Mexico has recently embarked on the implementation of a major structural reform package with the aim of emerging from three decades of slow growth, low productivity and excessive income inequality. The reform package has already helped improve confidence and bodes well for 2015. A must for the OECD, in Mexico they will have to improve governance and institutional capacity to ensure the effective implementation of these measures. The government elected in 2012 quickly reached a historic agreement between previously divergent political parties on an ambitious consensus-based package of reforms, known as the “Pacto por México”, aimed at putting the country back on track for recovery. The main legislative measures aim to improve competition, education, energy, the financial sector, employment, infrastructure, telecommunications and the tax system. If fully realised, these reforms could affect the annual growth trend of per capita GDP by one percentage point over the next ten years, while the education reform will have more lasting effects in the medium term. The reform package fits into a context where Mexico is facing external turmoil, in particular the drop in oil prices and the announced tightening of US monetary policy. Therefore, full implementation of reforms in the near term will be crucial to reap the benefits of a strong and sustainable recovery. But this requires a strong political commitment to maintain and further strengthen administrative capacity. The widespread perception of a corrupt system, weak administrative governance and poor enforcement of rules are all factors that discourage investment and promote informality. The judicial system has so far been inefficient and slow, unable to adequately address the security problems affecting the country.
The Pacto por México is a bold reform package. From the analysis by the Organization for Economic Co-operation and Development, However, in some sectors further measures should be pursued:
• full implementation of the reform package to strengthen administrative quality at all levels of governance;
• justice reform, strengthening the rule of law, solving security problems and widespread corruption with reforms focused on the efficiency of the judicial resolution of civil, commercial and criminal matters and a strengthening of the transparency of public procurement;
• gradually reduce restrictions on agricultural land ownership and transfer, while strengthening rural income support and access to finance.
High inequality has left many families in poverty, with little access to quality education and health care, with the consequence of compromising long-term growth prospects. Again the implementation of recent reforms will help, but further efforts will be needed:
• improve the equity and efficiency of education spending by reallocating resources between pre-primary, primary and secondary education. It is also necessary to focus on improving the quality of teaching.
• access to quality health care through better coordination between the different institutions in the sector to reduce layoffs. In particular, promote the exchange of services between health care networks.
• improve the care system for children under the age of three and the extension of active labor market policies, especially the female one.
• the passage of a bill for universal unemployment and retirement insurance to protect the unemployed and the elderly against the risk of income loss and fight inequality.
