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Is violence in Mexico affecting foreign investment? No, say recent reports.

The reports suggest that, despite what might seem like common sense, investment in dangerous pockets of Mexico is up.

By Nacha CattanCorrespondent / August 8, 2011

A local police officer (L) and an investigative police officer take notes next to a bullet-riddled police car at a crime scene on the border between Mexico and the U.S. in Ciudad Juarez August 6. A Mexican police commander, Víctor Nazario Moreno Ramirez, was shot dead in his vehicle by unknown gunmen, according to local media.

Jose Luis Gonzalez/Reuters

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Mexico City

Recent reports out of Mexico describe violent border states as lands of economic opportunity, despite the car bombs and dead bodies hanging from pedestrian bridges.

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One government report last month showed that seven states where most drug-related murders take place are receiving greater percentages of the country’s Foreign Direct Investment (FDI) than they were before the drug war began in 2006.

The Financial Times reported that the industrial hub turned narco playground of Monterrey raked in $2 billion last year in FDI, compared to $1.4 billion in 2008, before the global recession. And NPR said last week that the murder capital Ciudad Juarez is sending record exports to the United States, thanks mostly to multinationals and not local businesses.

These accomplishments may serve to justify the government’s head-on approach to fighting crime and drug cartels.

Federal authorities said as much upon releasing their report: “The constant flow of foreign direct investment, even in places that have shown the phenomenon of violence from criminal rivalries of the greatest severity, is yet another reason to forge ahead, to deepen and speed up this fight,” said Mexico’s national security spokesman Alejandro Poire.

And if the business-friendly administration of President Felipe Calderon is dismantling trafficking rings and at the same time boosting investment, there is little reason to capitulate to activists who call for a change in strategy as the death toll rises. Over 35,000 people have died since Mr. Calderon sent troops to fight cartels in late 2006.

But not all economists are convinced that business is booming in places like Monterrey, Nuevo Leon, and Ciudad Juarez, Chihuahua. They say the investment landscape is much more complicated than the media and government reports suggest.

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