This thesis is concerned with how Canadian outward FDI in Mexico’s mining sector affects the country’s economic development. The paper will make the argument that Mexico’s economic development has not benefited extensively from Canadian investment in the mining industry, especially considering the revenues earned by mining firms. Furthermore, the argument will be made that inadequate state institutions in Mexico, rather than a malicious Canadian presence, is the principal reason for this phenomenon. Utilizing new institutional economic theory, this thesis will draw attention to the roles of formal and informal institutions in Mexico and how they have affected the mining sector’s potential to foster economic development. It will be argued that institutions largely independent of Canadian influence have most significantly affected the outcome of Canadian mining FDI in Mexico’s economic development.