Mexico drug war driving investors from some areas

* Mexico drug war hurts investment in some regions

* Investors looking for safe places to set up in Mexico

By Jason Lange

MEXICO CITY (Reuters) – Investors are shunning some parts of Mexico plagued by a wave of drug cartel murders that is disrupting the economy, the country’s finance minister said Thursday.

A surge in drug war killings is fueling concerns about safety, worrying foreign investors and leading some companies to cancel planned investments.

“They are probably putting their investments elsewhere and not in certain troubled areas in country,” Finance Minister Ernesto Cordero told local radio. “They are establishing themselves in other parts of the country.”

Cordero said, however, there was no evidence that overall investment in the Mexico has suffered because of the drug war.

Mexico’s drug war has claimed more than 38,000 lives since President Felipe Calderon took office in late 2006 and ordered the army to tackle violence between warring cartels.

Mexico became a major exporting power after entering a free trade agreement with the United States and Canada in 1994. Foreign manufacturers built thousands of factories along the northern border with the United States.

But in recent years, as cartels have fought for control of smuggling routes into the United States, Mexico’s north has been rocked by routine gun battles in city centers. Gang members have dumped severed heads outside schools and shaken down businessmen in some cities.

A poll of companies released by the central bank Thursday showed companies in northern Mexico felt crime was biting into their business considerably more than in the country’s center or the south.

On Wednesday. a poll of analysts showed worries that spiraling violence was hitting Mexico’s growth rose to a record high in May.