Mexico Must Replicate US’s Infrastructure Plan: BBVA

Mexico must develop an infrastructure plan such as the one proposed by US President Joe Biden’s administration to improve its existing infrastructure, said Carlos Serrano Herrera, Chief Economist at BBVA Mexico.

The US has suffered from roads, bridges, trains, water supplies and energy grids failures for decades, leading president Biden’s team to propose a 2700-page, US$1.2 trillion infrastructure bill that would revitalize the country’s infrastructure. The new infrastructure bill will bring several benefits to US citizens, such as an increase in the economic growth rate, an improvement to the existing infrastructure, electric urban bus network development and a stronger infrastructure in charging stations for electric cars, while creating an easier transition to cleaner sources of electricity such as wind and solar.

Mexico stands to benefit from a similar program. “Mexico should start planning a powerful infrastructure program. First, because, after decades of underinvestment, the state of our infrastructure is regrettable. Second, because we will not be able to capitalize on the competitive advantages of being inserted in value chains with the largest economy in the world without having better infrastructure. The potential to export to the US and the Pacific cannot be exploited without better roads, trains and ports. Third, because infrastructure can help reduce inequality and fourth, because it is possible to implement an important program of about four to five points of GDP in the long term without putting public finances at risk,” said Serrano via a BBVA economic analysis.

To achieve well-developed infrastructure, the country needs a portfolio of projects with feasibility studies and clear financial and social returns ready to be implemented based on technical and non-political criteria, said Serrano. Currently, Mexico has three major projects in the works for 2022: the Felipe Angeles International Airport, the Mayan Train and the Dos Bocas Refinery.