Mexico Can’t Do It Alone: Why PPPs Are Vital for Growth

Mexico faces a structural dilemma. It needs to invest more in infrastructure to restore economic momentum and improve competitiveness, but the fiscal space to do so is becoming increasingly limited. The gap between what the country needs and what is actually being invested is beginning to widen.

According to the 2026 Draft Federal Expenditure Budget (PPEF), total public investment in infrastructure will reach MX$1.26 trillion (US$69.7 billion), equivalent to approximately 3.2% of gross domestic product (GDP). A significant portion of these resources will be concentrated in priority rail and energy projects.

While this amount is relevant, it is not enough to cover the country’s structural needs. In fact, an analysis by the National Bank for Public Works and Services (Banobras) indicates that Mexico should invest around 5% of GDP in infrastructure to maintain competitiveness, begin closing the current gap, and drive stronger economic growth. This represents a difference of nearly 2 percentage points of GDP, equivalent to roughly MX$700 billion in additional investment each year.

The problem is that this investment does not depend solely on political will. It is also conditioned by an increasingly complex fiscal reality. In a context where public debt has become a sensitive issue, due to higher financing costs, budgetary pressures, and growing social commitments, thinking that the state can simply increase infrastructure spending and solve the problem is overly simplistic. In practice, the opposite often occurs: When governments seek to contain debt, one of the first areas typically adjusted is infrastructure investment. The result is a vicious cycle in which less investment today leads to lower growth tomorrow, reduced future revenue, and even less fiscal room in the long term.

At first glance, it might seem logical to assume the solution is for the government to invest more and that’s it. But this view is based on a mistaken premise, that the state can and should do everything on its own. In today’s economy, that is practically impossible.

Investment needs continue to grow. Cities are expanding, industrial supply chains are transforming, digitalization demands new technological infrastructure, the energy transition requires modern electrical grids, and the population demands better mobility systems, water, housing, healthcare, and education. Added to this is a global context in which countries’ competitiveness increasingly depends on their logistics, energy, and technological capacity. Expecting the public sector to finance, design, execute, and operate all this infrastructure on its own is simply unfeasible.

International experience shows that countries that have managed to close their infrastructure gaps have not done so solely with public resources. They have done so through collaboration schemes with the private sector that mobilize capital, innovation, and execution capacity. This is where public-private partnerships (PPPs) come into play.

PPPs are mechanisms through which the public and private sectors collaborate to finance, build, operate, or improve infrastructure or public services. Although they are often associated only with highway concessions or large transportation megaprojects, they actually encompass a much broader range of models, including long-term contracts, co-investment schemes, private financing for public infrastructure, concessions, and strategic partnerships to improve existing services or infrastructure. The central principle is an appropriate distribution of risks and responsibilities. The state defines public objectives, regulates, and supervises; the private sector contributes capital, technology, operational efficiency, and execution capacity. When properly designed, monitored, and made transparent, these arrangements can accelerate projects, reduce pressure on public debt, and improve service quality.

But public-private partnerships are not limited to large-scale projects. They can also take shape through more agile collaborations that are closer to communities. An example of this type of collaboration can be found in the projects we have promoted from the Directorate of Strategic Partnerships at the Ministry of Equality and Inclusion of Nuevo Leon, where we have designed public-private partnership models with companies to jointly address various social challenges in the state.

For example, in the state’s 50 community centers — public spaces that serve as meeting points to offer training, education, sports and social development programs — the government provides infrastructure, operations, and various social programs, while the private sector contributes equipment, facility renovations, technology, or specialized expertise. Thanks to these partnerships, initiatives such as technology classrooms have been promoted, featuring spaces equipped with computers and internet access to reduce the digital divide in vulnerable communities; culinary classrooms, where companies provide professional equipment to train individuals in job skills; and sewing classrooms, which help develop productive capabilities and self-employment opportunities.

In these cases, the value of the partnership is not limited to financing. It arises from the complementarity of capabilities, where the government provides territorial presence and direct contact with the community; companies contribute innovation, equipment, and technical expertise; and the result is a form of collaboration that multiplies social impact without proportionally increasing public spending.

Moreover, these partnerships do not necessarily involve complex public-private partnership models or large infrastructure contracts. They are alliances that allow the state to expand its capacity for action, generate savings, and, at the same time, integrate companies directly with the communities where they operate. In just the past year, this model has enabled us to promote more than 300 projects alongside 159 companies, benefiting more than 550,000 people across the state.

Here, the underlying lesson is clear. There are multiple forms of collaboration between the public and private sectors. Some are based on the exchange of added value, as seen in many social projects. Others rely on an efficient distribution of risks and responsibilities, as in traditional public-private partnership models. But beyond the specific mechanism, the central idea remains the same. Major public challenges cannot be solved by working in silos. Neither the public sector nor the private sector can do it all on their own.

This does not mean reducing the role of the state. Quite the opposite. It implies gaining a clearer understanding of the role that must be assumed in the face of each public challenge. In some cases, the state must lead, regulate, and safeguard the public interest. In others, it must enable the participation of actors who can contribute investment, innovation, or execution capacity.

The state has an irreplaceable role in defining priorities, establishing clear rules, ensuring transparency, and guaranteeing that projects serve the public interest. Companies, for their part, play a fundamental role as generators of investment, innovation, and productive capacity. When both sectors work in coordination, resources multiply, projects advance more quickly, and solutions reach more people.

Ultimately, as economic, technological, and social challenges grow exponentially each year, the question is no longer whether Mexico should promote public-private partnerships. The real question is how quickly can it overcome its hesitation to do so.