Challenges for implementing industrial policy in Mexico

Abstract

Although Mexico experienced high growth rates in the 1960s, 1970s, and early 1980s, the country has not fared well in terms of improvements in poverty and equality, growth in GDP, and job growth in some sectors in the last couple of decades. In conjunction, during the last twenty-five years, the traditional industrial policies of tariffs, local content requirements and quotas have been phased out of Mexico's policy toolkit. However, there have been some industrial policies implemented in Mexico such as investments in training, R&D, and infrastructure especially on the subnational (state) level. Although some state governments have been able to implement industrial policies, there are still many challenges that hinder opportunities to implement these policies such as the national ideology that supports liberalization, insufficient funding and resources, limited governmental capacity, lack of shared vision, and lack of credit available. Even though some states have been able to implement industrial policies in this climate, there are ways in which the government could improve opportunities for executing these policies such as creating a national framework that provides a lot of flexibility at the subnational level, providing more funding and capacity for subnational actors, requiring evaluation to measure the effectiveness of these programs and creating mechanisms that help officials generate a shared vision for strategic planning.