The Organization for Economic Cooperation and Development (OECD) confirmed in its latest report that Mexico foreign direct investment (FDI) reaffirmed its position as one of the most attractive in the first half of 2025. According to the organization’s document “Foreign Direct Investment Flows in the First Half of 2025,” the country is in the top five of the main recipients worldwide with USD 34.265 billion in FDI. The amount reflects that Mexico remains the most relevant among the receiving economies in America, underlined by reinvestment in profits.

Mexico foreign direct investment improves its standing: OECD

The OECD’s report was issued amid a scenario of global economic uncertainty, where trade growth is at a low level, interest rates are at their highest in more than a decade, and geopolitical conflicts continue to take place. In this situation, Mexico’s FDI has stood out by maintaining an important level of activity. “Global growth in the first half of 2025 was hampered by weakening trade, a high level of interest rates, and continued geopolitical tensions. The outlook remains highly uncertain, as many countries continue to struggle with high inflation, higher public and private debt, and tighter financial conditions, while China remains under pressure,” the OECD explained.

The organization’s report confirmed that worldwide FDI was stable in the first half of the year, reaching approximately USD 663 billion. This result was little change from the prior years, given the fact that global economic conditions had not encouraged large movements of capital in or out of borders. However, within this context, the OECD pointed out how the distribution of global flows had changed among countries.

Mexico Ranks Fifth in the Global Recipients of FDI

In this way, what the OECD described was a landscape of flows where the most favored economies had been mainly those that registered an important internal reinvestment or strong industrial performance. In the general ranking, the countries that would be the preferred ones among investors would be the United States, Brazil, the United Kingdom, and Canada. In this list, the United States is in first place, with USD 149 billion; Brazil, in second place, with USD 38 billion; the United Kingdom, in third, with USD 37 billion; and Canada, in fourth, with USD 36.869 billion. Rounding out the first five is Mexico with USD 34.265 billion. This way, the Mexican economy was above other large economies in Europe and Asia.

Mexico’s profit reinvestment

In this regard, what is notable about Mexico’s position is the origin of its FDI inflows. For the OECD, the main characteristic of the Mexican economy is that its FDI is mainly explained by profit reinvestment. This means that Mexico’s FDI was driven not by capital injections from abroad but by local companies that are already in the country and that decided to reinvest the profits that are made here rather than returning them to the country of origin.

This situation is described in OECD as a general trend by which a large part of the Mexican FDI was made up of profits reinvested by the same companies that were operating here. The sectors in which this situation is seen would be manufacturing, automotive, aerospace, and electronics. In all of these, Mexico continues to be very competitive as a production and export platform and is the main destination of large companies.

Mexico’s FDI and other countries

In this sense, the OECD report showed that this process is not something unique to Mexico, since in other economies of similar size, it is also notable that the main driver of investment has been the profit reinvestment by the companies themselves. Germany and France are OECD members, where these figures would be more important in relative terms. In this case, it is noteworthy that the German economy, and even France to a lesser extent, has registered better FDI figures than Mexico.

For the OECD member countries, global FDI increased by 8% to USD 249 billion in the first six months of 2025. According to the OECD, most of the FDI increases in 2025 resulted from intra-company loans, or intercompany lending within multinational groups of companies. Reinvested profits also made a significant contribution, especially in Mexico, Germany, and France.

On the other hand, total cross-border M&A values declined in both developed and emerging markets. Fewer transactions were carried out in each case compared to the previous year. While developed market M&A activity softened somewhat, that of emerging markets was particularly affected. M&A activity in these markets also tends to be more sensitive to financial conditions, commodity prices, and exchange rates.

As the OECD itself points out, some sectors have registered positive peaks. Among them, investment in green technologies in advanced economies, with investments in clean energy, electric vehicles, and charging infrastructure, or infrastructure for the development of artificial intelligence, is reaching record levels. However, these peaks are still limited given the drop in FDI inflows into new projects around the world.

OECD’s Outbound FDI

The OECD data reveal that between these organizations’ member countries, outbound foreign direct investment fell 19% during the first half of 2025. The sharpest declines in overseas investments were recorded in Canada, Australia, and Sweden, according to OECD data, which cited weaker domestic savings and changes in corporate investment priorities as a result of market uncertainties. In contrast, France was the only other major developed economy to increase its outbound FDI in the first half of 2025.

The OECD report indicated that Japan was the world’s largest source of FDI during the first half of 2025, with USD 64 billion invested abroad. It was followed by France, with USD 49 billion. Third place in the world’s major economies’ FDI sources was for the United States with USD 26 billion. The report also noted that Japanese corporations have continued to expand abroad despite the higher cost of financing and lower domestic growth. This is due to their long-term strategic planning horizon.

Mexico maintains a favorable long-term FDI performance

As the OECD itself notes, Mexico foreign direct investment data shows that the economy’s good performance in this indicator in the short, medium, and long term will be maintained. In this sense, a context such as the current one, with a greater desire on the part of large companies to maintain or increase investments in the countries where they are located, will only have a positive impact on Mexico. This is because these companies have in the national space a geographically strategic location, with excellent infrastructure and a wide network of free trade agreements that allow them to supply not only their main market but also other destinations.

For Mexico, factors such as its location, the value of free trade agreements or the vast number of people with a good academic and professional training have been determining factors to ensure a high performance in terms of receiving foreign direct investment. In addition, the work carried out in recent years in infrastructure or energy has been another key element. The prudent management of macroeconomic policy, with monetary and fiscal policies that have allowed, among other things, to contain inflation expectations in a context of global shocks, has been another characteristic that has allowed Mexico to remain a safe haven for investors.

The Directorate of Investments and Special Regimes (DIE) of the Ministry of Industry and Commerce (MIC) revealed that in the third quarter of 2025 (July-September), Paraguay issued 74 certificates to foreign investors, who committed to approximately USD 6 million in national investment projects. These data show a tendency of continuity in foreign investment in Paraguay, despite a regional context that, due to the deceleration of world trade and tighter financial conditions, has not been as favorable. Paraguay, in this regard, has become a destination of greater interest for foreign capital in the region, as a country that stands out for its macroeconomic stability and investment incentives.

Changes in the Destination of Foreign Investment

The MIC highlights that foreign investment in Paraguay is becoming more diversified in the long term. If a few years ago the majority of these operations were destined for the primary sector (mainly, agriculture) and construction activities, recently more than half of the total foreign capital committed in the third quarter was destined for business services, industrial technologies, and light manufacturing. In this sense, foreign investments in Paraguay are consolidating themselves in the medium term as a form of productive insertion in global value chains and are gaining relevance as a result of industrial relocation and nearshoring trends.

More concretely, the technology-linked investment model is gaining a growing share of foreign investment in Paraguay. On the one hand, this activity is part of a governmental policy of digitalization and productive innovation. In this context, numerous incentives for industrial modernization have been launched in recent years, such as the National Innovation and Industrial Competitiveness Program, which has encouraged, among other things, the adoption of new technologies in production and logistics. On the other hand, certain segments of light manufacturing are also beginning to move to Paraguay. Production units of this kind are located in the country’s free zones and are able to reduce their tax burden and face simpler and more agile administrative procedures. Companies also committed to expanding certain services in the third quarter. In particular, back-office functions, logistics coordination centers, and some technical support services, among others. These operations take place in Paraguay’s main cities, such as Asunción and Ciudad del Este. The work and social insertion that these services generate is not limited to formal jobs, since training and human capital are also developed in the national territory.

Mercosur: The Main Source of Investment

The Mercosur region continues to be the main source of foreign investments in Paraguay. Of the 74 certificates that the DIE issued in the third quarter, about 50% corresponded to companies and investors from Mercosur countries. Brazilian investors registered the most projects of all countries in the region, with a total of 26 new investments. The main driver of these investments has been Paraguay’s lower energy costs compared to Brazil and the rest of the world, which is a competitive advantage that is maintained in the medium term. It should be remembered that the national energy matrix is mainly based on clean hydroelectricity from the Itaipú and Yacyretá dams. For the case of Brazil, investments have been prominent, especially in food processing industries, automotive, and plastics parts.

Following Brazil, Bolivia, Argentina, Uruguay, and Chile provided the second largest number of new investments. Bolivian investors have diversified their destinations and are beginning to expand logistics and agricultural input activities in Paraguay, for example. For its part, Argentine and Uruguayan investors have increased their presence, mainly in the construction, manufacturing, and wholesale and retail trade sectors. Finally, Chilean investments have been recurrently related to agri-food projects and renewable energy.

Expanding Extra-Regional Investment Partnerships

Paraguay is also expanding its investment relationships to other extra-regional countries, including a larger variety of European, Eurasian, North American, and Asian investors. European and Eurasian investors were responsible for around 35% of all new projects in the third quarter of 2025. Spain, Poland, Russia, Turkey, and Ukraine, in particular, have been financing projects in industrial services, infrastructure, and agribusiness. Finally, investors from North America and Asia were responsible for the remaining 15% of new projects. This group of countries, made up of investors from the United States, Canada, China, and South Korea, among others, has expanded its interest in Paraguay in recent years. This interest has been based on the long-term stability of the Paraguayan economy (characterized by low inflation and public debt, and relatively predictable fiscal policies) and its potential as a platform to the rest of the Southern Cone market, through Mercosur. As for Asian investments, several South Korean and Chinese investors have expressed interest in manufacturing components in Paraguay and assembling electrical and electronic goods. This may be part of a greater tendency of relocation of production and supply chains by companies that want to reduce logistics costs and diversify their operations across the Americas.

Foreign Investments in Paraguay: Key Strengths

One of the most important competitive advantages that explain the dynamism of foreign investments in Paraguay is the low tax burden. In this regard, Paraguay has a corporate income tax rate of 10% and a value-added tax (VAT) of 10%, which is one of the lowest in Latin America. Moreover, companies that operate under the Maquila Law only pay a single tax rate of 1% on the national value added, if their production is destined for export. Another structural advantage is related to low energy costs. Paraguay is a world leader in clean energy generation, whose production capacity far exceeds its domestic consumption. In the medium and long term, this means very low industrial rates for electricity in the national territory. In addition, in recent years investments have been made in infrastructure that improve logistics corridors that connect the main cities of Paraguay: Asunción-Ciudad del Este-Encarnación-Concepción. In this sense, road improvement projects, port facilities, and digital connectivity have significantly increased Paraguay’s connection to global trade routes. The improvement of the infrastructure in the country’s main river ports, a process that is still taking place, has also made the waterway formed by the Paraguay-Paraná rivers a strategic axis for the shipment of agricultural exports and industrial products.

Prospects: Paraguay’s Future as a Regional Hub

The government’s medium-term policy is expected to be increasingly focused on consolidating Paraguay’s role as a logistics and production hub for the rest of the Southern Cone. In this way, the state will prioritize policies that support industrial upgrading, digital transformation, and sustainable production. As new sectors continue to gain strength and diversity in foreign investments in Paraguay, these operations will be fundamental for shaping the next stage of Paraguayan development. With fiscal stability, abundant clean energy, and infrastructure connectivity, Paraguay will continue to attract foreign investors in 2026, looking for efficiency, sustainability, and regional insertion in an increasingly competitive environment.

Nicaragua approves special economic zones to attract Chinese investment, as the National Assembly grants wide tax exemptions for companies operating in the framework of the Belt and Road Initiative.

Nicaragua recently approved special economic zones, or free-trade areas, in a move to deepen ties with China and attract foreign investment. The National Assembly green-lighted the Nicaragua–China Special Economic Zones (SEZ), a framework that will give new fiscal and regulatory incentives for Chinese companies operating in the country and help diversify its industrial base. The zones will target manufacturing, agribusiness, logistics, and high-tech sectors.

Operating under the auspices of Beijing’s Belt and Road Initiative, these special economic zones will benefit from a preferential fiscal and regulatory regime that will remain in place for the next 10 years. The move is one of the most significant economic measures adopted by Nicaragua since it resumed relations with China in 2021.

Fiscal and Investment Incentives

Companies that operate in the SEZs will enjoy a 100% exemption on income tax for the next decade, as well as exemption from customs duties, municipal taxes, and VAT on purchases made in Nicaragua, according to the recently approved law. The special regime also exempts from taxation the importation of machinery, raw materials, and intermediate goods for use in Nicaragua, as well as the payment of dividends.

The incentives could lead to investment in industrial manufacturing, agriculture and agro-industry, renewable energy, information technology, and other sectors. Nicaragua’s Ministry of Development, Industry and Trade (MIFIC) said that the law also promotes investments in export-oriented logistics and infrastructure. The government hopes the SEZs will also attract Chinese investment in the assembly of electronic components, auto parts, and other light industries.

Nicaragua plans to position itself as an attractive destination for Chinese firms looking to set up assembly lines and export to the United States and Europe, as well as a supplier of agricultural goods, under the framework of the Belt and Road Initiative (BRI), Beijing’s massive global infrastructure and investment program.

China’s BRI and Nicaragua: A Growing Partnership

Nicaragua and China signed the free trade agreement (FTA) in 2023, which will increase the access of Nicaraguan products such as beef, coffee, fish, cocoa, and sesame seeds to the Chinese market. Chinese state companies have also built thousands of homes, financed modernization of the country’s Pacific ports, and provided infrastructure and credit for upgrading the national telecoms network. The new SEZ measure is the latest in a long list of economic concessions to Beijing.

While Nicaraguan officials have hailed the measure as historic, the U.S. government has reacted with harsh rhetoric and warnings of potential economic reprisals. The administration of U.S. President Joe Biden is expected to impose a 100% tariff on Nicaraguan exports and suspend a range of preferential trade arrangements, including parts of the Central America–Dominican Republic Free Trade Agreement (CAFTA-DR), citing “continued authoritarianism and the deterioration of human rights” under the Ortega government.

Nicaragua approves special economic zones and the U.S. government fears that China is tightening its grip on Nicaragua, as Nicaragua-China Economic and Trade Forum plans to deepen ties between private sectors of both nations.

Government officials say that Nicaragua’s policy pivot to China and away from traditional Western partners is raising new concerns about transparency, labor standards, and national sovereignty. Analysts note that further U.S. sanctions could blunt some of the expected benefits of Chinese investment, given that the U.S. is Nicaragua’s largest export market.

Growing concern about China’s increasing footprint in the country has given way to protests and public criticism of the Ortega administration’s strategic alignment with Beijing. However, the Nicaraguan government has brushed off concerns, describing the move as a “sovereign economic decision” that will create jobs, generate income, and help modernize the economy.

Opposition and Concerns at Home

The decision to create special economic zones, as well as the naming of Laureano Ortega Murillo to coordinate the SEZs, has sparked criticism of authoritarian governance in Nicaragua. Laureano Ortega Murillo, the president’s son and a high-ranking member of the ruling party, has been placed in charge of coordinating and managing these SEZs. This decision has intensified concerns over nepotism and the consolidation of power within the Ortega family and their political allies.

Civil society groups and independent economists are increasingly vocal about the lack of transparency and institutional checks in the implementation of these SEZs. They argue that without proper regulatory frameworks and mechanisms for accountability, these zones risk becoming enclaves of discretionary authority, vulnerable to corruption and limited public scrutiny.

Nicaragua’s macroeconomic environment and broader political climate have also been a source of concern, especially for investors outside of China. Nicaragua’s media freedom, the independence of the judiciary, and space for political opposition have all come under pressure, a dynamic that could make the Ortega government less attractive to diverse sources of foreign direct investment.

A Chinese Flagship Investment?

Nicaragua approved special economic zones recently to support Chinese investment, as both countries signed an important FTA on 7 April in Managua. China’s trade and investments have reached significant levels in a short period. The Asian nation’s role as an investor has grown substantially since the renewal of bilateral relations in 2021.

In 2023 alone, more than 85% of the $870 million invested by China in Nicaragua focused on five economic sectors: construction and public works, trade, tourism, finance, and agriculture. The largest share was construction and infrastructure, reaching $200 million in private investment and another $400 million in public works. All of these projects will have a synergic relationship with the Special Economic Zones.

Nicaragua has become an important partner for Chinese investment in the Central American region and for diplomatic support in international fora, as both sides approve special economic zones. In 2022, Nicaragua–China trade reached $851 million, a 150% increase in just one year, with a trade surplus of $504 million in favor of Beijing.

Despite being a net importer of Chinese goods, Nicaragua’s exports to China have also grown significantly. In 2022, Nicaragua’s exports to China totaled $347 million, more than double the $136 million from the previous year. In terms of sectors, while Nicaraguan exports to China are mainly composed of agricultural goods and seafood, China exports a variety of manufactured goods, including electronic appliances and machinery.

China’s Economic Presence in Nicaragua

Chinese FDI has increased rapidly across sectors, including infrastructure, real estate, and mining. The Nicaragua–China Economic and Trade Forum is planning to play an important role in deepening the trade relationship between the private sectors of both countries and building bridges for further cooperation.

China approved two large infrastructure projects in 2022: a nearly $200 million investment in telecommunications equipment to upgrade the country’s telecoms network and a $367 million deal for the Pacific road, a coastal highway stretching over 100 km along the Pacific Ocean and open to bids from international investors.

The latest project, a 100,000-home development in Tipitapa, about 20 km north of Managua, is part of a deal signed in 2022. The $900 million development, which aims to build more than 500,000 homes by 2026, is being financed through Chinese debt and Chinese firms.

Opportunities and Risks Ahead

Nicaragua’s approval of the Nicaragua–China Special Economic Zones marks a significant shift in its economic policy, with the potential to reshape the country’s trade dynamics and foreign investment landscape. On the positive side, these zones could provide a much-needed boost to the Nicaraguan economy by attracting substantial Chinese investment, creating jobs, and fostering economic diversification.

Enhanced bilateral trade with China, supported by the zones, is also expected to increase revenue from exports and bring in advanced technology, which could be particularly beneficial for sectors like manufacturing and agriculture.

Nicaragua also sees the SEZs as a means to reduce economic dependence on the United States and explore new avenues for growth and development. However, these positive aspects are not without their risks and challenges. The special economic zones could exacerbate the existing economic dominance of Chinese interests, further concentrating economic power and limiting the growth of domestic industries that are not directly aligned with Chinese investment strategies.

Nicaragua recently approved special economic zones, but the growing Chinese footprint in the country also raises concerns about transparency, labor rights, and environmental standards, which are not always aligned with international norms. The potential impact on the U.S. trade relationship is particularly worrisome, given the traditional economic ties between Nicaragua and the U.S. Market.

The U.S. response, which could include punitive tariffs and a withdrawal of trade privileges, threatens to undermine the very investment that Nicaragua seeks to attract. Moreover, these zones could become highly politicized, serving as instruments for consolidating political power rather than advancing broader economic interests. The appointment of Laureano Ortega Murillo, the president’s son, as the coordinator for the SEZs has only intensified these concerns.

Conclusion

In conclusion, while the SEZs offer a strategic opportunity for Nicaragua to engage with China and potentially transform its economic landscape, the move is fraught with geopolitical, economic, and social implications. The potential benefits of job creation, technological transfer, and infrastructure development must be carefully weighed against the risks of increased dependence, economic polarization, and the potential erosion of regulatory standards. The outcome will largely depend on how Nicaragua navigates these complex dynamics and whether it can ensure that the SEZs serve the interests of the entire nation, rather than a privileged few.

Mexico will need 7.5 million homes in the coming years. As for the real estate epicenter, it will focus on the Valley of Mexico, Guadalajara, and Monterrey. The dynamics both reflect demographic pressures and the reconfiguration of space in Mexican cities, where economic, demographic, and infrastructure factors converge to define the next housing construction boom.

In the metropolitan areas on the periphery of the Valley of Mexico, housing projects have spread towards the edges of the state, bordering Hidalgo and Morelos. In Guadalajara, real estate growth has occupied former industrial corridors. In Monterrey, expansion is directed towards municipalities to the north—source: Research on the Real Estate Situation in Mexico, BBVA.

Real estate growth in Mexico is redrawing the geography of urban limits and reconfiguring cities towards where economic opportunities are located. The fact that new construction is shifting to neighborhoods far from city centers is not coincidental: population growth and migration are also intertwined with the location of new infrastructure, industrial development, and strong labor markets. The increase in real estate demand in Mexico, with all the weight this sector has for the country’s economy, is above all a sign of these growing points.

The Concentration of Housing Growth in Mexico

As for growth in the housing market, it will concentrate in the coming years in the country’s six largest states and a handful of metropolitan areas. The report Real Estate Situation in Mexico, Second Half of 2025, prepared by BBVA, estimates that Mexico will need 7.5 million homes in the coming years, 56.5% of which will be concentrated in six states: the State of Mexico, Mexico City, Jalisco, Nuevo León, Guanajuato, and Baja California.

“These three metropolitan areas concentrate about half of the total demand,” states the report, referring to the Valley of Mexico, Guadalajara, and Monterrey, respectively. Likewise, these three territories also hold a special position, since they are logistics hubs, and centers of industry, manufacturing, services, and commerce, where strong migration is also generated.”

These locations, where industrial corridors and high economic value coexist with demographic weight, will concentrate demand from a social-interest point of view. These states represent the center of gravity of real estate demand in Mexico, while in the south of the country, housing needs are lower, with less than 60,000 expected units in the case of Campeche, Tlaxcala, or Zacatecas. Demand is also concentrated in the north and center of the country, where economic growth and infrastructure expansion are the most robust.

“The type of housing and the market segment where it is intended to be located directly influences the territorial distribution of housing demand,” states the report. That is why population flows to new construction jobs “reflect the internal migratory flow that shows an additional preference to concentrate in regions with a greater diversity of industries and employment.”

The Type of Housing That Will Boost Growth

The nature of demand also changes depending on its socioeconomic characteristics. If we look at the number of homes by housing type, we find that of the total number of units, 41.6% are traditional, 35.2% social-interest, 19.9% middle income, and 3.4% residential or luxury housing. This distribution between the different segments shows, among other things, the prevalence of the affordable housing sector in the national market and the influence of the housing funds on access to housing.

If we break down demand by housing type, we find that the social-interest housing segment has the most robust demand nationwide. In this segment, demand is particularly concentrated in the most urbanized states: The State of Mexico requires the construction of nearly half a million homes, followed by Mexico City, Jalisco, Guanajuato, Puebla, and Nuevo León, which, added together, account for 51.8% of the national total. In other words, access to a job and urban infrastructure are critical factors for real estate demand in Mexico.

In contrast, the states with the least demand are Campeche, Colima, Zacatecas, and Baja California Sur. These entities present lower urban population densities, less diversified productive structures, and lower levels of industrial diversification, which translate into less internal migratory pressure, lower growth, and lower demand for housing.

Traditional Housing and the Consolidation of the Middle Class

Traditional housing (a housing type with higher values than social-interest housing but still within a fair price range) is a little more than 3 million potential units. Demand for this type of housing is also more concentrated than other types of housing, but it does appear in more areas of the country. It is a trend that is also associated with the progressive consolidation of the Mexican middle class, which seeks more secure access to housing and mortgage credit.

Traditional housing, often associated with middle-income households, opens up possibilities to access a mortgage with a more formal credit structure. It is here where demand begins to be distributed further afield from capital cities and starts to point to secondary areas of real estate demand in Mexico. Querétaro, León, or Mérida are also cities where demand will increase thanks to job creation and greater connectivity. That is why the states with the most significant demand are also those with the most industrial activity and the highest population density: State of Mexico, Jalisco, Mexico City, Nuevo León, Guanajuato, and Baja California account for 51.3% of national demand.

“Social-interest housing demand is more geographically concentrated,” says the report, “while traditional housing has a greater territorial dispersion, based on the borrowing capacity of the middle class and commercial bank credit.”

The Middle-Income and Residential Market: The Strength of the Metropolises

In this high-value segment, the territorial concentration is more pronounced. Demand for homes worth more than 2.5 million pesos, which includes the middle and residential segments, reaches 1.7 million units, which is equivalent to 23.2% of the national total. It should be noted that this demand, the one associated with the country’s most dynamic economies, largely comes from the metropolises, where employment is generated, services are concentrated, and foreign investment is attracted.

In this range, the entity with the highest demand is Mexico City, where the number of potential homes exceeds 300,000 units, followed by Jalisco, the State of Mexico, Nuevo León, and Baja California, which, added together, account for 52.5% of the national total. In this range, demand also shows other factors associated with changing consumption patterns and new housing needs, such as the emergence of mixed-use, vertical, and environmentally friendly models.

What Housing Will Be Needed?

“In short, as the value of the housing unit increases, the territorial concentration becomes more acute,” says the report. In the future, growth in the real estate sector in Mexico will be focused on the metropolitan areas in the country’s three largest conurbations, the Valley of Mexico, Guadalajara, Monterrey, and Tijuana. On the one hand, this will mean that public policy and urban management will have a decisive influence on the country’s real estate future.

It is vital that investment be channeled into public transport, services, and infrastructure, as well as improved access to credit to meet future demand. On the other hand, we should note that the most dynamic real estate growth will also be in areas with high economic value, which means that regional economic balance will be necessary to guarantee and expand the housing market in Mexico. In the BBVA report, it is also emphasized that half of the demand is in three metropolitan zones of the country, “representing a challenge for territorial planning, investment prioritization, and targeting social housing policies.”

In a context of increasingly large metropolitan areas, housing needs, services, climate adaptation, and the future of urban transport will therefore be central to understanding the real estate construction that Mexico needs. Real estate demand in Mexico and the new construction where it is focused will be one of the driving forces of the country’s economic dynamism, which is already beginning to show signs of the industrial acceleration that nearshoring can generate.

Strengthens Uruguay’s economic diversification

Uruguay and Saudi Arabia took another step towards building stronger investment relations with the signing of the Investment Promotion and Protection Agreement. The agreement is one of a series of similar accords and a part of a comprehensive strategy initiated at the beginning of President Yamandú Orsi’s government, aimed at diversifying the markets for Uruguayan production and attracting foreign investment to the country.

The agreement was signed by the Foreign Minister, Mario Lubetkin, on Thursday in the Saudi capital of Riyadh with the Kingdom of Saudi Arabia’s Minister of Investment, Khalid bin Abdulaziz Al-Falih. The agreement aims to provide greater legal security and protection for Saudi investors who wish to do business in Uruguay, as well as to incentivize Uruguayan businesses to invest in and do business in Saudi Arabia’s growing market.

Guarantee and protection for investors

“The signing of this agreement guarantees for Saudi entrepreneurs who wish to make investments in Uruguay, and under stable, predictable, and fair conditions”, emphasized Minister Lubetkin. The agreement will create a firm legal framework to enable foreign investors to do business in Uruguay under transparent and stable legal conditions, he said. “We also want Uruguayan investors to be able to make their way into this dynamic economy,” he added.

In his speech, Lubetkin stated that the signing of the agreement, which was another milestone in the international investment promotion policy of the Uruguayan state, began with a view to not only expanding trade between the countries but also strengthening and consolidating Uruguay’s image as a safe and reliable investment destination.

Uruguay and Saudi Arabia: In line with the foreign policy of the Orsi Government

This agreement is in line with President Yamandú Orsi’s foreign policy since the beginning of his government. He pointed out that the priority of his government since the beginning of its term has been to seek to diversify and deepen integration with new areas and trade blocs, beyond traditional regions and markets such as the European Union and Latin America.

In this regard, the government aims to attract investment from around the world, especially from countries and regions with strong financial capacity, such as the Gulf countries. “The signing of the Agreement on Reciprocal Promotion and Protection of Investments between the Kingdom of Saudi Arabia and the Eastern Republic of Uruguay, signed today, is just one more step in a process that began months ago and which we do not intend to stop”, he said.

Progress in Trade and Investment

In his speech, the foreign minister also highlighted progress in the Uruguay-Saudi Arabia relationship, achieved through the signing of the record-breaking agreement between Mercosur and the European Free Trade Association (EFTA) countries. These are Switzerland, Norway, Iceland, and Liechtenstein. The four countries form a free trade area with a GDP of more than 4.3 trillion dollars and a market of almost 300 million people.

“That is why this agreement is the result of our determination to continue to be competitive and act in time to safeguard the interests of Uruguayans, especially in strategic markets like the European one”, he concluded. “The signing of this Agreement is in line with the government’s ongoing effort to position Uruguay as a modern, reliable, and growing country that is not afraid to take part in global supply chains.”

Facilitates the access of Uruguayan products to new markets

In another part of his speech, Lubetkin also noted the achievements that Uruguay has made in recent months to access new markets for the export of agricultural and food products. In this context, he reported that “working hand in hand with the MGAP and MEF teams, we have already achieved new sanitary authorizations for the export of Uruguayan products to the markets of the Philippines, Algeria, Qatar, Hong Kong, Singapore, Malaysia, Kuwait and China, among others.”

Lubetkin emphasized that the signing of the agreement between Uruguay and Saudi Arabia will create an opening to further advance the export of Uruguayan products to the Middle East. In a context of growing demand in the Middle East for high-quality food and agricultural products, the importance of the market is critical for Uruguay to be able to access and expand its sales in the region.

Uruguay and Saudi Arabia: Developments in other world regions

Lubetkin also referred to the developments in the relationship with other countries in other world regions, in particular with Asian countries. In this respect, he celebrated that “Uruguay has recently become a member of the Treaty of Amity and Cooperation of Southeast Asia (ASEAN) in a ceremony held in Kuala Lumpur, which ratifies, by including us in this Treaty, the strength and closeness of our relationship with some of the main regional economies such as Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.”

Finally, the Minister of Foreign Affairs referred to the strong links that the country has been building recently with countries in the Middle East and Africa. “These results reflect our coherent and dynamic policy, a policy that will continue to propel us forward with this same drive so that Uruguay can take its place as a protagonist in the markets of the future,” he concluded.

As the Costa Rican semiconductor ecosystem consolidates, experts say it is time to recalibrate the Costa Rican investment attraction strategy. Costa Rica has established itself as one of Latin America’s most vibrant semiconductor ecosystems in recent years. More than five thousand direct jobs have been created, and there are now more than six hundred local suppliers in the country’s semiconductor value chain. But to continue adding value, Costa Rica must ascend the global value chain and assert itself as a true regional manufacturing hub. In the context of a rapidly changing semiconductor industry, marked by new competitors, technological shifts, and geopolitical alignments, industry leaders are calling for a redefinition of Costa Rica’s approach to attracting semiconductor investments through a renewed investment-attraction strategy.

Experts believe that if the Costa Rican investment attraction strategy does not adapt to these new dynamics, the country will risk losing competitiveness and long-term FDI that no longer aligns with its economic or technological development. According to Federico Quesada Chaves, ECA’s Director and an economist, the recent closures of multinational semiconductor subsidiaries are the catalyst for rethinking Costa Rica’s strategy in the sector. “It is a strong alarm signal for a semiconductor ecosystem in Costa Rica that we have been building, to continue betting on the productive linkages with the national industry and the transfer of technology and know-how to be cross-cutting elements in the country’s development,” said the expert in an interview with UNIVERSIDAD ESTATAL A DISTANCIA.

The strong foundations of the Costa Rican semiconductor ecosystem

Costa Rica’s semiconductor ecosystem has taken shape over two decades, strengthening its role as a trusted haven for high-tech investment and advanced manufacturing. During this period, the Costa Rican business climate, institutions, and labor pool have been built as elements of attractiveness for this industry. Currently, according to data from the Costa Rican Foreign Trade Promotion Agency (PROCOMER), around 5,000 direct jobs have been generated, and more than six hundred Costa Rican suppliers serve the international technology industry, many with capabilities at the global level.

Last year, the Ministry of Foreign Trade (COMEX) presented its Semiconductor Roadmap, a comprehensive strategy to position Costa Rica as a regional hub. The long-term plan, with a horizon to 2040, envisions a multi-faceted approach to attract and retain semiconductor projects, including human talent development, regulatory improvements, and fiscal incentives. However, as Quesada explains, the rapid reconfiguration of the global semiconductor industry may call for changes to the roadmap.

The challenge of the changing global semiconductor industry

Semiconductor supply chains are undergoing the largest reconfiguration of the last century, as countries and corporations seek to move production closer to home, reduce costs, and shorten supply lines. Governments and technology companies are investing billions of dollars in semiconductor manufacturing worldwide, from the United States (CHIPS and Science Act) and Japan to the European Union and China. The semiconductor sector has also seen the emergence of new competitive players in Asia and Eastern Europe, offering compelling incentives to attract projects and investments.

According to Quesada, Costa Rica can benefit from this global shift and position itself as a natural destination for semiconductor companies looking to move closer to American markets. “Emerging economies in Asia and Eastern Europe, with less stringent environmental and labor regulations, are displacing some of these established leaders in the sector. Costa Rica will have to be prepared to position itself and face this change: it must anticipate it, strengthen its technological base, and plan what it wants to be in this new industrial revolution,” he added.

This new context challenges Costa Rica to move to a more holistic semiconductor investment attraction strategy—one that is not only about promoting FDI but also about building the country’s own innovation, technology, and industry. Costa Rica can no longer simply aim to attract subsidiaries; instead, the goal must be to attract research, design, and higher-value-added operations that contribute to a more advanced and sustainable Costa Rican investment attraction strategy.

The challenges facing Costa Rica in the global semiconductor industry

The semiconductor roadmap is an important step in planning for the country’s future role in the industry, but it must be updated as the context changes. Faced with global supply chain reconfigurations and a rapidly changing international semiconductor landscape, Costa Rica must deal with a number of key challenges that will define the next stage of its strategy for economic development. In this regard, the economist at UNIVERSIDAD ESTATAL A DISTANCIA emphasizes four key points that Costa Rica must focus on:

• Productive Linkages: Companies located in Costa Rica, especially multinational corporations, must generate local value. Through supplier development programs, technology transfer, and innovation partnerships, Costa Rica must integrate itself into a wider value chain that allows it to position itself as a center of excellence in a specific area. Integration in a broader regional ecosystem is key to the sustainability and growth of Costa Rica.
• Technology Transfer: FDI is not only about job creation but also about innovation and research. R&D and innovation need to be fostered through the creation of innovation clusters, links between academia and the productive sector, and technology centers focused on new materials, chip design, artificial intelligence, and other core technological areas that will power Costa Rica’s next-generation industries.
• Specialized Talent: Costa Rica must have the skilled and specialized talent to support industries of the future. Universities, technical schools, and the private sector must work together to expand talent and encourage professionals in engineering, data science, materials, advanced manufacturing, and related fields. The creation of Costa Rican human talent is the most important tool in the strategy.
• Strategic Adaptability: Costa Rica must be agile and able to quickly identify and seize opportunities in a shifting global industrial landscape. A clear focus on regulations, attracting talent, and positioning in areas of global strength will be key to Costa Rica’s ability to compete in a changing global context.

To successfully navigate this path and remain relevant, Quesada warns that Costa Rica’s investment attraction strategy needs a profound update that prioritizes the rethinking of productivity linkages with the Costa Rican productive sector. Experts are particularly concerned that companies operating in the country may no longer serve as generators of productivity linkages with the national industry and may not support the strengthening of Costa Rica’s own knowledge.

In this new industry, Costa Rica must prioritize both attracting direct investment and strengthening the competitiveness of its semiconductor industry and its research and development ecosystem. By generating effective and strategic links with its own productive sector, the country will be able to ensure that every dollar of FDI invested in Costa Rica will not only generate high-quality employment but also contribute to building a more sustainable and inclusive economy and technological leadership for Costa Rica. In a year in which multinational companies are ending projects and uprooting plants from Costa Rica, the Costa Rican investment attraction strategy must be urgently rethought if the country wants to continue consolidating itself as a hub for high-tech investment.