2007 OECD Economic Surveys: Mexico 2007

image of OECD Economic Surveys: Mexico 2007

This edition of OECD's periodic economic survey of Mexico examines key challenges Mexico faces in the medium-term including strengthening public finances, maximising the gains from integration into the world economy, improving infrastructure (including transport, telecommunications, electricity, and natural gas), and creating more and better jobs to alleviate poverty.

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Improving infrastructure in Mexico

To lift overall growth and improve the benefits from openness to trade and FDI, Mexico needs to make complementary reforms to enhance the efficiency, quality and quantity of infrastructure services. Transport infrastructure efficiency has a direct effect on domestic and international trade flows and overall growth by lowering delivery times and transport costs, while efficiency in telecommunications and energy influences the cost-competitiveness of Mexican firms. Despite progress made to increase competition and lift productivity in infrastructure, there is scope for further improvements. This chapter reviews progress achieved so far in developing infrastructure and identifies remaining challenges in key sectors, making specific recommendations on how to strengthen competition and improve regulation. State-owned firms still have a large presence in the infrastructure sector, and their governance and regulation needs to be improved. There are also areas that are in principle opened to competition but where application of the law is impaired and effective competition is lacking. Steps should be taken to reduce discretionary decision-making and introduce or clarify rules for accessing network assets so as to facilitate entry of new participants and foster competition. Price signals to ensure efficient investment and consumption decisions and facilitate private investment should be strengthened in some sectors by removing price subsidies, while using targeted income support to address legitimate social concerns.

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