Local Strength: How MSMEs Can Anchor Mexico’s Future

Across Mexico, each day begins with small and micro-businesses opening their doors, hoping that today will be a little less difficult than yesterday. These daily acts of faith sustain local jobs, neighborhood commerce, and regional supply chains. In many communities, they determine whether progress moves forward or falls behind.

High-level economic debates — foreign investment, trade agreements, global supply chains — are undeniably important. But they often overlook a fundamental truth: the health of Mexico’s micro, small and medium-sized enterprises (MSMEs) largely determines whether the country’s competitiveness will be both sustainable and tangible in the everyday lives of millions. International investment drives growth, but creating fertile ground for local talent and creativity is just as essential.

Beyond the Numbers: A Deeper Structural Challenge

Recent data highlight both the weight and the vulnerability of MSMEs. According to INEGI’s 2023 Economic Census, they account for 95.5% of all economic units, employ 41.5% of the workforce, and generate 17.1% of total revenues. They are the backbone of the daily economy, yet, their share of national income remains limited compared to the vast employment they sustain.

Another revealing fact underscores this paradox. Between 2019 and 2023, 1.7 million establishments were created, but 1.4 million closed, according to INEGI’s Business Demography Study. On average, more businesses disappeared than emerged each month. Although business mortality has eased since the pandemic, fragility remains the norm.

Regional inequality deepens this vulnerability. A June 2024 report from the Ministry of Economy shows that half of all MSMEs are concentrated in just 10 states, including Mexico City, the State of Mexico, Jalisco, and Veracruz, while southern regions lag far behind. In those areas, more than 80% of businesses operate informally, and many lack basics such as reliable electricity, running water, or internet connectivity.

Digitalization exposes another gap: Among micro-enterprises, only 23% use the internet and just 4.4% sell online, leaving them outside an increasingly digital economy.

These figures point to more than statistics; they reveal a structural challenge. Starting a business in an industrial corridor with access to credit and training is worlds apart from doing so in a town where opening a bank account or taking an online course is a hurdle. Some states have partnered with the private sector to offer support programs, but such conditions are far from universal. The real task is not merely to count businesses, but to strengthen them so they endure, grow, and integrate into larger value chains.

A Blueprint for Inclusive Growth

To truly integrate MSMEs into Mexico’s development, five strategic fronts demand immediate action:

1. Make formalization easier. Formality should be a gradual, accessible path, not a barrier. Simplified procedures, lower compliance costs, and flexible social-security schemes tailored to microbusiness realities are essential.

2. Expand access to financing. Too many companies depend on informal credit or operate without financing altogether. Development banks, state funds, public guarantees, and fintech solutions can create a more dynamic environment for productive investment.

3. Strengthen knowledge transfer. One-off training isn’t enough. Active learning networks that connect MSMEs with universities, technology centers, digital platforms, and mentors can help them meet market demands and professionalize operations.

4. Drive comprehensive digitalization. Digitalization is more than selling online. It means optimizing processes, ensuring traceability, automating tasks, and meeting regulatory standards. Technology must become a strategic ally throughout the value chain.

5. Promote productive linkages. Large companies and MSMEs cannot operate in separate circuits. Supplier-development programs, local public procurement, and incentives for import substitution can weave strong public-private collaboration networks. State and municipal governments have a central role as facilitators.

If these policies are applied with local vision, continuity, and political will, Mexico can take a decisive step toward inclusive growth, where success depends not on company size or location, but on the talent and determination of the millions of entrepreneurs who keep the country’s economy moving every single day.