Summary: Mexico Competitiveness Forum

Introduction

• Eric Farnsworth, Vice President, Council of the Americas

Opening Remarks

• Ángel Cabrera, President, George Mason University

Panel One: U.S.-Mexico Competitiveness Agenda

• Jerry Haar, Professor of Management and International Business, Florida International University
• Matt Rooney, Deputy Assistant Secretary of State, U.S. Department of State
• Gerardo Patiño, Trade and Investment Commissioner, ProMéxico (Moderator)
• Kenneth Smith, Minister Representative, Trade and NAFTA Office, Embassy of Mexico

Panel Two: Mexican Innovation and Cross-Border Investment

• Luis Castro, Director for United States and Canada, Quarksoft
• Ricardo Ernst, Professor of Operations, McDonough School of Business, Georgetown University (Moderator)
• Peter Foyo, President, Nextel Mexico
• Nadja Giuffrida, CEO, Dextro

Closing Remarks: A Conversation on Mexico’s Economic Outlook

• Santiago Levy, Vice President for Sectors and Knowledge, Inter-American Development Bank

Summary

On June 26, AS/COA hosted a forum focusing on Mexican competitiveness and opportunities for growth. Speakers from both the public and private sectors discussed the economic progress that Mexico has made in terms of macro-economic indicators while highlighting the opportunities for increased competitiveness that can be achieved through a variety of micro reforms. Panelists agreed that Mexico’s leadership in establishing an open global economy and its importance as both a market for U.S. goods and exporter of quality products make the discussion about Mexican competitiveness pertinent to the rest of the Americas. However, they offered different insights into the challenges for enhancing foreign investment and innovation in Mexico’s economy.

Opportunities for Bilateral Cooperation

George Mason University’s Dr. Ángel Cabrera’s opening remarks emphasized the need to shift the focus of bilateral relations towards economic partnerships rather than security concerns by including Mexico and Latin America in future trade agreements. He cautioned that excluding the region from agreements such as the Trans-Pacific Partnership or a potential deal with the European Union could hamper the productivity of North America as a whole. He also reminded participants that both the United States and Mexico must take advantage of the border and keep in mind the need to facilitate the flow of legal goods when discussing immigration and security reforms. Coupled with investment in key drivers of productivity, such as technical education and research, an increase in commercial border activity can provide economic benefits to countries on both sides of the border.

Panelists agreed that the United States has an obligation to aid Mexico’s competitiveness through improving border relations. Yet, they also encouraged private and public sector actors to look beyond the border. They pointed to Mexico’s placement ranking in the 81 spot on the Global Innovation Index’s rankings as an indication of an area for improvement. In order to foster innovation, certain factors—improved research hubs, investment in research and development, and an increased awareness of existing financing options for potential entrepreneurs—must be aligned to enable citizens to take advantage of the country’s resources and macro-economic framework.

Improving Education to Increase Productivity

One of the most important factors contributing to innovation in countries such as the United States is their quantity of high-quality research universities. These institutions are critical in attracting talent and creating clusters of innovation. With this in mind, U.S. President Barack Obama and Mexican President Enrique Peña Nieto have created a Bilateral Forum on Higher Education, Innovation, and Research that will sponsor exchanges and allow for further integration of the country’s universities.

Panelists lauded Peña Nieto’s efforts thus far to create a strong foundation for the country through education. Still, while access to primary education in most regions has advanced, the quality of basic education and access to technical education must be improved. Only one of the top 200 research universities is located in Mexico. In comparison, four of those top universities are located in the state of Virginia alone. Universities are critical mechanisms to harnessing the ideas of the country’s large youth population and making them into monetized realities. Through these institutions, Mexico can also foment the culture of innovation and risk-taking linked to entrepreneurial success.

Shifting from Informal to Formal Firms

The Mexican government can further fuel productivity by creating incentives that will encourage informal firms to formalize. Due to regulations and the existing tax and labor regimes, a large majority of Mexican businesses are informal and only 1 percent of firms employ more than 50 workers, said the Inter-American Development Bank’s Santiago Levy. The small scale and informality of these firms discourages investment in skills training, bars them from access to credit and other benefits, and ultimately distorts fiscal policies. Therefore, to ensure that Mexico can effectively boost productivity, entrepreneurs must be encouraged to work with institutions and to take advantage of existing resources. All of the panelists were confident that by working on the micro conditions within Mexico, the country’s proven economic potential will translate into continued progress in development and growth.