Mexican companies issued flows of Foreign Direct Investment (FDI) for 5,029 million dollars in the second quarter of 2020, according to data from the Bank of Mexico (Banxico).
In the previous period, the first quarter of 2020, its emissions totaled 983 million dollars.
This type of flows is defined as an investment that implies a long-term relationship and that reflects a lasting interest and control by an entity resident in an economy (direct foreign investor or parent company) in a company resident in an economy other than that of the direct foreign investor (subsidiary company or foreign affiliate).
Thus, FDI implies that the investor exercises a significant degree of influence over the management of the resident company in the other economy.
Such investment involves both the initial transaction between the two entities and all subsequent transactions between them and between foreign subsidiaries, both incorporated and unincorporated. It can be carried out by both individuals and commercial entities.
Of the total Foreign Direct Investment made by Mexican companies in the second quarter of 2020, 1,047 million dollars corresponded to new investments; 1,416 million to reinvestments and 2,566 million to intercompany accounts.
FDI
The new investments include those in fixed assets and working capital for the regular conduct of commercial acts in Mexico; the contribution to the capital stock of Mexican companies by foreign investors; the transfer of shares by Mexican investors to direct investors, and the initial amount of the consideration in the trusts that grant rights over the Foreign Direct Investment.
Direct Investment Flows
Meanwhile, the reinvestment of profits corresponds to the part of the profits that is not distributed as dividends and that is considered Direct Foreign Investment because it represents an increase in the capital resources owned by the foreign investor. And the accounts between companies are the transactions originated by debts between Mexican companies with FDI in their capital stock and other companies
