Global capital is entering a new phase in which financial returns are no longer the sole determinant of investment decisions. Governments increasingly seek to influence not only where capital flows but also which forms of investment are strategically desirable. Foreign investment screening mechanisms (FISMs) have become a key manifestation of this transformation. Rather than signalling a retreat from globalization, their expansion reflects a reorganization of globalization around national security, supply-chain resilience, technological competitiveness, and geopolitical alignment.
Recent research suggests that this represents a broader transformation in the governance of global capital. Rather than signalling deglobalization, foreign investment screening reflects a shift towards selective globalization, in which states increasingly evaluate cross-border investment through strategic, technological, and security considerations. Together, Alami (2024), Eichenauer and Wang (2024), and Li et al. (2024) argue that investment screening has become an important instrument through which states reorganize international capital.
Mexico provides a particularly revealing case because this transformation has emerged through both external pressure and domestic adaptation. Unlike many advanced economies, where investment screening developed primarily from domestic concerns over critical infrastructure, emerging technologies, and national security, Mexico's evolving investment governance has been shaped by its deep economic integration with the United States. More than 80% of Mexican exports are destined for the United States, while approximately 41% of Mexico's imports originate there. Since the 2000s, roughly 47% of Mexico's accumulated foreign direct investment has come from the United States, and total U.S.–Mexico trade is about fifteen times larger than Mexico's trade with Canada. As North American economic security has become increasingly central to regional cooperation, investment governance has gained greater strategic importance ahead of the scheduled 2026 review of the United States–Mexico–Canada Agreement (USMCA).
This distinguishes Mexico from many countries that have introduced formal investment screening regimes. Where screening mechanisms largely emerged from domestic debates concerning foreign ownership of strategic industries, technological competition, and national security. Mexico's experience reflects a more complex dynamic. Rather than independently constructing a security-oriented investment framework, Mexico is adapting to a regional governance model shaped by its principal economic partner while seeking to preserve its own industrial policy objectives and development priorities. The result is not simply policy convergence but tension between external strategic pressures and domestic economic interests.
This dynamic reflects the broader transformation identified by Alami (2024), that foreign investment screening has evolved beyond a narrow national security instrument into a broader mechanism for governing globalization itself. Screening matters not only because governments may prohibit specific acquisitions, but because it fundamentally changes the criteria through which foreign capital is evaluated. States are not withdrawing from international investment; they are increasingly incorporating geopolitical, technological, and security considerations into routine investment governance. Consequently, the significance of screening lies less in the number of transactions it blocks than in its capacity to redefine the principles governing cross-border capital flows.
The economic consequences frequently emerge before governments formally implement or expand screening regimes. Eichenauer and Wang (2024) argue that investors adjust their behaviour when anticipating greater regulatory scrutiny, higher compliance costs, or the possibility that political considerations may influence investment approvals. This adds policy-risk premia, leading firms to delay, scale back, or redirect investment even before formal legal restrictions. In Mexico, this mechanism is reflected more broadly in investor caution surrounding the forthcoming 2026 USMCA review and evolving North American trade and industrial policies, which have contributed to greater uncertainty over the future investment environment (UNCTAD, 2025).
Recent investment trends in Mexico illustrate this broader dynamic. Although Mexico remained the principal beneficiary of nearshoring-related manufacturing investment in Latin America, announced greenfield investment declined significantly in 2025 despite an increase in overall foreign direct investment inflows. According to the UNCTAD World Investment Report 2025, announced greenfield project values fell from approximately US$44 billion in 2024 to US$24 billion in 2025, while overall FDI remained comparatively resilient because much of it reflected reinvested earnings by firms already operating in the country rather than new equity investment.
Although these findings do not attribute the decline in greenfield investment directly to foreign investment screening, they support Eichenauer and Wang's (2024) broader argument that investors respond to policy uncertainty and regulatory risk before formal restrictions are introduced. In Mexico's case, multinational firms continue to regard the country as a strategically important production platform within North American supply chains, yet they have become more cautious in committing to entirely new productive capacity while expanding primarily through reinvested earnings.
Mexico complicates explanations of how foreign investment screening spreads internationally. Li, Shapiro, and Ufimtseva (2024) argue that screening has increasingly diffused through networks of strategic alignment as governments respond to technological competition, economic security, and geopolitical rivalry. Mexico reflects this trend through its integration with the United States and the USMCA framework, but it also demonstrates that diffusion does not always result from voluntary alignment among equals. Instead, convergence may emerge through asymmetric relationships in which smaller economies adapt to expectations established by more powerful partners.
Nevertheless, Mexico's adaptation should not be understood as passive acceptance of an externally imposed agenda. Through Plan México, launched in January 2025, the government aims to attract US$100 billion annually in foreign direct investment while strengthening strategic sectors including semiconductors, automotive manufacturing, pharmaceuticals, aerospace, and clean energy. The initiative seeks to increase domestic value added, promote technological upgrading, expand local supplier networks, and position Mexico more competitively within North American value chains. The challenge is therefore no longer whether to attract foreign investment, but how to ensure that it contributes to domestic capabilities and long-term development.
Ultimately, Mexico demonstrates that foreign investment screening is not simply a mechanism for restricting foreign ownership but part of a broader transformation in the governance of global capital. Rather than maximising investment volumes alone, states increasingly seek to shape the strategic direction of capital by prioritising resilience, technological capability, and economic security. As one of the most integrated economies in North America, Mexico illustrates how this emerging geoeconomic order is negotiated through the interaction of regional integration, geopolitical competition, domestic industrial policy, and global capital flows.
