Mexico definitely required a radical change, with no demur, as the only emerging economy that undertook a reform process to boost economic growth. The magnitude of the challenges faced, culminated in 11 structural reforms that are rethinking economic structure and power in the country (Energy, Telecommunications, Economic Competition, Financial, Tax, Labor, Education, Criminal Procedure, Political-Electoral, Transparency and Appeal Law), which were approved during the first 20 months of Enrique Peña Nieto´s administration, being the energy sector reform the most important advancement in Mexico since the North American Free Trade Agreement. These structural reforms implicated restructuring key economic sectors, backed by constitutional amendments and a resolute legislative agenda, such reforms are not in the least effortless to initiate and are usually difficult to complete, but they will increase the potential growth of the Mexican economy, and its successful implementation will be key to increasing the attractiveness of Mexico as a destination for investment. The actions undertaken have fundamentally strengthened the economy and promoted productivity increases through structural reforms. Decisions as to launch several reforms at a time can be sterile if the necessary mechanisms are not built to ensure a rigorous implementation, specific monitoring, and systematic evaluation of its results; effective and timely implementation of these reforms is crucial, as they have to be complemented with new laws that result in more opportunities for Mexicans, greater productivity, competitiveness and social inclusion.
Currently, Mexico is pursuing longstanding foreign and domestic investors to back these ambitious and exhaustive reform efforts. Mexico has to emphasize the human and institutional capacity to carry all of the reforms to fruition, and for these reasons, Mexico´s government updated the regulatory framework, and has the punctual obligation to enforce it. Nonpartisan regulators will be essential to uphold real competition across the economy. The effective application will ultimately cease the humongous social inequalities. Let’s not forget that the ultimate goal is to create inclusive growth, half of the Mexican population still lives in poverty and vulnerability and this reality has to be changed, encourage modernization, broaden access to credit, increase competition, enhance the system of public education and have a more efficient political structure, among many others.
These reforms have to find a way to shake up a sluggish economy; the reforms´ costs have unfold faster than their benefits in the short term, regulatory uncertainty and higher taxes have taken a levy on internal consumption and investment. Nonetheless, investors seem to have a foretaste for Mexico´s market, specifically for equity markets due to the reforms improving the economic outlook and the potential to transform to a new pathway and become a conclusive example for other Latin-American countries, despite a marginal lapse in Mexico´s stock market thus far in 2014, investors became extra wary of an economic recovery. The reasons of the country’s ambitious structural-reform efforts will have a far-reaching motion effects around the globe. Mexico´s stable fundamentals, competent macroeconomic management and sound policy scheme have granted to cope with financial volatility related to unprecedented monetary policies of developed economies.
Propositions in the Mexican reforms are not only important to Mexicans, but also to the United States and Canada. Reforms might reduce illegal immigration from Mexico to these two countries, American and Canadian capital in the energy, telecommunications and other industries will be present, as Mexico becomes more responsive to foreign capital and businesses. United States is the main trading partner of Mexico; accordingly, reforms will revamp opportunities for both countries to import and export a greater number of goods and services. Our neighbors to the north are experiencing robust economic recovery, which corresponds to recent data from strong employment growth and improvements in other indicators. In order to be competitive, these transformative reforms must seek to maintain fiscal discipline that allows a low public debt, a stable monetary policy focused on depressing inflation, target a flexible foreign exchange regime and to preserve international reserves to meet any contingency that boosts productivity as the foundation for long-term growth; the productive capacity is built with new investments, improved technology and a better trained workforce. There is strong international confidence in Mexico
The structural reform program has definitely abetted to eliminate many of Mexico´s blockages to growth, the potential achievements are substantial, but can only be executed over the long term; sustained growth implies new investments of millions of dollars. In this regard, it is also urgent to make major political and social changes that will allow Mexico to move more effectively to an improved integration into the world economy. Mexico is in the midst of a deep transformation that had been deferred for years due to lack of agreements and consensus. It is certain that if Mexico seeks to boost its economic growth, certain issues that undermine productivity and competitiveness must also be overcome, Mexico has the historic opportunity to achieve a higher platform of development, favoring a plural inclusive society in line with the structural reforms. The country is well positioned in terms of macroeconomic and financial results, but integral growth remains insufficient and much remains to be done to clearly improve the progress that will translate into the welfare of all Mexicans. Mexico is now ready to seize opportunities and to conduct these reforms with a human and social meaning. All the Constitutional amendments were approved by national representation in both the Congress and the Senate, 81 laws were amended, and 21 new legislative texts were created and deleted with the support of all Mexican parties. The legislative stage is almost done, we are entering the implementation phase, the operational phase of these much needed structural reforms that need to adapt to the reality of our country and generate the necessary flexibility to respond to changes in the economic cycle.