Mexico closed 2025 with a record USD 40.9bn in foreign direct investment, up 10.8% year-over-year. The Ministry of Economy celebrated. The headlines wrote themselves. But behind the record number, the composition tells a story that should make nearshoring bulls more cautious and nearshoring bears less dismissive. The question is not whether capital is flowing into Mexico. It is what kind of capital, where it is going, and how much of the announced pipeline will ever materialize.
The composition problem
Of Mexico’s USD 40.9bn in FDI for 2025, the largest component was reinvested earnings: USD 27.6bn, or 67.7% of the total. This is profit that foreign companies already operating in Mexico chose not to repatriate. It is a vote of confidence in the Mexican operating environment, but it is not new capital building new factories. Reinvested earnings contracted 3.7% year-over-year (from USD 28.7bn in 2024), as companies distributed more dividends.
New investment, the category that most closely tracks actual greenfield activity and new facility construction, reached USD 7.4bn. This was the real bright spot: a 133% increase from 2024’s USD 3.2bn. After years of nearshoring announcements generating headlines but not shovels in the ground, new investment finally jumped. It now represents 18.0% of total FDI, up from just 8.6% in 2024.
The third component, intercompany accounts, totaled USD 5.8bn (14.3%), up 17% year-over-year. These are capital transfers between parent companies and Mexican subsidiaries, often reflecting corporate treasury management rather than productive investment decisions.
Mexico FDI by type: new investment vs. reinvested earnings, 2020 to 2025
Source: CNIE, Secretaria de Economia. 2020-2023 composition estimated from available breakdowns.
The analytical takeaway: two-thirds of Mexico’s record FDI is companies keeping profits in the country they already operate in. Only 18% represents genuinely new capital commitment. That 18% is growing fast, which is encouraging. But the headline “record FDI” overstates the pace at which new productive capacity is actually being added.
The geography tells you where nearshoring is real
The geographic distribution of FDI in 2025 reveals extreme concentration. Mexico City captured USD 22.4bn, or 54.8% of the total, a 55% increase over 2024. This reflects Mexico City’s role as the corporate domicile for holding companies and regional headquarters, not physical manufacturing investment. When a multinational books its Mexican subsidiary’s profits in CDMX, that shows up as FDI in the capital, regardless of where the factories actually operate.
Mexico FDI by state, 2025
Source: Secretaria de Economia, CNIE. CDMX figure reflects corporate headquarters booking, not physical manufacturing investment. States 4 to 10 estimated from Q1 proportions and partial-year data.
The states that matter for the nearshoring thesis are the ones attracting manufacturing FDI: Nuevo Leon received USD 3.6bn (up 72.9% year-over-year), Estado de Mexico USD 3.3bn, and a cluster of northern and Bajio states including Chihuahua, Coahuila, Jalisco, Guanajuato, Baja California, and Queretaro that collectively represent the industrial backbone.
Nuevo Leon’s surge is genuine. Manufacturing accounts for 53% of the state’s FDI, with U.S. companies responsible for over half the total. The state has leveraged its proximity to Texas, established industrial parks, and skilled labor base to become the undisputed nearshoring hub. Its 72.9% year-over-year growth is not an accounting artifact: it reflects real factory expansion and new facility commitments.
But the concentration raises a different concern. If we strip out Mexico City’s corporate booking effect and look at the top three industrial states, the numbers narrow significantly. The nearshoring opportunity is real, but it is heavily concentrated in a handful of northern states with existing infrastructure. The promise that nearshoring would spread to second-tier cities and central Mexico has not yet materialized in the disbursement data.
The announcement-to-disbursement gap
The most important number in Mexico’s FDI story is one the government does not report: the gap between announced investment commitments and actual disbursed capital. The Secretaria de Economia regularly publicizes investment announcements, which include everything from signed memoranda of understanding to firm construction contracts. The CNIE’s disbursed FDI figures capture only capital that has actually crossed the border and been deployed.
The gap is wide. Tesla’s Monterrey gigafactory, announced in 2023, remains in limbo. BYD’s planned facility has been shelved amid geopolitical pressure. Multiple EV-related commitments have been delayed or cancelled as companies reassess Mexico’s position in the U.S.-China trade tension. These are not small projects: they represent billions in announced investment that may never convert to disbursed FDI.
The government’s “Plan Mexico” initiative aims to close this gap through regulatory streamlining and targeted incentives. The early evidence suggests it is working at the margin: the 133% jump in new investment for 2025 is a meaningful acceleration. But the pipeline of unfulfilled announcements from 2022 to 2024 remains large, and the conversion rate is still well below what the headlines imply.
What this means for the equity market
For investors in Mexican equities, the FDI data has two implications. First, the industrial real estate thesis is intact but concentrated. As we wrote in our analysis of Mexico’s industrial FIBRAs, the absorption of industrial space in northern states has been strong, and FDI flows confirm this. Second, the consumption spillover from FDI, higher wages in manufacturing states driving retail and services demand, is real but geographically narrow. National consumption data will understate the dynamism in Monterrey and the Bajio corridor while overstating it in regions where nearshoring remains aspirational.
The bottom line: Mexico’s FDI record is real, and the 133% jump in new investment is the most encouraging signal since the nearshoring narrative began. But the composition (two-thirds reinvested earnings) and the geography (heavily concentrated in CDMX and a few northern states) mean the headline number overpromises relative to the actual pace of new productive capacity. The announced-versus-disbursed gap remains the elephant in the room. For equity investors, the playbook is to follow the disbursed dollars, not the press releases, and to focus on companies and sectors with direct exposure to the states where the capital is actually landing.