This article studies Mexico’s evolution from a protected economy in the 1970s to the free market economy of today. It also presents the different political and economic stages of this process, as well as the important changes made to laws on foreign investment in preparing for the North American Free Trade Agreement (NAFTA), the Mexico-European Union free trade agreement and other bilateral agreements on investment promotion and protection. This has also led Mexico to privatize its economy, its banks and telecommunications in particular. This article also explains the legal framework for this privatization and presents an outline on the possible opening of the electricity sector.