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Getting it Right

Strategic Priorities for Mexico

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Mexico has been a reform champion, having launched ambitious reforms in a broad range of areas. While the reforms are showing first positive effects they are not delivering to the extent they could. On many dimensions of well-being, including education, health and security amongst others, Mexico still lags behind the OECD average and regional development remains very uneven. While Mexico has done a lot to build a competitive economy, progress has been too slow in two complementary areas, namely strengthening institutions and fostering inclusion. The capacity of the public sector is weak, corruption remains widespread and the rule of law is week, all hindering trust in government institutions and the effective implementation of policies. Similarly, persistent inequalities and widespread poverty do not only mean that higher growth does not translate into widespread gains in well-being; these inequalities are also holding back growth as Mexico is not using all available talent. Mexico has taken measures to tackle these issues, but important implementation gaps remain. It will be important for the next government to build on past reform efforts, ensuring the full and effective implementation of already legislated changes to allow for reform continuity and to launch additional reforms in several priority areas, including the rule of law, education and social protection. Only then will Mexico be able to deliver a higher quality of life for all its people.

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Strengthening Mexico's fiscal policy

While Mexico has made significant progress in strengthening its fiscal policy over recent years, revenues remain too low to finance spending on infrastructure, education, health care, poverty reduction, family support and social protection. Although there is room for improvement on the efficiency of public spending, potential to raise additional tax revenues clearly exists, including by broadening the tax bases and adjusting the tax mix by focusing more on immovable property and environmentally related taxes. A more decisive fight against informality would improve tax collection and enhance the redistributive role of its tax system. This has to be accompanied by a strong agenda to increase the effectiveness and transparency of public spending and the fight against corruption.

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