Doing business at Baja, general overview on economy. Mexico has a mixed economy, with the government, its agencies and government-owned or -controlled companies expected to reduce their traditionally dominant position in the areas of telecommunications, public utilities and petroleum.

This would be more evident as Mexico is gradually changing with the energy and telecommunications reforms. Private enterprise is the principal factor in manufacturing, mining, commerce, entertainment, and the service industries, including construction and tourism.

The economy is fairly broad-based and dedicated mainly to supplying the needs of the large and rapidly increasing population. However, proximity to the United States also provides a large market for the export of manufactured and semi-manufactured goods, as well as substantial income from foreign tourists.

In general, the government’s attitude is to encourage foreign investment, particularly when new skills or manufacturing techniques are brought in, except in the few remaining fields reserved to the government or Mexican nationals.

Foreign investors receive the same treatment under Mexican law as domestic investors. Prior foreign investment law imposed performance commitments, including a requirement to maintain a positive balance of payments. These requirements generally no longer apply, and entities established under prior law can request a waiver of the commitments from the Foreign Investment Commission.

The foreign investment law in force (Ley de Inversión Extranjera) specifies which activities are reserved or restricted and, in the latter case, the maximum percentage of foreign investment allowed.

It also specifies those activities that require prior authorization from the Foreign Investment Commission to increase foreign participation above the levels approved. Currently, for example, the automotive and construction industries are not considered to be restricted activities; therefore, 100% foreign investment is permitted in companies engaged in such activities.