There countries can control some of these factors, but not all. Governments depend on how attractive they make their countries, through attractive fiscal and commercial policies, but it also depends on them to preserve the rule of law, respect for industrial property and respect for investments and investors as fundamental elements of attraction . Increasingly, the strength of its environmental laws, environmental commitments, and visibility of its market and energy inputs have become equally important.
On the other hand, they can do little or nothing about their geographical situation, access to natural means of communication and availability of natural resources. They are what they are and have what their territory offers them. But there is a lot that they can do to attract investments that seek to produce sustainably by adopting legislation that supports the ‘renewability’ of inputs and the circularity of the economy. This has become recurring and essential in recent years and recent investments and financing in Mexico confirm it. So important has it become that it has fallen even in the ‘greenwashing’, that is, pretending to be sustainable without being so with the desire to access this financing and satisfy the importance that it entails. The availability of renewable energy, a strong renewable energy promotion framework and access for new industries simply encourage or stop investment today.
Probably the most frequently used aspect for foreign direct investment (to differentiate it from pilgrim or indirect investment) is that of ‘jumping’ trade barriers and ‘producing like locals’, which is a refined way of simply expanding markets. I explain.
If producing in the country of origin costs 100 but taking it to a new market, with or without tariff barriers, costs 10, the price in the importing country must be at least 110. If we add to this that there is no free trade agreement between the country of import and export, the cost of tariffs will have to be added, which could bring the cost of that product in the import market to 130. If, on the contrary, derived from economic conditions, availability of resources, tax incentives , cost of energy, availability of renewable energy, producing the same product directly in the importing country (now production) is 80, which means that, by not having to pay transportation costs or tariffs, the price of that product, Already in the country of final consumption, it can be from 90.
Of course, excluding the ‘dumping’which is an illegal and internationally sanctioned practice, means that the product becomes more attractive to the final market, which was previously imported and is now the production market.