This chapter presents a discussion of the positive change in Mexico’s attitude regarding foreign investment since the 1973 Act to Promote Mexican Investment and Regulate Foreign Investment. The Foreign Investment Act of 1993 was designed to establish a new legal framework in Mexico, promoting competitiveness providing legal certainty to foreign investors in order to channel international capital to productive activities. The new Act formally repeals the 1973 Act, which was a highly restrictive approach to foreign investment, including such provisions as: 1) the 49/51 rule, and 2) prohibition of foreign ownership over land and water.

The 1993 Act, though similar in such areas as reserving certain activities to the Government and Mexican nationals to the earlier 1973 version, contains several unprecedented provisions, such as: 1) the abandonment of the 49/51 rule; and 2) the elimination of performance requirements upon foreign investors, thus reducing discretionary powers of the Commission and other Mexican authorities.

The Regulations of 1989 also took an unprecedented step towards liberalizing foreign investment and introduced significant changes to foreign investment. Although the 1973 Act was not repealed by theses regulations, it was amended by them, thereby streamlining and liberalizing the legal framework applicable to foreign investment in Mexico. The Regulations also serve as a guide to interpret the 1993 Act, and contains areas in symmetry with the new Act, e.g, a simplified version of the fideicomiso..

Mexico’s Foreign Investment Act of 1993 is part of a general modernization of current policies, that, together with the inception of NAFTA, and other technological and scientific developments, serves as a sign of Mexico’s drive to become a mid-size power in the near future.