The impact of the «Pacto Por México» beyond the perceived notion of political consensus revolves around the major reforms it presents as the ultimate gateway to Mexico’s modernization.
Op-ed by Aleyda González
During the last couple of months and perhaps more evidently since president Enrique Peña Nieto took office, in December 2012, many optimistic articles published by the New York Times and The Economist have stressed on the rise of Mexico’s economy as if it were to be considered the new China.
After a visit to the industrial/innovation center in Monterrey, Thomas L. Friedman wrote in The New York Times about the unprecedented growth this region showed during 2012, despite violence and corruption which he also recognized are still serious problems in the entire country. A special report by The Economist says Peña Nieto’s priority “is to make the economy grow faster in order to reduce poverty” and to do so “he will need to introduce a series of big economic reforms.” The Economist also affirms Peña Nieto has reason to be optimistic as the National Action Party (PAN) “shares much of Peña’s agenda and together the two parties have a two-thirds majority in both houses of Congress.”
Friedman, just like The Economist, based most of his optimism on the possible success that the recent agreement signed by the three major political parties know as “Pacto Por México” (A Pact for Mexico) can have in passing the reforms that according to Friedman will break the paralysis Mexico has lived during the past 15 years.
It is not clear where all this enthusiasm is coming from after it has been proven wrong by the analysis presented by Gerardo Esquivel, PhD in Economics from Harvard University and current economics professor at the Colegio de México.
According to Esquivel, this optimism can be boosted by a couple of factors. First the return of the Revolutionary Institutional Party (PRI) to the presidency with Enrique Peña Nieto, who promised foreign investors to pursue structural reforms in the fiscal and energy sectors when he took office. Together with a change in the official rhetoric, which has “moved from violence and security towards economic issues and economic reforms,” as accurately described Esquivel.
The impact of the «Pacto Por México» beyond the perceived notion of political consensus revolves around the major reforms it presents as the ultimate gateway to Mexico’s modernization. Just like decades ago with the creation of NAFTA, Mexico is now hoping to take off financially once the reforms to the education, telecommunications, energy and fiscal sectors are successfully implemented.
Unfortunately, out of the 95 points conforming the agreement, the majority are contingent on the fiscal reform, which means so long as the fiscal reform is not passed the rest of the program bears no chance of success. According to Esquivel, “there are notorious disagreements amongst political parties in terms of how far the fiscal reform can go.”
Apart from the assumed agreement of political consensus, nothing has really changed in Mexico to ensure that today’s economy has the conditions for it to become a global power. Esquivel scrutinizes a series of elements that only lead to believe that Mexico’s economy is no different than what it was years ago. In fact he asserts that “a Mexican worker makes less today per hour of work than he did 30 years ago.”
On a 12-year comparison against similar income level countries, Esquivel proves that Mexico’s GDP has remained the second lowest in Latin America for the past five years, only above Haiti. The GDP per equivalent adult in 2012 was exactly at the same point it was in 1978 ($14,000). Poverty levels have not changed significantly in the past decade, ranging from 53.1 percent (of the total population) in 1992 to 51.3 in 2010.
As Esquivel points out, a change in perception may help attract new investments, but the reality is Mexico faces a deep structural problem that is not being addressed by the current political agreements. Therefore, “excessive optimism on the future evolution of the Mexican economy is clearly unjustified. Most likely, we can expect to continue in a mediocre path in both, the short and the medium terms»
Referred articles:
The New York Times
OP-ED COLUMNIST: Is Mexico the Comeback Kid? By THOMAS L. FRIEDMAN
OP-ED COLUMNIST: How Mexico Got Back in the Game By THOMAS L. FRIEDMAN
The Economist
The rise of Mexico, America needs to look again at its increasingly important neighbour
From darkness, dawn, After years of underachievement and rising violence, Mexico is at last beginning to realise its potential, says Tom Wainwright
Twitter: @aleydag
