Crime Explodes — But an Economy Booms

By: Deborah Caldwell, CNBC:

The Mexican border city of Nuevo Laredo, the bodies of nine people were found hanging from a bridge and another 14 decapitated and dumped near city hall last May — the result of a turf war between Mexican drug cartels.

The murders exposed the Mexican government’s significant problems; its seemingly out of control violence and its public relations problem —keeping the country’s violence level low enough not to scare away foreign investors.

“When they’re hanging people off bridges — it’s the visual of this. The drug cartels make it gruesome intentionally,” said Andrew Selee, director of the Mexico Institute, a Washington-based think tank.

As a result, when U.S. corporations consider expanding south of the border, Mexico is rarely their country of first choice, he said. Yet after doing research, “they find it’s not as bad as they thought,” Selee said. Then these same companies build a plant or establish a corporate office and watch their investments take off. (More: Mexico's Image Problem With Tourists)

And that is the paradox of Mexico. On one hand, the country’s well-publicized drug killings would appear to be a clear disincentive to foreign investment. On the other hand, the economy has become an under-the-radar economic juggernaut. Read more.