When I first glanced at this volume, it appeared to be an updated version of the How to Do Business in . . . books which were so popular at one time; few of my first impressions have been quite so wrong! Harry K. Wright has carefully researched and written a complete and readable survey of the status of foreign investments in Mexico. It prepares the foreign businessman for the peculiarities and idiosyncracies of Mexican business law and custom and, at the same time, encapsules a great deal of Mexican economic history as it traces and explains the evolution of the various policies by which the Mexican government today seeks to encourage and yet control foreign investments. The book functions well on several levels, offering both general information for the neophyte to Mexico’s business world and specifically documented data for the scholar interested in the more specialized areas of economic policy, law, or the status and problems of foreign investors. In some cases the author devotes too much space to reporting provisions of current law and policy that may well change by the time the book reaches the reader. However, his discussions of business organizations, the functions of notaries and registries, the status of aliens and foreign business concerns, how the tax system functions, the reality of labor relations and social security benefits, and Mexican legal practices concerning patents, trademarks, and licensing agreements, are full of detailed explanations not easily available otherwise. Wright takes up where the surveys of the Mexican macroeconomy leave off, filling in another dimension in our knowledge of Mexico.
Certainly one of the more interesting aspects of this book is that it answers the charges of the neo-Marxists that foreign capital is taking over the economy and their hints of a tacit understanding between a supine Mexican Government bent on betraying the Revolution and the American imperialists. Wright’s analysis makes it clear that Mexico possesses and uses a host of sometimes direct and sometimes subtle economic controls over foreign investment. The application of these controls varies from industry to industry, depending upon its importance to the Mexican economy. Food processing and fight manufacturing will be unmolested as long as there is no monopoly; but heavy industry, public utilities, communication and transportation, and financing are other matters.
As shown in the case of the Pan American Sulphur Company (PASCO) which was exploiting the Tehuantepec sulphur domes, foreign enterprises which are encouraged to start activities beneficial to the Mexican economy can soon be gripped by a velvet-gloved iron fist. Mexican policy permitted adequate profits—Mexico is not socialistic! —but forced the foreigners who wished to enjoy those profits to admit Mexicans as associates and to shape their companies’ activities to fit Mexico’s national plans. PASCO, making high profits exporting raw sulphur, was not too happy about having to accept Mexican partners and having to build a fertilizer plant to draw upon its own sulphur as a raw material. But PASCO received over $80, 000, 000, plus certain guarantees, for selling 43 per cent of its stock to the Mexican Government and 23 per cent to a syndicate headed by the Banco Nacional de México—plus continuing to receive dividends on its remaining 34 per cent and to enjoy the exercise of a management contract. Wright concludes that minority position in new enterprises has not dampened “the enthusiasm of many foreign companies to participate in the growing Mexican economy.”
As for foreigners taking over that economy, Wright notes that only 5. 7 Per cent of the fixed private investment in Mexico was accounted for by direct foreign investment in the period from 1942 to 1965. Public foreign loans accounted for only 11. 4 per cent of the respective total. “The total contribution of foreign capital from all sources in that period is estimated at about 10. 7 per cent of the total gross investment in the economy.” So much for the complaint about government delivering Mexico to the imperialists.
