Mexico has been facing significant economic challenges, including falling oil prices, tighter monetary policy in the United States and a sharp depreciation of the peso. Ambitious structural reforms and sound macroeconomic policies have supported the resilience of the Mexican economy in the face of challenging global conditions. Mexico’s productivity growth has recently picked up in sectors that benefitted from structural reforms, such as the energy, financial and telecom sectors. Yet, important challenges remain in eliminating the gaps between Mexico and other OECD economies.

Over the past two decades, successive Mexican governments have faced the challenge of raising the country’s competitiveness, a continuous task since the North American Free Trade Agreement (NAFTA) came into force. Yet, it was only with the present administration that a consensus was reached for initiating the structural reforms necessary for increasing the country’s productivity, competitiveness and development.

The OECD was asked by the Mexican government to carry out an independent policy assessment to identify rules and regulations that may hinder the competitive and efficient functioning of markets in two sectors of the Mexican economy along the vertical supply chain. These were medicines (production, wholesale, retail) and meat (animal feed, growing of animals, slaughterhouses, wholesale and retail).

This assessment identifies distortions to competition in Mexican federal legislation and proposes recommendations for removing regulatory barriers to competition in two sectors of the Mexican economy: the vertical chain of production for medicines (production, wholesale, retail) and meat products (animal feed, growing of animals, slaughterhouses, wholesale, retail). It identifies and analyses 176 potential regulatory restrictions, and makes 107 specific recommendations to remove potential barriers and increase competition. Benefits from increased competition will include lower prices, and greater choice and variety for consumers. This report identifies the sources of those benefits and, where possible, provides quantitative estimates. If the particular quantified restrictions are lifted and the expected effects are realised, the OECD has calculated a positive effect for the Mexican economy of at least MXN 10 228.7 million, which could rise to MXN 44 161.9 million.

The medicines sector has enormous economic and social implications for Mexico. It is an important source of employment (367 056 people, as of 2013) and contributor of GVA (from 2005 until 2015, the GVA for medicine manufacturing was, on average, 0.67% of total GDP). Among its main constraints are a lack of regulation concerning pecuniary advantages pharmaceutical companies can provide to doctors; patients’ restricted possibilities to substitute branded medicines for generics; a regulatory model of maximum prices for patented medicines that leads to high prices for Mexican consumers; the confidentiality of the amendment to the medicines-pricing agreement; and provisions that allow the sector’s regulators unguided discretion. In addition, several dispositions discriminate against foreigners, in both the private and the public sectors. The report also finds various Mexican standards that expressly state that they are not in line with international norms.

The meat sector is important in Mexico, both as a source of employment (344 849 people, as of 2013) and as a contributor of GVA (animal slaughtering and processing accounted for 0.95% of Mexican GDP in 2015). Regulatory reforms could bring efficiency gains that would benefit Mexican households, particularly the poorest. The major constraints in the meat sector include unnecessary documentation to transport livestock, their products and sub-products (e.g. state transport documents and certifications granted by local livestock associations); excessive controls for imports (e.g. double authorisation of establishments and countries; inspection of all imported meat, carcasses, viscera and offal); anti-competitive legislation on livestock associations; and the non-harmonisation of several Mexican standards with international norms.