Is Mexico’s Infrastructure Ready for a World-Class Economy?

On June 18, Mexico woke up to the news that it had dropped seven places (from 55th to 62nd out of 70 countries) in the IMD World Competitiveness Ranking from 2025 to 2026. This “Comprehensive annual report and a globally renowned reference point for governments and the private sector” (IMD Business School, 2026), evaluates the pillars of Economic performance, Government efficiency, Business efficiency, and Infrastructure. The infrastructural pillar stood out as a weak point in Mexico, and considers: basic, scientific, health and environment, and education infrastructure. Basic infrastructure scored particularly badly.

As a general term, “…infrastructure…encompasses a wide range of innovations, technologies, and assets that help people connect, drive economic growth, and provide essential services in our daily lives” (KPMG, 2026). Infrastructure for business can be defined in two areas: hard and physical, and digital and organizational infrastructure. Hard and physical consists of energy (fossil and renewable energy, and electrification), transportation (roads, rail, seaports, and airports), and utilities; while the digital and organizational includes telecommunications, IT architecture, and supply chain assets (Chandra Asri Group, 2026). There is additionally soft infrastructure for more technological advanced industry and services, such as fiber-optic cables, charging corridors for electric vehicles, data centers, renewable-power plants, and cutting-edge digital networks (McKinsey & Company, 2025). In this article, we will focus more on hard, or basic, infrastructure.

Spending on infrastructural development and maintenance is a key incentive for business investment in any country. The World Bank, OECD, and the International  Monetary Fund recommend that infrastructural spending should be between 4% and 8% of GDP in emerging economies. Mexico has been prioritizing its spending elsewhere recently, from 5% of GDP on infrastructure in the early 2000s to 2.5%-3% of GDP in 2023. For 2026, the federal government projects budgeted infrastructural spending to be 2.5% of GDP. Other countries spend more generously on infrastructure as a percentage of GDP to attract investment, including Hungary (6.6%), Estonia (5.5%), and Norway (5.1%). Under the new Plan de México national economic policy, Mexico is now projecting the budget to increase to 5% of GDP in the long term with collaboration from the private sector.

In terms of total infrastructural spending as defined by the World Bank, the organization recommends that developing countries spend 39% on energy, 31% on transport, 23% on telecoms, and 7% on water/sanitation and wastewater (World Bank, 2015). Recently, Mexico has been overspending on energy and transport and woefully underspending on telecoms and water/sanitation and wastewater. During the AMLO and Sheinbaum presidencies, this has had much to do with prioritizing pet projects in states governed by the Morena political party, part of a left-leaning ideology originally put into motion since Andres Lopez Obrador’s bid to win the presidential election in 2018 (El Informador, 2026). His infrastructural projects have stressed fossil fuels and passenger train/air transport (more socially popular initiatives) including constructing the Felipe Ángeles International airport in Mexico City, developing the Olmeca (or Dos Bocas) oil refinery Tabasco, and starting the operation of the Tren Maya passenger train service in the Yucatan Peninsula (to mention a few). Much of this investment was made in the south of the country to boost economic development there, as well as to support local Morenista governments (Brown R., 2024). AMLO’s successor, President Claudia Sheinbaum (also of the Morena party), has since continued the tradition of focusing on transport, projecting more train lines, such as Mexico City – Queretaro/Guadalajara/Mazatlan/Nogales, Mexico City – Queretaro/San Luis Pososí/Saltillo/Nuevo Laredo, and Mexico City – Pachuca, as part of the signature Plan de México (SICT, 2026).

When it comes to infrastructural investment, foreign direct investment should always be a consideration. Indeed, investors look for regions with a developed infrastructure for their business activities. The states which have received the heaviest public investment in physical infrastructure were Mexico City, Tabasco, Campeche, and Veracruz (SHCP, 2025). Incoming foreign direct investment, however, has been targeted at different geographies. Outside Mexico City, these states (Nuevo Leon, Sonora, Baja California, Cuahuila, Mexico State, Jalisco, and Chihuahua) do not receive the necessary basic infrastructural spending for business (data from Ministry of Economy, 2026).

The World Bank also recommends that a developing economy destine 50% of its public budget to transportation infrastructure and investment in new networks and 50% on maintenance (World Bank, 1015). In 2026, the Mexican government planned to allocate MX$69.3 billion (US$4 billion) for new road infrastructure, and MX$50 billion to road conservation and improvement (Mexico Business, 2026). This is approximately in line with the guidelines. As economies become more developed, however, a greater share is required for maintenance (as the infrastructure becomes more established), so Mexico needs to spend more on maintenance in the future. Another guideline from the World Bank is that Latin American countries should be spending 2.7% of their GDP on road maintenance, whereas Mexico is spending 1.37% (Ramírez, 2025).

There is a growing tendency for hard or basic infrastructure to be complimented by softer or more technologically advanced infrastructure, such as renewable energy, digital connectivity, and electrified mobility. These different combinations of infrastructure will require greater interconnectivity, and more private investment as they become more complex (McKinsey & Company, 2025 ). Although the present federal government is aware of the need for such infrastructure, it is still insistent on limited private investment, and is committing minimal public funding itself. In the meantime, and going back the IMD's 2026 World Competitiveness Ranking report, the unbiased recommendation of “Strengthening domestic value chains and key infrastructure in energy, logistics, and digitalization” needs urgent attention if the country wants to one the Top 10 economies in the world as the government promises.