Interview: Ildefonso Guajardo Villarreal

How is Mexico addressing economic inequality?

IIDEFONSO GUAJARDO VILLARREAL: Naturally there is a correlation between low productivity, low growth and inequality. For instance, in Mexico, companies established in the northern region are up to six times more productive than the ones located in the south, where economic and social indicators are far behind those of the north. To reduce that gap, President Enrique Peña Nieto has introduced 13 structural reforms, six of which specifically aim to tackle factors inhibiting productivity, to promote more opportunities, and level the playing field for businesses of all sizes, sectors and regions. In addition, the government created special economic zones, which aim to boost each state’s economy, foster growth and improve living conditions for those living in Chiapas, Michoacán, Veracruz and Oaxaca.

How will the government’s formalisation strategy strengthen the capacity of key public entities?

GUAJARDO: Various government agencies in Mexico are working together on different public policies aimed at reducing informality across all sections of society and the economy. This policy framework brings together all key actors and collectively presents a coherent and public response to informality, strengthening our institutions’ ability to effectively promote the benefits of working and living in the formal sphere. Furthermore, intra-governmental collaboration enhances our ability to increase formality by offering an integrated package of benefits to formal enterprises, such as access to information, finance, insurance, technology and business development services.

What can Mexico do to improve in the World Economic Forum’s Global Competitiveness Index (GCI)?

GUAJARDO: Three of the strengths that our country maintains in the GCI are our market size, macroeconomic environment and financial market development, all of which are related to economic stability. Given our existing strengths in these spheres, Mexico should focus on continuous improvements in these areas, given their necessity for improving competitiveness across the board. Additionally, there are some other areas our country should improve upon to strengthen Mexico’s performance in the GCI, such as deepening structural reforms and regulatory simplification, especially given increased interest from foreign investors in many sectors of the Mexican economy.

To what extent can Mexico leverage its 12 free trade agreements (FTAs) to diversify its exports?

GUAJARDO: President Peña Nieto has instructed us to continue our integration into the global marketplace. Mexico has started to speed up the modernisation of FTAs with Europe in order to conclude these processes by 2017. Given the uncertain future of the Trans-Pacific Partnership (TPP), Mexico needs to re-establish its integration strategy with the Asia-Pacific region. The Pacific Alliance (PA) could be a platform to do so. In March the PA accepted the category of “associated countries” to sign trade agreements in the short term between the PA and Asian economies, building upon TPP disciplines.

How is Mexico positioned to face external shocks?

GUAJARDO: The country has a few major assets to ensure a favourable position against external economic shocks and changes. It has an ability to boost domestic sources of growth, for instance, by lightening the burden on businesses through different regulatory changes; implementing economic policies to increase job creation; and strengthening consumption in an increasingly prosperous middle class. The country has to remain competitive by continuing on the same path and complying with the structural reforms implemented by the government, as well as reinforcing our commitment to free trade and supporting the international trade regime outlined by the World Trade Organisation.