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OECD Territorial Reviews: Chihuahua, Mexico 2012

image of OECD Territorial Reviews: Chihuahua, Mexico 2012

Located at the border with the US, Chihuahua has benefited from FDI and NAFTA. Chihuahua has been one of the richest regions in Mexico and one of the most dynamic in the OECD. However, the region’s FDI-trade link with the USA has also led to some vulnerability to external shocks. The two crises affecting the USA in the past decade affected Chihuahua more than any other state. Despite recent progress in the quality of education, other structural challenges such as lower productivity growth, high inactivity rates and dwindling employment rates have been factors in Chihuahua’s sluggish growth. Chihuahua not only displays large intra-regional and gender inequalities, but also the largest inter-ethnic inequality levels in the country. Chihuahua can gain from a territorial approach to policymaking that integrates sectoral policies, fostering value-added in rural activities, better linking SME-development and FDI-attraction policies, as well as between innovation capacities and applications. The region could also strengthen their recent inclusive governance arrangement with civil society and the private sector.  Growth and development can only be possible if the current challenges in insecurity, water shortage and public finance are addressed.

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Going Local to Enable Complementarities

This chapter examines the role of space in allowing for policy complementarities. It argues that the best way to foster complementarities between efficiency-seeking policies (economic) and equity-seeking policies (social) is by addressing the challenges and design the policies at the local level. The chapter argues that while infrastructure is a crucial dimension of regional policy, the risk of not having an integrated approach to regional policy is that providing transport infrastructure can reduce costs, but also lead to further agglomeration and therefore a leaking-by-linking effect. The chapter continues with the urban challenges in terms of housing, sprawl, sustainability and transportation that the pattern of urbanisation has represented for Chihuahua and argues for a city-regional approach to urban planning, as well as for the use of fiscal tools to reduce vacant land, curtail sprawl and increase density. The chapter then alerts the reader to rural challenges and the way in which these have exacerbated water stress, leading to the third systemic challenge. The review looks at issues that limit rural areas’ productivity and reduce water availability such as: farm size, type of crops, subsidies to electricity, lack of financing and outdated modes of land and water management. The chapter ends with a discussion on water governance and the need to allow for more local regulation among other recommendations.

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