Future of Mexico - Global Hub for Innovation and Investment, Forecast to 2025

The Social, Technological, and Economic Factors Influencing a Culture of Innovation and Investment

Mexico’s demographic favorability through the next decade, its focus on education to fully capitalize on the growing working and escalating digital accessibility, and its growing start-up business support mechanisms advocates the expanding Mexico’s culture of innovation. Though Mexico spends less than 1% of GDP in research and development compared to other developed nations like US, Korea and Singapore but the nation has been rapidly rising in the Innovation index compared to other nations over the past few years because of steady reforms and dynamic policies. Doing so has resulted in increasing amounts of VC investment. Increases in technology investment by the Mexican government, coupled with pro-private investment schemes, will encourage multinationals to view Mexico as a viable locale for centers focused on emerging technologies, such as artificial intelligence (AI), the Internet of Things (IoT), and cybersecurity. Because of emerging technologies, traditional industries are reinventing themselves.

Mexico has the opportunity to participate in these reinventions by investing in innovation that can be exported regionally and globally, generating value that will resonate through the coming decades. Mexico has the ability to be the innovation leader in Latin America for emerging industries, such as EV development; 4G/5G telecommunications rollout; and affordable, smart, and green housing; as well as in more established areas, including tourism and medical devices.

The key to Mexico becoming the innovation gateway for Latin America is in nurturing R&D and startup ecosystems that build on the progress Mexico is already making. This study has identified social, technological and economic factors as key contributors to innovation and future investment in Mexico. Demographic factors, education developments, growth of the Mexican middle class, women's contribution to the economy, entrepreneurial and start-up developments in Mexico are some of the social factors contributing to the growing innovation culture in Mexico.

Mexico’s working-age population is expected to peak at approximately 68% in 2033, surpassing the working-age share of the total population for all other LATAM countries. Mexico’s demographic shift is expected to increase the region’s economic prosperity, driving infrastructure development and advancing innovation and technological adoption. Digital indicators like future connectivity trends, government enablement of technology growth, growth in technology innovation areas are some of the technological factors leading to innovation growth in the region. With the largest fintech ecosystem in LATAM (Latin America), Mexico is capable of building multiple start-up hubs in cities such as Mexico City, Guadalajara, Monterrey, and Tijuana. Since 2010, Mexico’s count of tech start-ups has tripled. Economic growth and investment of the region has also fueled the innovation activities. Growth of VC Investment is higher than the regional average- Again Mexico’s score in the US Chamber of Commerce’s International IP Index is above the regional average, this is mainly driven by government efforts to increase the importance of IP rights - a critical factor in attracting and retaining start-ups. This study also includes geographical mapping of various Mexican state hot spots ripe for innovation activities.