OECD Urban Policy Reviews: Mexico 2015

Transforming Urban Policy and Housing Finance

image of OECD Urban Policy Reviews: Mexico 2015

In parallel to a sweeping structural reform agenda, Mexico announced in 2013 a new approach to housing and urban policy. Calling for a more explicit qualitative focus on housing and the urban environment, the policy shift is a welcome development. Mexico urbanised more rapidly than most OECD countries in the past half-century, in part as a result of the expansion of housing finance led by INFONAVIT and facilitated by policies aiming to expand access to formal housing. Yet the quantitative push for formal housing came with quantitative costs: inefficient development patterns resulting in a hollowing out of city centres and the third-highest rate of urban sprawl in the OECD; increasing motorisation rates; a significant share of vacant housing, with one-seventh of the housing stock uninhabited in 2010; housing developments with inadequate access to public transport and basic urban services; and social segregation. How can the Mexican authorities “get cities right” and develop more competitive, sustainable and inclusive cities? How can they improve the capacity of the relevant institutions and foster greater collaboration among them? How can INFONAVIT ensure that its lending activities generate more sustainable urban outcomes as it also fulfils its pension mandate and help Mexicans save more for retirement?



The potential contribution of INFONAVIT in resolving Mexico's pension shortfall

This chapter discusses the ways in which INFONAVIT can help to resolve Mexico’s pension challenge, proposing strategies to strengthen the institute’s financial position and improve outcomes for affiliates in light of proposed reforms to the Social Security Law. The chapter: i) assesses the causes of inadequate retirement income in Mexico and proposes possible avenues for future reform; ii) reviews the financial history of INFONAVIT, focusing on the institute’s tendency to prioritise housing finance functions over pensions; and iii) examines the potential impacts of the pending changes to the Social Security Law, focusing on how INFONAVIT might position itself in a new landscape for housing finance, unemployment insurance and pensions income.


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