Mexico needs a new strategy to boost growth, fight poverty and improve well-being for all

Mexico

San Miguel de Allende (Mexico Jezael Melgoza, Unsplash)

This article is brought to you in association with OECD.


The Mexican economy is expanding at a moderate pace, underpinned by a strong macroeconomic framework and robust exports tied to the country’s deep integration into global value chains. A new strategy is now needed to boost growth, reduce high levels of poverty and inequalities, and improve well-being for all Mexicans, according to a new report from the OECD.

The latest OECD Economic Survey of Mexico discusses the links between low living standards and stagnant productivity, poor educational outcomes, weak rule of law, obstacles to competition and widespread informality. The Survey projects growth of about 1.6% this year and 2.0% in 2020, in the context of a slowing world economy and persistent trade tensions that risk disrupting exports, private sector investment and global value chains.

The Survey, presented in Mexico City by OECD Secretary-General Angel Gurría and Mexican Finance Minister Carlos Urzúa discusses the need to address the growing divide between the more modern and productive economy in the north and centre of the country and the more traditional economy in the south, which is a source of both inequalities and poverty. It also looks at how implementation of recent reforms, institutional improvements and changes to the tax and transfer system can better support more inclusive and sustainable growth.

“The Mexican economy has performed well in recent years, but is now facing serious headwinds from the external environment and important structural challenges at home,” Mr Gurría said. “The only response is to continue designing and implementing new reforms to  instill confidence, improve the quality of public administration, increase opportunities, reduce inequalities and bring about a stronger and more inclusive society for all Mexicans.”

 

Improving institutional quality would have the largest growth benefits among all structural reforms and would increase the impact of all other policy reforms, according to the Survey. Implementation of recently created national and local anti-corruption systems should be completed, alongside consideration of the introduction of a specialised, independent anti-corruption agency, taking into account the federal structure of government. Efforts are needed to ensure the continued strength and independence of new competition authorities and sectoral regulators.

A new tax reform is needed to improve collection, limit evasion and ensure financing for infrastructure investment and policies to reduce poverty and inequality. The Survey suggests a comprehensive medium-term tax and benefits reform should seek to broaden the value-added tax base, by cutting exemptions and abolishing reduced rates while compensating low-income households with targeted subsidies. It also suggests adding greater progressivity to the personal income tax system, via a lower income threshold for the top rate and further cutting back tax allowances and making better use of taxes on immovable property. Continuing efforts are needed to reduce duplication of social programmes and beneficiary overlaps while expanding coverage to the poor not already receiving benefits, the Survey said.

 

Reforms are also needed to reduce Mexico’s persistently high informality, which constrains productivity growth and the government’s fiscal capacity to provide public benefits and redistribute. A coordinated approach to reducing informality should ease the administrative burdens of doing business. Lowering tax compliance costs, reducing the cost of creating new jobs and reduced social security contributions for low-wage earners are all identified as desirable and possible.

Better educational outcomes will help fight persistent inequalities and boost productivity growth. Education spending should be re-focused on early childhood, pre-primary, primary and secondary education, and more should be done to increase the capacity of schools in poor neighborhoods and to support students from disadvantaged backgrounds, the Survey said.

Integrating environmental and metropolitan governance concerns into policy making has wide scope to improve both economic and environmental outcomes. Reforms in the governance of large metropolitan areas would enable local governments to plan land use, public transport and housing in an integrated manner, boosting productivity and lowering congestion and air pollution, which affects low-income households the most.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Eurozone closer to a deflation – stagnation trap

MWC 2016 Live: Industrial world prepares to reap digital benefits

Extra mild ECB tapering of QE and zero interest rates keep euro low

Progress against torture in Afghan detention centres, but Government needs to do more, says UN report

After Brexit and Grexit, Brussels to deal with Poloust

Capital Markets Union: Making it easier for smaller businesses to get financing through capital markets

These Indian fishermen take plastic out of the sea and use it to build roads

Cities will lead the electric transport revolution. Here’s why

There is a way for Eurozone to reach a sustainable growth path

New EU rules to boost crowdfunding platforms and protect investors

Rehn very reserved about growth in Eurozone

EU Copyright Directive: Will US tech giants comply or ditch the EU market?

Mali: Two peacekeepers dead after dawn attack, several injured – UN Mission

“Will TTIP solve the massive EU-US unemployment? Absolutely not!” A revealing Sting Exclusive with Tim Bennett from the Transatlantic Business Council

Climate activist Greta Thunberg urges MEPs to put words into action

Paris agreed with Berlin over a loose and ineffective banking union

What’s going on in Chernobyl today?

How India is harnessing technology to lead the Fourth Industrial Revolution

Hunger and obesity in Latin America and the Caribbean compounded by inequality: UN report

South Sudan: €48.5 million in additional EU humanitarian aid

Blockchain could boost global trade by $1 trillion

Are e-cigarettes as safe as they claim to be?

Eurozone’s sovereign debt not a problem anymore?

A rapid deterioration of the humanitarian situation in the war-torn Yemen

Commission: Raising the social issues that can make or break the monetary union

A neo-liberal toll free Paradise for the super rich and tax hell for wage earners

Palestinian children’s education deeply impacted by ‘interference’ around West Bank schools, UN warns

Horn of Africa: UN chief welcomes Djibouti agreement between Eritrea, Ethiopia and Somalia

Can big events really go plastic-free? A water capsule made from seaweed may be the answer

Brexit casts a shadow over the LSE – Deutsche Börse merger: a tracer of how or if brexit is to be implemented

Dieselgate: Parliament calls for mandatory retrofits of polluting cars

German banks suffer of nausea amidst rough seas

A Sting Exclusive: “China-Africa Cooperation Sets a Fine Example of South-South Cooperation”, by China’s Ambassador to EU

The Council of Europe adopts Recommendation on young people’s access to rights

Businesses can lead a revolution in disability inclusion

Mental health in medical students: the deciphered quandary

Removing deadly mines means ‘new horizons and hope’, clears a path to SDGs, says UN chief

China Unlimited Special Report: at the heart of Beijing

EU-US trade war? EU calls for logic while Trump’s administration is a loose cannon in a dangerous lose-lose situation for global prosperity

Let Nagasaki remain ‘the last city’ to suffer nuclear devastation says museum director, as UN chief arrives

At Ministerial session, UN regional office in Beirut to focus on technology for sustainable development

Commission celebrates the 30th anniversary of the Jean Monnet Activities promoting European studies worldwide

From rescue animals to electric buses, California is introducing bold new rules

ECB’s first flight in Eurozone’s banking universe will be just a reconnaissance

LED lights could stop turtles and birds from drowning in fishing nets

Innovation for a smarter world: ITU Telecom World 2018

Here’s the secret to financing a greener future

What has changed in the French politico-economic horizon

Unemployment and exclusion brings EU cities to boiling point

Antitrust: Commission imposes binding obligations on Gazprom to enable free flow of gas at competitive prices in Central and Eastern European gas markets

Governments must act to help struggling middle class

‘New tech’ business model threatens decent work conditions, warns UN

Millions more migrant workers, means countries lose ‘most productive part’ of workforce

Impossible Brexit options: WTO or new referendum?

New SDG Advocates sign up for ‘peace, prosperity, people’ and planet, on the road to 2030

Electric vehicles are half the market in Norway

ISIS fighters fleeing Mosul for Syria can topple Assad. Why did the US now decide to uproot them from Iraq?

Nigeria: Armed conflict continues to uproot thousands, driving up humanitarian need

Syrians still living on ‘razor edge’ as UN launches $8.8 billion dollar appeal

COP21 Breaking News_10 December:#ParisAgreement: Points that remain in suspense

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s