Episode III- The Bajio region
El Gran Bajio
El Gran Bajio is a private initiative originated by entrepreneurs who seek to promote internationally six states of the country, known as the Mexican Bajio region. Guanajuato, Aguascalientes, Queretaro, San Luis Potosi, Zacatecas, and Michoacan are those that constitute the cluster of El Gran Bajio (El Gran Bajio, 2022). Its business community consists in members such as Bison, ACSA, The Nearshore Company, Red Sun Farms, Materiamist, Corporativo San Luis, and many more.
Some sources differ when naming the six states that make up this region, while others may include the state of Michoacan or instead include the state of Jalisco. Since the Mexican region series already dedicated an episode to Jalisco, this article will incorporate some fundamental points of the state of Michoacan.
The Bajio region contributes 12.9% of the national GDP (El Gran Bajio, 2023). According to the referred above group of entrepreneurs, 12 reasons make the Bajio region the most economically developed. First, the aeronautic cluster that the region possesses is positioned as one of the ten regions of the world that has a greater investment in the aeronautical industry, with more than 80 companies, universities and investigation centers, Tier 1, and Tier 2 companies, and more.
The second reason is being the biggest exporter of automobiles in Latin America and 4th worldwide. The region has more than 800 companies of all levels of supply network in LATAM. With more than 146 specialized industrial parks for different industries like innovation and high-tech parks, namely the Agropark, the only one of its kind in America, a third reason is noticeable.
As reported by the source of El Gran Bajio, the list of reasons continues. In agroindustry, the region exports 163 products to 59 different destinations, Bajio counts more than 4,000 global companies, and it’s become a reputed region for the headquarters of internationally renowned companies like Huawei Global Services, General Electric Engineering Center, the first Latin America plant of Kellogg’s and one of the four Data Centers of Santander.
Due to its functional rail and road mobility network, El Gran Bajio group states that the region is considered the third area globally with immense logistical potential behind Shanghai and Dubai. With four international airports and three customs facilities for foreign trade.
Considering the quality of life, the region has one of the most developed health systems in the country. Furthermore, it stands out for having excellent residential planning, including 12 country clubs of the highest levels (the region is a preferred choice for professional golf and polo) and a broad cultural offer all over the six states. The Bajio region has a unique colonial architecture, with 5 World Heritage Sites, 10 Historical Centers, 19 Pueblos Magicos, 138 museums, 11 archaeological sites, and a substantial compilation of ranches of the colonial era.
The six states in context
Located in the North Central-West of the country, the Bajio region has achieved to maintain a yearly growth between 4% and 5% for 20 years. It is an ideal agricultural area that benefits from moderate weather that allows fertile soils to exist (Forbes, 2022).
Aguascalientes is one of the smallest states of Mexico, occupying only 0.3% of the national territory. According to the Secretary of Agriculture and Rural Development (2020), 4.5% of the active population works in primary sector activities. However, in the third quarter of 2022, Data Mexico reports that the economically active population was 666k persons. This state is divided into 11 municipalities, and 12% of the population lives in the rural sector.
The state of Aguascalientes borders the state of Zacatecas in the north and Jalisco in the southeast (Gobierno del Estado de Aguascalientes, 2022). Famed for the national fair of San Marcos, Aguascalientes is well recognized for its agriculture which farms 35% of the state’s land (History.com, 2018).
The state of Zacatecas is situated in the center of Mexico, counts 58 municipalities, and occupies 3.9% of the total surface of the country. This state is an important archaeological zone with a long mining history (PwC Mexico, 2016). The economically active population of Zacatecas reached 695k persons during the third quarter of 2022 (Data Mexico, 2023).
A world heritage place known to be the cradle of Independence is the state of Guanajuato. With five metropolitan areas and 46 municipalities, this state is the 6th most populated with a 2.85M economically active population as due in the third quarter of 2022 (Data Mexico, 2023). The region possesses a vast repertory of culture, recreation, and tourism activities. The state positions itself as a desired destination having 6 Pueblos Mágicos, 5 archaeological sites, mezcal & wine routes, the Guanajuato International Film Festival, the World Rally Championship, the Cervantino International Festival, the Hot Air Balloon Festival, and many more (Mexico Industry, n.d.).
Why invest in Queretaro? The municipality of Queretaro (2021) informs that this state has 18 municipalities and borders San Luis Potosí in the north, Hidalgo to the east, Michoacán in the south, the State of Mexico to the southeast, and Guanajuato to the north-west. The state is connected with the United States through the NAFTA Highway and has 4 Pacific and Atlantic Ocean Ports (Queretaro State Government, 2021). 1.07M economically active people were registered in the third quarter of 2022 reported by Data Mexico.
The state of San Luis Potosí has big silver mines located in the northern part of the state, and it is successful in the manufacturing and agriculture industries. This state owns the ecotourism region of La Huasteca Potosina, a northern site full of waterfalls, rapid rivers, caves, and camping sites (History.com, 2018). Data shows that during the third quarter of 2022, the state had a quantity of 1.28M economically active people (Data México, 2023)
Lastly, the state of Michoacan counts an economically active population of 2.25M in the first quarter of 2022 (Data Mexico, 2023). It has the largest port in the country; the port of Lazaro Cardenas operates 59 shipping lines, connects with more than 40 countries, and is situated at the Pacific (Invest in Mexico Facilitation Board A.C., 2021).
Table 1. States in numbers
Retrieved from INEGI (2020) and Data Mexico (2023)
Economy and Business
Since this region is a dynamic cluster for the automobile industry, the year 2022 was successful and full of projects and investments for the Bajio region. Sources from Cluster Industrial (2022) confirm that the sum of projects of investment, development of industrial plants, and parks reached more than 3.9B USD. The report states that the region concreted 96 projects of investment; Guanajuato had the highest number of investments (53), followed by Queretaro (26), San Luis Potosí (12), and Aguascalientes (5).
Table 2. PIB growth rate and FDI from 2021 and 2022 by state
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Q1- First quarter of the year
Q2- Second quarter of the year
Retrieved from El Gran Bajio (2023)
Figure 1 Bajio Region Map with ECI
The map shows the difference in Economic Complexity Index (ECI) between the different geographic areas. Colors closer to blue indicate greater economic complexity and values closer to red refer to less complexity. A higher ECI value is commonly related to the presence of competitive advantages in more complex industries. (Economia, 2023)
Variety of Industries
Due to the economic crisis of 2008 and the rise of violence in the northern region of the country in 2010, an industry and foreign investment relocation was provoked. Yoselin Acosta mentions in her study at the Regional Studies Association (2022) that this caused the emigration of manufacturing companies to smaller cities in the Bajio region with economic growth and an increase in population, compared to the Metropolitan Areas like Mexico City, Guadalajara, and Monterrey.
The logistical connectivity between their main cities, infrastructure advantages, planned industrial growth and shared economic activities of states like Aguascalientes, Guanajuato, Queretaro, and San Luis Potosí are part of the reason that the region had a GDP growth rate of 15.1% in 2010, and a faster recovery of the 2008 crisis, compared to northern states like Nuevo Leon (11.1%) or Sonora (6.2%) (Acosta, 2022).
A case study made by Jordy Micheli Thirión in 2020 shows, that in general, regional economic development is associated with an industrialization pattern based on foreign direct investment. The study reassures Yoselin Acosta’s findings since both argue that the Bajio had a regional industrialization plan which impulsed the structural change of the region.
Table 3 Distribution of FDI to El Bajio by state and by sector
Source: Jordy Micheli Thirion (2020) based on data obtained from the Ministry of Economy (2018)
Table 3 reveals information gathered by Thirión which also shows the influx of FDI to other important industries in the area like beverages & tobacco, chemical, rubber & plastic, and the food industry.
Thirión concludes that Guanajuato, Queretaro, and Aguascalientes share similarities which indicate that the local structure based on exportation and manufacturing (significantly with the weight of the automotive industry) alongside the FDI received over almost three decades, are the essential factors of this region’s differentiation.
Industrial corridors in the Bajio region continue to expand. During the first quarter of 2022, 455,000 square meters were reported to be under construction. The nearshoring boom that is happening in the northern border is expected to also occur in the Bajio region. Guanajuato and Queretaro are leading the high demand in the industrial space sector; in the third quarter of last year, both added more than 80% of the net absorption, around 200,000 square meters (Escobar, 2022).
The nearshoring report from Swiss Cham (2022) affirms that the preference for the offshoring model changed. The report illustrates this circumstance with the example of the migration of supplier operations that General Motors made; leaving China to open operations in the Bajio region last year.
Along with the numerous industrial parks this region possesses, an added value is the state of Michoacan and the strategically located port of Lazaro Cardenas. An ideal platform for cargo in this sector, linked to Puerto Interior in Guanajuato, creates an important logistic node of the Western Basin and the Pacific. The collaboration of Michoacan with the imported merchandise and the manufacturing operations happening in Guanajuato’s Puerto Interior can impulse the nearshoring business with the United States (GPI NEWS, 2022).
In addition, the state of Michoacan ranks number one in avocado production in Mexico with 2.2 M tons, exporting to 39 countries. The state is also considered the leading producer of 16 agricultural products like blackberry, strawberry, and lemon in Mexico (Invest in Mexico Facilitation Board AC, 2021).
Innovation
The region of El Bajio has the potential to produce high levels of clean energy. The average solar radiation in this area can be two to three times the amount of some regions in Europe (Adame, 2020). In fact, the region already has important projects working and some others under construction. Some examples are the one in Guanajuato called “Don Jose” which has a capacity of 205 MW, and another one in Aguascalientes called “Pachamama” with a capacity of 300 MW (ASOLMEX, 2023).
El Bajio currently consumes approximately 20% of the total energy consumption of Mexico (Estrella, 2019), what gives us an idea of the level of industrialization this region has. It is worth mentioning that the Mexican government enables in a legal framework the figure of energy self-supply. Some companies in Mexico are already implementing it. One example of this is the German company BMW, which built a solar park near its factories in San Luis Potosí. (Industry, 2019).
Global companies are now looking for places where they can produce their goods with energy from clean sources. The DACH companies are no exception, therefore, the Bajio represents an investment opportunity for those companies that are looking for places with a strong presence of renewables.
Acosta, Y. (2022, July). The so called great Bajio in Mexico: a case of booming economic regional growth. Retrieved from Regional Studies Association: https://www.regionalstudies.org/news/blog-the-so-called-great-bajio-in-mexico-a-case-of-booming-economic-regional-growth/
Adame, W. ( 2020, August 25). Despliega Guanajuato su potencial para la energía solar con 11 proyectos. Milenio.
ASOLMEX. ( 2023, January). Asociacion Mexicana de Energia Solar. Retrieved from https://asolmex.org/centrales-solares/
Data Mexico. (2023). Data Mexico. Retrieved from https://datamexico.org
El Gran Bajio. (2023). El Gran Bajio. Retrieved from https://www.elgranbajio.com/el-gran-bajio
Escobar, S. ( 2022, October). Aumenta 36% la construcción de espacios industriales en el Bajío; nearshoring empujará crecimiento. Retrieved from El Economista: https://www.eleconomista.com.mx/econohabitat/Aumenta-36-la-construccion-de-espacios-industriales-en-el-Bajio-nearshoring-empujara-crecimiento-20221019-0099.html
Estrella, V. (2019, September). Región Bajío, con potencial para energías limpias. El Economista.
Forbes Mexico. (2022, November). El Bajío y su poder industrial. Retrieved from Red Forbes: https://www.forbes.com.mx/el-bajio-y-su-poder-industrial/
Gobierno del Estado de Aguascalientess. (2022). Aguascalientes. Retrieved from https://www.aguascalientes.gob.mx/estado/ubicacion
Gobierno del Estado de Guanajuato. (2022). Ubicación y Zona Geográfica.
GPI NEWS. (2022, September). Guanajuato Puerto Interior y Lázaro Cárdenas impulsan transporte de mercancías marítimas. Retrieved from GTO Puerto Interior: https://puertointerior.guanajuato.gob.mx/blog/2022/09/28/guanajuato-puerto-interior-y-lazaro-cardenas-impulsan-transporte-de-mercancias-maritimas/
History.com. (2018, August). Aguascalientes. Retrieved from https://www.history.com/topics/latin-america/aguascalientes
Industry, M. (2019, March). BMW Group Planta SLP colocará paneles solares para proveerse de energía.
INEGI. (2020). INEGI. Retrieved from https://www.inegi.org.mx
Invest in Mexico Facilitation Board A.C. (2021). Michoacan. Retrieved from https://investinmx.com/why-invest/michoacan
Mexico Industry. (n.d.). Invest in Guanajuato. Retrieved from https://www.invest.mexicoindustry.com/public/frontend/economic-profiles/guanajuato.pdf
Municipio de Queretaro. (2021). Queretaro Municipal Yearbook. Retrieved from https://municipiodequeretaro.gob.mx/programa-anuario-2021/pdf/AEM2021_00_ENG.pdf
PwC Mexico. (2016). Zacatecas A reference for the global mining industry. Retrieved from https://www.pwc.com/gx/en/mining/publications/assets/study-english--zacatecas.pdf
Queretaro State Government. (2021). Why Queretaro? Retrieved from https://www.investinqueretaro.com
Secretary of Agriculture and Rural Development. (2020). Aguascalientes un territorio pequeño, pero muy productivo. Retrieved from https://www.gob.mx/agricultura/articulos/aguascalientes-un-territorio-pequeno-pero-muy-productivo
Swiss Cham Mexico. (2022, September). Mexico Nearshoring Report 2022. Retrieved from https://swisscham.mx/2022/09/26/mexico-nearshoring-report-2022/
Thirión, J. M. (2020). FDI, regional development and structural change. The Case of three states in El Bajío, Mexico. Retrieved from Scielo: FDI, regional development and structural change. The Case of three states in El Bajío, Mexico