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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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Policies and Institutions to Enhance Economic Growth

This chapter examines federal, regional and local policies and institutions for regional development in Chihuahua. It starts by discussing the institutional framework – the international context being a border region, as well as the federal, state and municipal levels of government – in Chihuahua. The chapter continues with an analysis of the policies in place and points at the need for reforms to enhance economic growth. In particular, the chapter looks at policies for private-sector development: i) those that aim at fostering private investment, ii) those for upgrading the regulatory framework, and iii) cluster policies to link value chains. One of the central policy discussions in this chapter is the policy options that the state has, in order to strike a balance between attracting foreign direct investment and supporting local entrepreneurship. The chapter also looks at policies to develop and attract skills and talent, as well as innovation policies such as science and technology parks, the financing of innovation and the institutions for innovation. In light of Chihuahua’s vulnerability to external shocks, one of the policy options that are explored is the diversification of the economy in sectors with growth potential. The chapter ends with a discussion on the potential role of a regional development agency in Chihuahua that would allow a quadruplehelix approach to regional development with the implied involvement of the private sector, academia and civil society.

English

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