Potential Economic Impact of an Audiovisual Production Incentive in Mexico

Image credit: Ruben Ramirez

Location: Mexico

This 2023 study examined the current position of Mexico’s audiovisual production sector globally, and considers the potential for a new national incentive in the country.

The study models how a new incentive could stimulate audiovisual production in Mexico, and generate economic impacts. It also considers broader strategic impacts that a new incentive could deliver.

The key findings include:

• Global production investors are closely interested in Mexico as an audiovisual production hub. This is due to a range of positive factors, including Mexico’s well-regarded talent base, its infrastructure, cost base, locations, and proximity to US decision-making hubs. Mexico is also well-placed strategically because of the global boom in Spanish-language audiovisual content

• Because of these attractive elements, Mexico’s audiovisual production sector has been very busy since the height of the COVID-19 pandemic. However, this growth trend disguises the fact that Mexico is in fact underperforming as a market when compared with growth in other key global audiovisual production markets. Inflationary and other pressures in the sector are increasing investor focus on production markets with incentives, and there is potential for Mexico to see current levels of production reduce in the coming years

• Mexico’s unique attributes and production capabilities mean that it would be primed for immediate further growth in response to the introduction of an audiovisual production incentive. This would include an upturn in larger budget productions

• SPI estimates that current audiovisual production activity was worth around US$673 million in 2022. Full adoption of an incentive – i.e. a globally competitive audiovisual production incentive without a significantly capped annual budget – could more than double production expenditure in Mexico to US$1.38 billion by 2026. Conversely, doing nothing would lead to softening of Mexico’s production levels

• Under the full incentive adoption model, an incentive would deliver an estimated US$14.1 billion in total cumulative output between 2023 and 2028, including direct, indirect, and induced phases of impact. In terms of gross value added (GVA), the full adoption model is projected to deliver nearly US$7.3 billion in cumulative GVA between 2023 and 2028. SPI’s production expenditure driven economic impact model indicates that an internationally competitive incentive could also deliver 38,180 jobs in 2028, across direct, indirect and induced impacts

• Growth leveraged by an incentive would deliver multiple strategic benefits including driving skills and talent – including among young people – as well as encouraging more infrastructure investment and more production activity in Mexico’s regions. An incentive introduction would also provide a strategic opportunity to drive formalization of the audiovisual production economy in Mexico, and lessen the ‘grey’ economy. It would be important therefore for an incentive introduction to be linked to a robust sectoral development strategy – including a focus on workforce and infrastructure growth. Such a strategy would aim to ensure that Mexico extracts as much value and impact as possible from production growth. Since Mexico lacks robust data on audiovisual production expenditure at a national level, the introduction of an incentive should be linked to the implementation of robust statistics and data reporting for the audiovisual sector.

Downloaded the report in English here and in Spanish here.

Further information on SPI’s impact studies can be found here.

For further information on this study, please contact Leon Forde at leon@o-spi.com.