London, August 2022: OBG has announced that it has selected the Mexican state of Hidalgo, and its investment team lead by economic tsar José Luis Romo, as its foreign investment case study of the year.
OBG operates across four regions, providing economic intelligence across 40 countries, highlighting investment opportunities and novel stories across these emerging markets. While there has been marked progress across many of these countries following the pandemic, OBG felt the cumulative success for Hidalgo over the government’s past six-year term (known as a sexenio) warranted the recognition.
Over the last 6 years, the state has managed to shift its economy from being one largely reliant on industries established for decades or centuries– such as mining and textiles– to those focusing on high value-added sectors– such as the pharma-chemical industry, agroindustry, and sustainable mobility, among others. During the sexenio, Romo and his team have secured a record MXN70bn ($3.43bn) of investment, more than any previous administration. In fact, the investment brought in during the first half of the administration was over double that of the same time period in any previous government.
Examples of the successful economic policy implemented in Hidalgo are: the annual GDP growth of 8% registered in the first quarter of 2022, almost 4 times higher than the country’s average; the growth of industrial activity of 27% in the first quarter of the year and employment creation, which remains the fourth most dynamic in Mexico in 2022.
Part of the success is down to the state’s underlying fundamentals– such as it’s good rail and road connectivity to other parts of the country’s industrial heartland, as well as its accessibility to Mexico’s City’s 20m+ people, in particular its new international airport which opened earlier this year.
However, Hidalgo has not always been among the most favoured states of Mexico’s 32 federal entities for investment. Despite this, the policy and practice implemented by the economic team have been key drivers of investment and economic growth. The implementation of regulatory reforms put the state on par with governing frameworks of many European countries, thereby providing security and certainty for foreign and domestic investors alike.
As a result, large investors have occurred in the state from big global players. One of the most notable has been the MXN15bn ($740bn) investment from Grupo Modelo (part of Belgian conglomerate AB InBev) in a new brewery in Apan, in the state’s southeast. Operational from 2019, the brewery is the world’s second largest with the potential to the world’s largest with future expansion.
In addition, investors have also been drawn in by the strong credit rating that Hidalgo has received from international agencies such as Fitch Ratings, which awarded the state with AAA rating, the first of its kind for a state.
As the new administration takes the helm in September, it is hoped that the continuation and evolution of the state’s current measures will continue to positively shape the entity’s economic ecosystem going forward. OBG will be a close observer of the upcoming sexenio and looks forward to conducting future research on one of Mexico’s most dynamic economies.