Monterrey 2014 Blog: Post-Reform Competitiveness in Nuevo Leon

The state of Nuevo Leon is well known as an industrial hub and a leader in advanced manufacturing. Situated in Northeast Mexico, its geographical location is key for supply networks between Mexico and the rest of North America. But a fundamental factor for Nuevo Leon's importance as an industrial center is its human capital. Over 6,000 engineers graduate each year from highly competitive educational institutions like the Tecnológico de Monterrey, while Nuevo Leon is the Mexican state with the highest proportion of the population possessing professional, masters, and PhD degrees.

The Mexican Competitiveness Institute (IMCO) ranks Nuevo Leon as the second most competitive state in its State Competitiveness Index, behind just Mexico City. The analysis emphasizes Nuevo Leon's highly productive workforce and innovative companies. In IMCO's city-level competitiveness ranking, Nuevo Leon's capital Monterrey ranks fourth among 78 cities in Mexico. 

The structural reforms passed by Mexico's Congress in the last two years represent an opportunity to increase productivity in Mexico, and especially in Nuevo Leon. Furthermore, the National Infrastructure Plan announced by the federal government in April 2014 includes the expansion of Monterrey's airport, new power plants, gas pipelines, and other projects in Nuevo Leon estimated at $4.8 billion.

Positive effects of the reforms combined with the state’s competitiveness are coming to fruition, particularly in the energy sector. Houston-based oil companies have revealed their intention to transfer part of their operations to Monterrey, since they believe the city has the possibility to become the oil corporations' center. Many other sectors also benefit: Kia unveiled a plan to invest more than $1 billion in a plant near Monterrey, General Electric inaugurated a new financial center for its operations in Latin America, and 28 companies in the aeronautics sector have chosen Nuevo Leon to be a new aerospace host. 

Some constraints remain for the full development of Nuevo Leon, particularly insecurity generated by organized crime. While the murder rate is less than a quarter of what it was three years ago, extortion is up 437 percent. Federal, state, and local authorities face the challenge of boosting the rule of law and improving security to ensure private-sector investments.

Editor's note: This post previously incorrectly stated that Monterrey is the Mexican state with the highest proportion of the population with post-graduate degrees. It is Nuevo Leon.