What Should AMLO Focus on to Boost Development?Wed, 05/08/2019 - 17:47
The arrival of President López Obrador created uncertainty among investors but also provided new opportunities for industries to evolve and contribute to Mexico’s growth. Business leaders across all sectors are willing to work hand in hand with the new government and have also shared a series of recommendations and opinions regarding the public policies the federal government should favor, the priorities it should focus on and the elements needed to boost growth.
Juan Pablo Castañon
It is very important to solve problems related to security and rule of law. The National Anticorruption System needs to start working and we need to have an Anticorruption Prosecutor. This would also allow us to reduce the country cost. Corruption costs us at least 1 percent of the country’s GDP. However, there are studies that put the cost of corruption between 1 and 10 percent of the GDP. As this is a key topic for President López Obrador, we would like to see the rapid functioning of the National Anticorruption System and specific measures from the federal government to address this issue.
The most important thing is to spur Mexico’s growth, which has been relatively limited. Rather than growing 2.5 percent, the country should grow at least 5 percent. There were some encouraging changes in the Peña Nieto administration with the structural reforms, but with the start of this new government cycle, economic growth will depend on the investment attracted to the country
Public policies for the healthy development of the financial system are obvious. We need to continue promoting financial inclusion, which is a topic that has received emphasis in recent years, and to find ways for the informal economy to have more formal financing mechanisms. The informal economy continues to be a burden on the country’s growth and development. It is less productive and does not have access to formal financing. This implies that its financing schemes are expensive and shortterm, generating a vicious cycle of low productivity.
Raymundo E. Enríquez
We need to innovate. The government needs to use new tools available to make its processes more productive and efficient. It will be a challenge for the new government to reduce the federal workforce and to make due will less as a result. However, this will lead to increased efficiency and transparency to eliminate the possibility of corruption. If the government can make these changes while providing certainty to investors regarding timelines and results, we will be able to generate much of the investment we need.
Education is key to the digital transformation. Most children in Mexico still receive a traditional education and it is necessary to make technological tools available to them from a very young age. Programming skills will be extremely useful to children, not just because they are in demand but because they teach a flexible way of thinking. Deloitte supports an organization that implements several programming courses for girls and we also have a scholarship program for university students in Queretaro. Developing stronger educational programs will help the country cultivate the capabilities it needs to be more competitive.
It is important to continue investing in research and development and we need to develop professional talent with expertise in agriculture. With research, it is always important for people to be prepared and ready to continue supporting the development of agriculture. We need to continue favoring export markets that pay well for our products and that help farmers earn money. For the southern part of the country, it is important to develop a production platform. It is equally important to develop storage infrastructure, build highways and to develop cold chains to facilitate exports for producers. We need a public-private policy that favors the development of the small and medium-sized producer.
The new administration must maintain Mexico’s free-trade agreements, since free trade is necessary for the country to achieve long-term competitiveness and greater economic development. The government has to maintain infrastructure investment in the country because South American countries like Ecuador and Colombia are becoming more competitive. Security and rule of law must also play a key role in Mexico’s development because there are some states in the country that are almost nonexistent for doing business. The government needs to balance and strengthen rule of law throughout the country if it wants the country to develop equitably
We need to have an administration focused on attracting a greater amount of foreign investment, which we think is the mechanism that will help us become more productive. Things like increasing minimum wages could be feasible if we have more investment. We also need an environment that makes it easier to do business. Sometimes it is very hard to obtain business permits and every state in the country functions differently, which complicates the process of doing business.
There are many priorities and not enough budget, so choosing one is not easy. One question that impacts the tourism industry is whether the money that is used for promotion will be used for other purposes. If the new administration wants to build the Mayan Train, the tourism sector will welcome it but the government will need to find new budgetary sources to pay for it, rather than use the money that is used by the CPTM for promotional purposes.