, a financial information platform.

The SE also highlights that average wages play an essential role, as regional wage disparities can reach up to 50%, significantly impacting operational costs when planning to open a business in Mexico.

What Sectors Do Entrepreneurs Invest In?

According to the Mexican Entrepreneurs Association, retail is the primary sector in which Mexicans choose to invest, followed by consulting, gastronomy, and IT.

However, the Mexican Institute for Competitiveness (IMCO) emphasizes that industries such as technology and software development, manufacturing, logistics, tourism, and the creative economy stand out for their high growth potential in various country regions.

This growth is driven by digitalization and automation, proximity to international markets, tourist attractions, and cultural heritage.

“This year, entrepreneurs must also consider sectors offering the highest probability of success. Doing so will make identifying opportunities with reduced operating costs easier,” adds Alejandro Sena.

Why Is Location Important?

Choosing the right city to open a business in Mexico is vital to a business strategy. For example, in cities like Monterrey, Guadalajara, and Querétaro, the average office rental cost is significantly lower than in Mexico City, translating into substantial savings.

Moreover, according to DineroMx’s analysis of the Urban Competitiveness Index 2024 by IMCO, access to markets and resources also varies by region. While major urban centers offer closer proximity to potential customers and business networks, they also have higher living and operational costs. In contrast, intermediate cities provide an attractive balance: modern infrastructure, local tax incentives, and a growing consumer base.

Another critical factor to consider is connectivity. Cities with better transportation networks and access to ports have a significant competitive advantage for businesses in the manufacturing and logistics sectors.

“Geographically, the central region of the country, which includes states like Mexico City, the State of Mexico, Guanajuato, Hidalgo, Morelos, Puebla, and Querétaro, accounts for 70% of sales from the country’s largest companies. Meanwhile, Mexico City remains the main hub for innovation and entrepreneurship, hosting 45% of the nation’s entrepreneurs,” Sena concludes.

Ranking of Mexican Cities to Open a Business

If you’re considering starting a business in 2025, identifying the best cities to open a business in Mexico is crucial, as each region’s infrastructure and market demand play a fundamental role in a venture’s success.

Based on the Urban Competitiveness Index 2024 by IMCO, DineroMx has compiled a list of the 10 cities offering favorable conditions for small and medium-sized enterprises (SMEs), combining affordable costs with business-friendly environments.

1. Mexico City

The capital of Mexico’s economic and political epicenter accounts for a large portion of the national GDP, making it a broad and diverse market despite high rental costs. It offers access to a highly skilled workforce and business support networks, including incubators and accelerators.

2. Monterrey

Known as Mexico’s industrial capital, Monterrey combines a well-established business culture with advanced infrastructure. Its streamlined regulatory processes and access to financing, including venture capital funds, make it attractive for entrepreneurs. Monterrey also boasts a robust ecosystem for tech startups.

3. Guadalajara

Dubbed the “Mexican Silicon Valley,” Guadalajara leads the tech sector with an innovative ecosystem supported by collaboration between universities, businesses, and government. The city offers competitive costs for coworking services and access to specialized IT talent.

4. Hermosillo

Hermosillo features affordable commercial rental costs, a strategic location, and a booming industrial sector. Its excellent land and air connectivity enables businesses to reach new markets and expand their horizons.

5. Chihuahua

With competitive energy and labor costs, a diversified economy, and its status as a major industrial hub in the north, Chihuahua is a strategic destination for ventures in technology, commerce, and advanced manufacturing.

6. Saltillo

Economic stability and proximity to the U.S. border make Saltillo a hotspot for entrepreneurs. Its strong industrial base, particularly in the automotive sector, provides an environment conducive to developing and expanding new businesses.

7. Querétaro

Located in the Bajío region, Querétaro stands out for its excellent highway and air connectivity and first-class infrastructure. It hosts thriving aerospace, technology, and automotive industries, creating supply chain opportunities for small businesses.

8. La Paz

Despite its distance from major urban centers, La Paz offers low operational costs for tourism-related businesses. Its growing popularity as a tourist destination has spurred the development of ventures in hospitality, gastronomy, and recreational activities.

9. Mérida

Known for being a safe city with reasonable living costs and suitable infrastructure for SMEs, Mérida offers a high quality of life and economic dynamism, making it an ideal place to open a business in Mexico.

10. San Luis Potosí

San Luis Potosí has become a key logistics hub due to its central location. It features modern industrial parks and moderate operating costs, facilitating the establishment of small and medium-sized enterprises.

What Makes a City Affordable for Business Ventures?

An affordable city in Mexico to open a business balances operational costs, infrastructure, regulatory procedures, and fiscal support. These are key points to consider:

Ease of Doing Business: Simplified regulatory procedures reduce time and initial costs for setting up companies.

Tax Incentives: Some cities offer tax exemptions or reductions for new businesses.

Access to Financing: While venture capital funds are concentrated in developed cities, programs like Nacional Financiera (NAFIN) and Fondo para el Desarrollo Social (FONDESO) are expanding to underserved regions, facilitating loans for entrepreneurs.

Affordable Real Estate: Competitive office and industrial land rental prices help reduce expenses.

Efficient Infrastructure: Reliable electricity, modern road networks, and functional airports ensure smooth operations and long-term competitiveness.

Technological Infrastructure: High-speed internet and coworking spaces are crucial for digital ventures.

Quality of Life and Labor Costs: Cities with lower living costs enable entrepreneurs to maintain competitive labor expenses without compromising talent quality.

Availability of Human Capital: The presence of universities and technical training centers ensures a steady supply of qualified professionals.

In conclusion, choosing the correct city to open a business in Mexico is a pivotal decision that can significantly influence the success of any venture. Factors such as infrastructure, connectivity, operational costs, and access to talent vary widely across the country, making cities like Mexico City, Monterrey, and Guadalajara standout options for businesses seeking robust markets and advanced ecosystems. Meanwhile, cities like Mérida, La Paz, and San Luis Potosí offer affordable alternatives with unique advantages, from safety and quality of life to strategic logistics capabilities. Entrepreneurs should carefully evaluate each city’s economic strengths, cost-effectiveness, and sector-specific opportunities to align their business goals with the region that offers the best conditions for growth and sustainability.

On January 20, Donald Trump will formally assume the presidency of the United States, following his commitment to implementing tariff policies against Mexico. According to Grupo Bursátil Mexicano (GBM), judicial resolutions in Mexico and compliance with the United States-Mexico-Canada Agreement (USMCA) will be pivotal in attracting investment to Mexico in 2025, especially in strategic sectors such as manufacturing and technology.

Judicial Resolutions and Their Impact

In its latest study on Mexico’s outlook for the year, the independent brokerage firm highlighted that judicial elections in June 2025 will play a crucial role. These elections aim to renew the Supreme Court of Justice and half of the nation’s judges. This reshaping of the judiciary is expected to influence key decisions in areas like energy regulation, labor rights, and economic competition.

The Supreme Court’s rulings on these issues will have a ripple effect on investor confidence, as legal certainty and regulatory transparency are critical for foreign businesses. Industries such as automotive manufacturing and technology, which rely heavily on stable legal frameworks, are susceptible to changes in judicial governance. These reforms will play a vital role in attracting investment to Mexico by ensuring a predictable and fair regulatory environment.

The Role of USMCA in Economic Relations

Mexico’s compliance with the provisions of the USMCA, the trilateral trade agreement with the United States and Canada, will also be under scrutiny. GBM underscored the growing attention on key sectors like automotive and agriculture, where adherence to trade rules remains contentious. For instance, disputes over rules of origin in the automotive industry have been a recurring challenge. These disagreements could strain the trade relationship among the USMCA partners, potentially deterring investment.

Compliance with USMCA provisions is essential for sustaining trade relations and attracting investment to Mexico. Mexico can enhance its reputation as a reliable regional partner by committing to the agreement’s principles.

Challenges of a New U.S. Administration

The political environment in the United States further complicates matters. As Donald Trump begins his term, his protectionist and tariff-driven economic policies are expected to create significant challenges for Mexico. During his campaign, Trump promised to renegotiate trade deals, including the USMCA, to prioritize American interests. This has led to widespread uncertainty about the potential impact on supply chains, and investment flows across the region.

One of the key threats is the possibility of reintroducing tariffs on Mexican exports, which could disrupt vital sectors such as automotive, agriculture, and manufacturing. GBM warned that such measures would affect both countries’ economies and have global implications for multinational companies operating in North America. In this context, maintaining a stable trade environment is crucial for attracting investment to Mexico and preserving its competitive edge.

Banxico’s Role in Economic Stability

The Mexican central bank (Banxico) will also be critical in shaping the country’s economic environment in 2025. GBM noted that Banxico began the year under new leadership following the departure of Irene Espinoza in 2024. The appointment of a new deputy governor is expected to significantly impact the stability of the Mexican peso, foreign investment attraction, and domestic consumption dynamics.

The brokerage firm emphasized that the new deputy governor’s vision will be instrumental in guiding monetary policy, particularly in addressing inflation while fostering sustainable economic growth. A stable monetary framework is fundamental to attracting investment to Mexico, as it assures investors of a predictable financial environment.

Opportunities and Strategies for Growth

Despite the challenges of judicial reforms, trade disputes, and monetary policy transitions, Mexico has opportunities to attract foreign investment. The manufacturing sector, which has long been a cornerstone of the Mexican economy, continues to benefit from the country’s proximity to the United States, skilled labor force, and competitive production costs.

Technology is another sector with significant potential. As global demand for technological innovation grows, Mexico has an opportunity to position itself as a key player in software development, telecommunications, and advanced manufacturing. These advancements are crucial for attracting investment to Mexico, as they showcase the country’s ability to adapt to modern economic trends.

Additionally, energy reform remains a critical area of focus. Mexico’s vast reserves of renewable and non-renewable energy resources and growing global interest in sustainable energy solutions present a unique investment opportunity. However, this will depend on the regulatory environment and the government’s ability to provide clear and consistent policies.

Strengthening North American Collaboration

To navigate the complexities of 2025, Mexico must prioritize strengthening its collaboration with its North American partners. The USMCA offers a framework for economic integration, but its success depends on all parties’ willingness to resolve disputes and constructively uphold the agreement’s principles.

Mexico’s efforts to enhance its legal and regulatory systems will reinforce its position as a reliable trade partner. Transparent judicial processes, adherence to trade commitments, and proactive engagement with international investors can help mitigate the uncertainties associated with changes in U.S. policy and global economic trends. These measures are indispensable for attracting investment to Mexico and sustaining economic growth.

Conclusion

In 2025, the interplay between judicial resolutions in Mexico and compliance with USMCA provisions will be central to the country’s economic trajectory. As the global economic landscape evolves, Mexico must address trade relations, judicial reforms, and monetary policy challenges to remain an attractive destination for foreign investment.

The actions of the Mexican government, judiciary, and central bank will shape the country’s ability to capitalize on its strategic advantages and navigate the uncertainties of the year ahead. Mexico can solidify its reputation as a resilient and competitive global economy by fostering legal certainty, strengthening trade relationships, and supporting key sectors like manufacturing and technology. Attracting investment to Mexico will hinge on these coordinated efforts and strategic initiatives.

According to Ecuador’s Ministry of Production, Foreign Trade, Investments, and Fisheries, private investment in Ecuador reached an impressive $1.304 billion in 2024. This figure is reflected in 39 investment contracts approved across various productive sectors, showcasing the country’s efforts to attract and promote both domestic and foreign investment.

At the beginning of 2025, the Strategic Committee for Investment Promotion and Attraction (CEPAI), led by the Ministry of Production, Foreign Trade, Investments, and Fisheries (MIPRO), confirmed this significant milestone. The total amount includes contracts, addenda, and transitions to the new Free Trade Zones regime implemented throughout 2024.

A Comparative Look: Investment Growth Between 2023 and 2024

While 2023 saw approved investment contracts valued at $1.161 billion, 2024 marked a clear improvement with $1.304 billion. The growth reflects Ecuador’s commitment to fostering a more attractive business environment, which continues to yield positive results. MIPRO highlighted that these investments spanned several productive sectors, with notable contributions from the commercial, renewable energy, mining, real estate, and aquaculture industries.

Investment Contracts and Sector Highlights

2024 Ecuador approved 39 new investment contracts, signaling robust interest across diverse economic sectors. Renewable energy projects stood out for their potential to enhance the nation’s sustainability goals, while mining projects and real estate developments further strengthened the economy’s foundations. Additionally, aquaculture projects underscored Ecuador’s global seafood production leader role, particularly shrimp farming.

The final quarter of 2024 brought additional gains, with amendments to existing contracts resulting in an extra $93.5 million in investments. These updates illustrate the dynamic and evolving nature of private investment in Ecuador, with businesses adapting their strategies to align with the nation’s economic priorities.

Transition to a Modern Free Trade Zone Regime

Ecuador achieved a significant milestone in 2024 by transitioning two Special Economic Development Zones (ZEDEs) in Santa Elena and Guayas into the country’s first Free Trade Zones under the updated legal framework. Established under the new Law of Economic Efficiency and Employment Generation, these zones are expected to stimulate economic activity and job creation.

The transition represents a notable evolution in the country’s approach to incentivizing investment. Over the next 30 years, the newly designated Free Trade Zones are projected to generate and sustain 69 direct jobs, supported by an investment exceeding $2 million. This development highlights the government’s strategic use of free trade mechanisms to attract long-term private investment in Ecuador.

On October 17, 2024, MIPRO issued a ministerial agreement detailing the guidelines for transitioning ZEDEs, previously governed by the Organic Code of Production, Commerce, and Investments (COPCI), and Free Trade Zones under the older legal regime, to align with the new framework. This transition ensures regulatory consistency and clarity, which are critical for sustaining investor confidence.

Foreign Direct Investment Trends in Ecuador

Despite these successes, Ecuador’s foreign direct investment (FDI) declined during the first half of 2024. The country registered $120 million in FDI during this period, representing a 12.2% decrease compared to the $136.7 million recorded in the same timeframe in 2023. This drop of $16.7 million underscores Ecuador’s challenges in competing for international capital amidst global economic uncertainties.

The primary sectors attracting FDI in 2024 were mining and quarrying, transportation and storage, and manufacturing. Together, these sectors accounted for a positive inflow of $92 million. Key contributors to Ecuador’s FDI included the United States, Switzerland, and Peru, which collectively invested $78 million during the year’s first half.

Focus on Key Sectors for Private Investment in Ecuador

While FDI trends highlight specific challenges, the segment of approved investment contracts tells a more optimistic story. During the first half of 2024, 100% of these contracts targeted agriculture, livestock, forestry, fishing, manufacturing, construction, and real estate. These sectors reflect Ecuador’s economic diversity and strategic emphasis on industries with significant growth potential.

Looking Ahead: Strengthening Private Investment in Ecuador

As Ecuador enters 2025, the country is well-positioned to build on the progress made in 2024. The approval of investment contracts across critical sectors and the modernization of Free Trade Zones demonstrate the government’s commitment to fostering a conducive environment for private investment. These efforts drive economic growth, job creation, and technological advancement nationwide.

In conclusion, private investment in Ecuador reached a remarkable $1.304 billion in 2024, underscoring the country’s growing appeal as an investment destination. By leveraging its natural resources, strategic location, and improved regulatory framework, Ecuador is paving the way for sustained economic development and increased investor confidence.

The demand for expanded infrastructure in Peru has reached critical levels, highlighting the urgent need to enhance the capacity of ports, roads, railways, and airports. These upgrades are necessary for the nation’s internal development and crucial for its ambition to become the leading Latin American port hub. Minister of Economy and Finance Luis Arista Arbildo underscored the importance of these investments in establishing Peru as a vital logistics gateway for the region. With its strategic location on the Pacific coast, Peru holds untapped potential to boost its economic influence significantly with the right infrastructure improvements.

Positive Economic Growth Sets the Stage

Reflecting on Peru’s economic performance, Minister Arista highlighted 2024 as a year of steady progress. “We have grown at a rate of 3.2%. We are awaiting the final data from the National Institute of Statistics and Informatics, and it will likely fall between 3.2% and 3.3%,” he explained. This consistent growth showcases Peru’s ability to navigate challenges and maintain an upward trajectory.

Another bright spot was the country’s record-setting investment levels. “We achieved an execution level of investment nearing 58 billion soles, encompassing contributions from local governments, regional governments, and the central government. This figure is 16% higher than what was accomplished in 2023, which was a remarkable year,” Arista noted. This significant increase underscores the government’s commitment to addressing Peru’s infrastructure needs.

Bridging the Infrastructure Deficit

Despite these gains, the minister acknowledged a daunting challenge: an infrastructure deficit estimated at $100 billion to $150 billion. “This gap continues to grow. What we need is to invest more and more,” he stressed.

The vision of transforming Peru into the Latin American port hub demands far-reaching upgrades across its infrastructure network. Key projects such as the Callao Port’s modernization, the Chancay Port’s expansion, and the construction of the new Jorge Chávez International Airport exemplify the scale of investment required. “We cannot aspire to be the port hub of Latin America with the same logistical infrastructure we have now,” Arista affirmed, emphasizing the need for swift action.

Addressing Regional Infrastructure Demands

The need for enhanced infrastructure extends beyond central hubs like Callao and Chancay. Significant demand is also growing in Peru’s northern and southern ports. Minister Arista pointed out that ports like Matarani, Chimbote, and Etén require urgent attention to meet rising logistical demands. “There is significant demand for investment in the southern and northern ports, but we cannot rely solely on state resources to fulfill these needs. We require private sector collaboration,” he explained.

Public-Private Partnerships: Key to Accelerating Development

Arista advocated for expanded Public-Private Partnerships (PPPs) to address these pressing needs. These collaborations are crucial for mobilizing the financial and technical resources needed to modernize Peru’s logistics infrastructure.

The minister highlighted the importance of expanding the ports’ capacity and road and rail connections. For example, linking Chancay and Callao with a modern rail network could enhance the flow of goods across the country and further cement Peru’s position as a Latin American port hub. “While we are pleased with the level of investment achieved so far, it is still insufficient to meet Peru’s infrastructure needs,” Arista emphasized, reiterating the urgency of fostering private sector involvement.

Infrastructure Investment Fuels Economic Growth

Minister Arista underscored the critical role infrastructure plays in driving economic growth. Prioritizing infrastructure investment is essential to elevating Peru’s GDP growth from the current rates of 3.2% or 3.3% to levels above 5%. “We need to take full advantage of Peru’s strategic geographical location, and that requires significant investment in infrastructure,” he stated.

With its proximity to key global trade routes, Peru’s potential as a Latin American port hub is unmatched. Properly developed, its infrastructure could make the country an indispensable logistics center, facilitating trade across the Pacific and the Americas.

Unlocking Peru’s Strategic Potential

Peru’s location on the Pacific coast uniquely positions it to become a major player in global trade. However, realizing this potential depends on overcoming its infrastructure challenges. Upgrading ports, expanding airports, and building modern rail and road systems are necessary steps to transform Peru into a leading logistics hub.

The road ahead will require a collaborative effort between the government and the private sector. Partnerships through initiatives like PPPs will be critical in bridging the infrastructure gap and ensuring that Peru is equipped to meet rising demands.

By addressing these needs head-on, Peru can solidify its role as a Latin American port hub and unlock broader economic opportunities for its citizens. These investments will enhance the nation’s competitiveness in global trade, driving sustainable growth and prosperity for years to come.