Why nearshoring failed

And how semiconductors might show a way fix it.

New foreign direct investment in Mexico is down. Estimates say that only 11% of nearshoring announcements actually materialised. Overall foreign direct investment has been below pre-pandemic growth trends throughout president Andrés Manuel López Obrador’s term. The nearshoring boom seems to be winding down before it even started.

Everyone seems desperate for nearshoring to be a thing—Mexican and US investors, policymakers, analysts, and journalists. Wishful thinking abounds, explaining away poor results with circumstantial excuses—the Mexican election, the US election, López Obrador’s reforms...