Enrique Peña Nieto: The reform imperative
Mexico has an historic opportunity to push through reforms that will make it more productive and prosperous, says its president
Mexico is a young and dynamic nation, and I am convinced that the country is ready to take the necessary measures to boost its economic growth and create a modern and vibrant economy. At the beginning of my administration, I made a commitment to work tirelessly to ensure that Mexico becomes an international actor with greater global responsibility. This promising moment is the result of three main factors: our macroeconomic stability, our young and open market-based economy, and the political will and commitment of the nation’s main political parties to transform the country. After 18 years of prudent economic management, Mexico’s macroeconomic finances are sound. Total government debt is equivalent to 38% of GDP and inflation is converging to the autonomous central bank’s target of 3%. Our responsible handling of economic policy has allowed us to set a zero-deficit goal for this year, creating an attractive and competitive destination for foreign direct investment (FDI).
Similarly, the United Nations Conference on Trade and Development announced that Mexico ranks 7th in investment perspectives. Our unparalleled fiscal reputation and upwards growth trends have also been recognized in leading global competitiveness indices in 2013. The global management consulting firm A.T. Kearney recently announced that Mexico is one of the top 10 destinations for FDI. In addition, the World Economic Forum’s Competitiveness Report shows that Mexico rose from 58th place to 53rd, while the World Bank’s Doing Business Report ranked Mexico five positions above its 2012 standing. Moreover, the Institute for Management Development’s World Competitiveness Yearbook highlights the country’s outstanding “Business Efficiency” and “Efficiency of Government”.
To capitalize on this promising moment, Mexico will continue to embrace free trade and cultivate the country’s enormous economic potential. Mexico’s strategic geographic location and wide network of free trade agreements with 45 countries provides international manufacturers and investors extraordinary access to a potential global market of over one billion consumers. The country is the eighth largest manufacturer and the fourth largest exporter of automobiles in the world and my administration will continue to work with industry leaders to solidify the nation’s position as the most important industrial center in Latin America. While the country accounted for 12.3% of US manufacturing imports – just behind China – in 2012, I am steadfast in my belief that the country must continue to explore innovative ways to diversify our production chains and develop new trading partnerships.
In addition, Mexico must take advantage of the fact that it is undergoing a period of low demographic dependency. We must exploit this unique demographic window of opportunity; we have a young, highly skilled population that is eager to join the workforce and compete in the global market. For example, more than 106,000 engineers graduate from Mexican universities every year, more than in larger economies like Germany or Brazil. To realize the full potential of the Mexican economy and workforce, we must invest in state-of-the-art technology and innovation, as well as making strategic investments in healthcare and quality education.
To complete the economic transformation that is underway in Mexico, I pledged to reach across political aisles and adopt a comprehensive reform agenda to boost economic prosperity and productivity. The Pact for Mexico represents the political will and consensus of the three main political parties and my government to bring about the fundamental changes that the country needs. We have passed reforms that will dramatically transform the education and telecommunication sectors. A financial system reform has already been presented, and later this year we will introduce legislation to reform the energy sector and overhaul the tax system.
Furthermore, Mexico’s society and political actors share a vision that transcends political and ideological differences: to build a more prosperous nation that benefits all Mexican families. The country must improve the quality of life and living standards of those living in poverty. As a nation, we must confront these challenges and that is why my administration has launched the National Crusade Against Hunger. Also, I firmly believe that productivity results in greater prosperity, which is the reason we have created a National Committee for Productivity. The Committee will define and adopt policies to boost and democratize productivity throughout the country, creating the necessary conditions to build an inclusive, prosperous and competitive Mexico.
I am well aware that we have to make significant investments in infrastructure, transportation and logistics if we want to increase our production capacity and enhance our competitiveness. That is why in July, I announced a six-year action plan to invest $100 billion to build new roads and railways, overhaul our ports and build a 21st century telecommunications network. This plan will boost growth and facilitate the flow of goods and services, enabling our country to become one of the most important logistical hubs in the region.
My administration is committed to building a more competitive, productive and prosperous Mexico. I am confident that we have the ambition, determination and political will to seize this historic moment and create a better future for our people. Mexico’s moment has arrived and it is time to take full advantage of this opportunity to transform the nation. LF
Enrique Peña Nieto is president of Mexico.