Integrity risks for international businesses in Mexico

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

Please provide an overview of the most pressing integrity risks affecting international businesses operating in Mexico.

Summary

Mexico is one of the most open economies in the world and has been characterised by sustained - albeit slow - economic growth, low levels of inflation and high levels of macroeconomic stability. Over the past decade, the country has also managed to transform its economy, decrease its oil dependency and develop its manufacturing capacity. The country’s geographic location, competitive production costs, sizeable domestic market and highly skilled young workforce make the country an attractive destination for international investors.  

Between 2012 and 2018, the Mexican government undertook a number of reforms that have helped to foster competition in a number of sectors, notably in the oil industry and the telecommunications sector, each of which had previously been dominated by a single player. The country ranks ahead of most other Latin American countries and emerging economies in terms of ease of doing business, though levels of foreign direct investment are comparatively low (2.6% of GDP). Sectors of interest to foreign investors include the automotive, aerospace, telecommunications, financial services and electronics sectors, based predominantly in central and northern Mexico.  

Despite these positive trends and developments, the country faces significant institutional and governance challenges that have made the effective enforcement of the relatively strong legal and institutional anti-corruption framework impossible. Corruption is perceived by citizens and businesses alike as one of the main challenges in the country, and its effects have further aggravated the crisis in the judicial system, the failings of the police force and the wave of violence linked to organised crime.

Contents

1. Global evidence of the impact of corruption on business and investment
2. The Mexican economy and international investment
3. Extent and types of corruption in Mexico
4. Legal and institutional anti-corruption framework
5. Cross-sectoral integrity risks
6. Business climate in Mexico
7. Anti-corruption guidance for businesses
8. References

Main points

• Mexico is considered one of the most open economies in the world and has free trade agreements some of the most important economic powers, including the US, the EU and Japan.
• Between 2012 and 2016, president Enrique Peña Nieto, in collaboration with the opposition, passed a number of structural reforms, including the new national anti-corruption system (SNA)
• Both petty and grand corruption are widespread in the country and an obstacle to conducting business and are a result of the weak rule of law that prevails in the country.
• Violence and organised crime remain an issue and regularly disrupt businesses in certain areas of the country.

Authors

Roberto Martinez B. Kukutschka, [email protected]

Reviewer(s):

Transparencia Mexicana

Date

28/02/2019

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