Mexico Policy Notes
Mexico’s economy has grown moderately over the last quarter century, with annual per capita GDP growth averaging just 1.2 percent between 1990 and 2017. The country’s weak economic performance reflected a decline in productivity, which fell by 8 pe...
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| Format: | Policy Note |
| Language: | English |
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World Bank, Washington, DC
2019
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| Online Access: | http://documents.worldbank.org/curated/en/506521560766072079/Mexico-Policy-Notes http://hdl.handle.net/10986/31989 |
| Summary: | Mexico’s economy has grown moderately
over the last quarter century, with annual per capita GDP
growth averaging just 1.2 percent between 1990 and 2017. The
country’s weak economic performance reflected a decline in
productivity, which fell by 8 percent during that period.
Mexico’s productivity challenges are associated with large
and widening regional disparities and the misallocation of
resources between sectors and firms. Large productive firms
integrated with Global Value Chains have not developed
backward linkages to the rest of the economy and lagging
regions. Meanwhile, widespread labor and firm informality
contributes to the misallocation of productive resources.
Reversing the decline in productivity will require an
integrated strategy encompassing multiple policy areas and
sectors. This broad strategy should include strategies
discussed in other policy notes: (i) alleviating rigidities
and distortions in labor markets and improving access to
credit; (ii) alleviating existing rigidities and obstacles
to competition across sectors and sub-sectors while
following through with the structural reforms enacted; (iii)
designing and implementing effective interventions at the
subnational levels to enhance both product and factor
markets; (iv) dealing with the financing of social insurance
schemes; and (iv) strengthening rule of law institutions at
the federal and local levels. This note focuses on critical
aspects of the diagnostic around the productivity dynamics
in Mexico. It also links the aspects of the strategy
above-highlighted to specific policy recommendations on
other Policy Notes of this set given the cross-cutting
nature of productivity growth. It also focuses on providing
policy directions on: (i) strengthening institutions and
programs working directly on the productivity agenda; (ii)
selected sub-national interventions to ease the regulatory
burden; and (iii) proposing a broad and integrated strategy
for fostering formalization. |
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