Latin America This Week: June 20, 2023

Investment inflows perpetuate Mexico’s north-south divides. Throughout his four years in office, Mexican President Andrés Manuel López Obrador (AMLO) has encouraged, cajoled, and even threatened companies to step up investments in Mexico’s south.  It hasn’t worked. Since 2018, southern states have received less than thirteen percent of all foreign direct investment (FDI). In contrast, nearly half goes to the northern and central states of Mexico City, Nuevo León, Baja California, Jalisco, and Chihuahua. The Mexican Institute for Competitiveness’ (IMCO’s) newest annual State Competitiveness Index, which ranks states based on favorable business conditions including labor, infrastructure, and innovation, explains in large part why: southern states are less competitive across their dozens of indicators. Add to this their isolation: For Chiapas, Oaxaca, and Yucatán, goods exports average just 5–6 percent of their GDPs. Meanwhile along the border, Baja California, Chihuahua, and Coahuila exported more than one hundred percent of their GDPs.

Washington fetes Uruguay. Uruguayan President Luis Lacalle Pou became the seventh Latin American leader to meet with U.S. President Joe Biden at the White House, the two presidents talking democracy, Ukraine, and Venezuela, following heavyweights AMLO and Brazilian President Luiz Inácio Lula da Silva. Congress, too, extended itself, U.S. Senators Bob Menendez (D-NJ), Bill Hagerty (R-TN), and Tim Kaine (D-VA) unveiling the United States Uruguay Economic Partnership Act, an agreement that cuts tariffs and boosts access to business visas. While a win for Lacalle Pou, Uruguay’s neighbors aren’t likely to look at the potential commercial deal kindly as it could rupture Mercosur’s aspirations to solidify its customs union.