Incentives to Invest: The Case of Mexico

For the past two decades, Mexico has been a significant exporter and importer of the world economy. Inevitably, its importance to the global market has caused a rapid increase in development within the country. Concurrent with an influx of foreign investment, violence has been an ongoing issue for the country. This project will pinpoint how Mexican state governments mitigate the risk of violence for foreign investors through economic incentives. The analysis also seeks to determine if political incentives genuinely benefit the region's economic development. This paper explores the proposition that politicians frequently provide incentives to foreign investors to mitigate the risk of violence; in doing so, they reduce the economic benefits associated with the investment inflows. This paper will examine the proposed positions through data on 15 out of 32 Mexican states from the years 2008, 2012, and 2017. The results indicate that governments provide more substantial distributions of economic incentives to states in areas with more violence. Further findings indicated that more GDP growth is associated with foreign investment and significant incentives. Additional models ran for the second proposition found that in both, violent areas with substantial investment and violent areas with significant incentives experience an increase in regional GDP