Why This is Important to Wisconsin: Wisconsin companies could take advantage of a new infusion of financing to facilitate moving to or contracting out services there.
Nearshoring could provide an economic boost to Mexico, a report by the Inter-American Development Bank (IDB) says.
Nearshoring involves relocating a company close to its end user or contracting out services to a supplier in a neighboring country—as opposed to offshoring, which generally has companies sending production to a supplier in a distant region.
Mexico is positioning itself as an attractive location for nearshoring, and the IDB is providing financial support.
IDB’s private-sector arm, IDB Invest, says that through 2025, it is willing to offer between $1.75 billion and $2.25 billion in short- and long-term financing and other resources for new industrial parks, for investment in anchor companies that relocate, and for developing innovative financing for small and midsize companies operating as part of global supply chains.
Initial estimates in an IDB study show that nearshoring could add $78 billion a year in additional exports from Latin America and the Caribbean. Mexico would see the biggest gains, with the possibility of capturing an additional $35.3 billion a year in goods exports, the report says.
“Latin America today has a unique opportunity to attract investment, and nowhere is this opportunity bigger than in Mexico. That’s due to its geographical location, the U.S.-Mexico-Canada Agreement (USMCA), its abundant human talent, the complexity of its products, and its growing participation in global supply chains,” said IDB Vice President for Countries Richard Martínez.
IDB plans to focus primarily on Mexico’s southern and southeastern states, where the bank says worker productivity is about half the level of northern states, while the poverty rate is as high as 59%—more than twice the rate of northern states.
Wisconsin companies interested in nearshoring could take advantage of the IDB’s participation.
