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  HOME | Mexico

Drug War Has Not Cost Mexico Investment, Experts Say

MADRID – The drug war in Mexico has not yet claimed foreign investment as a victim, but the violence in that country continues to be a serious “threat,” several experts said at a seminar on Monday.

“At the macroeconomic level, Mexico probably has not suffered in terms of the orientation of foreign investors. They are still investing in the country,” Jeff Dayton-Johnson, an economist with the Organization for Economic Cooperation and Development, said.

“For the people who live in the violent areas,” however, drug trafficking has “a very important negative impact,” Dayton-Johnson said.

The OECD expert was asked about the situation in Mexico at a seminar at Madrid’s Casa de America that examined the recently released “Latin American Economic Outlook 2011” report.

Drug trafficking is “the fundamental threat” that Mexico must deal with, but there are no figures showing that foreign investors have been driven away by the violence, Jose Juan Ruiz, chief economist and director of strategy and analysis for Latin America for Banco Santander, said.

“In the short-term, in the past 12 months, I have not seen any drop in tolerance for investing in Latin America because of the perception of narco risk, not even in Mexico,” the Spanish economist said.

Banco Santander, Spain’s largest bank, has 6,000 branches and 42 million clients in Latin America.

“I do not have any evidence today that somebody decided not to make an investment in Mexico because of the war on drugs,” Ruiz said.

“It is clear that (drug trafficking) imposes political costs” and “reduces the attractiveness of investment” in Mexico, the Spanish economist said.

Dayton-Johnson and Ruiz agreed that the Mexican state must deal with the threats from drug traffickers.

“The capacity of the state” must be brought to bear on the problem in Mexico, Dayton-Johnson told Efe, noting that in other countries dealing with similar situations, such as Colombia, “they have apparently had some success in recent years.”

“In Mexico, it is hard to see what the capacity of the state for dealing with this problem is,” Dayton-Johnson said, adding that “with the unbelievable financial resources available to the narcos, it is really difficult for a country with more limited resources to deal with such an opponent.” EFE
 

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