Mexico 2006-2012: Creating the Foundations for Equitable Growth

Description

Mexico has undergone a dramatic political, institutional and economic transformation over the last two decades. The political system has evolved towards open and highly competitive elections, decentralization of the public sector has progressed, some sectors previously controlled by state owned enterprises were privatized and barriers to international trade were substantially reduced. Sector reforms have resulted in expanded coverage of basic social services such as education and health, and the macroeconomic and trade reforms of the 1990s have established Mexico as a stable and more open economy.

Despite this progress, there is still an economic development puzzle to be solved. A newcomer to Mexico might read the basic facts and figures and note the following. Mexico is the sixth largest producer of petroleum in the world. It is a founding member of the North American Free Trade Association (NAFTA). The country enjoys a privileged geography: two ample coastlines and a border shared with the world’s largest economy. While oil reserves are diminishing, Mexico possesses other natural resources in abundance. It also is famous for its rich cultural tradition, an important asset for its substantial tourism industry. So, with all these benign features, why has Mexico’s level of economic development failed to approach the level of its NAFTA trading partners, or the level of a typical OECD member state?

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