Productivity growth has been insufficient over the past two decades for a convergence of Mexican living standards to the OECD average. Structural reforms in the areas of business regulation, competition policy and education will be crucial to stimulate productivity and foster the catching up process. The OECD has worked with Mexico in all of these areas to develop reform strategies. Efforts to reduce the regulatory burden for firms, including start-ups, should continue. There is also a need to better co-ordinate ongoing administrative simplification efforts at the federal and state levels. The recent competition law reform will strengthen enforcement of cartel law. Undue restrictions on firm entry and expansion in key network industries should be lifted to enhance productivity in potentially competitive segments. Higher quality education and more equitable access to it will be needed to help Mexicans develop their productivity potential in full. A key ingredient will be better teachers. Clear standards for teacher performance are needed to improve their initial education and professional development and to develop a teacher evaluation system that would guide their career development and help them develop their potential. School financing is currently complicated and uneven, leading to inequities. Given that overall spending on education is comparable to OECD levels, Mexico should work towards efficiency gains in the sector and creating a system that provides more reliable funding for all schools.