Mexico: Accelerated Growth with Equity for the XXI Century

A New Partnership with the Private Sector

 

Vicente Fox Quesada

 

 

I. INTRODUCTION

Allow me to explain the reasons fo this latter belief:

Nothwithstanding their explicit statements, Mexico«s "reformist" governments of the past two decades have:

II. Our Objectives

I adhere to the new thought that the correct economic and social model of development is one in which the correct synergy between public and private sectors is attained. A synergy which utilizing the dynamism of markets promotes private sector activities, but with the public interst in mind.

Such a program of policies must envision:

 

 

To fight poverty and unemployment, and bring about the creation of sustainable jobs in the private sector we have set to ourselves the following objectives:

 

 

III. Our Program

 

The new partnership which I propose is based on five major policy programs:

Macroeconomic Policies

 

Mexico«s fiscal discipline is based upon a fragile combination of unsustainable fiscal revenues dependent on petroleum prices, strong reductions in expenses and a total disregard for the public sector«s responsibility to provide adequate social and physical infraestructure in support of Mexico«s long-term growth.

The fiscal policies of the past 17 years, have left the country with :

 

 

 

 

The events of the past three years have demonstrated the need to have monetary discipline and an exchange rate policy which permits financial stability in the economy. They have also highlighted the curcial issues yet to be resolved in the banking sector if this is to fulfill efficiently its crucial role of financial intermediation between savings and investment needs of Mexico.

My administration will:

Reform Policies

The ambivalence of Mexico«s Administrations in the past 16 years towards private sector participation as a full partner in Mexico«s development has left the country with:

To make a credible partnership, the next Government of Mexico will need to finalize the truncated reform program in sectors where business opportunities exist, and to provide the investment framework to attract increasing levels of Foreign Direct Investment.

 

Our policies will be:

 

 

    Legal and regulatory reforms

    The existence of a stable and efficient legal and regulatory framework is a prerequisite for the credibility of the new government«s program of economic policies. Investment, commercial, and labor codes need to be updated, as they are crucial ingredients in promoting investment stability and private sector credibility. In addition, appropriate measures to improve the effectiveness of the judicial system are indispensable.

    My administration will be committed to:

     

    Opportunities for all

    It has been said that "like social exclusion at the top, exclusion at the bottom tends to be self-reproducing. I like to say that the vanguard must be responsible to ensure that the retaguard remains within close limits of distance in order to avoid such an situation of social injustice that Mexico«s political stability would be jeopardized.

    The model applied in Mexico during the past decade, by putting an excessive trust in market forces but not reviewing that the conditions for a competitive environment existed, impeded the creation of conditions under which a real private sector/public sector partnership would flourish.

    Worse yet, because it did not create the conditions to include all segments of Mexico«s entrepreneurs, it forced many mexicans into the ranks of the informal sector as the only means to find ways to support themselves and their families. Working in the informal sector has thrown many mexicans into a life of meager existence without opportunity to enter into the formal market structure which should be the right way to permit private sector entrepreneurship to fluorish to achieve our stated goal of creating sustainable formal jobs.

    The current economic model has proven its incapacity to provide the correct environment to bring those in the informal sector into formal, market-oriented private investments. A new model is needed. One which will build the new partnership I propose. The only one which by forging the private/public sector partnership will be capable of achieving the twin objectives of accelerated growth with equity.

    To bring these mexicans into the market oriented economy where private sector activity will fluorish, my government will:

    Reengineering of the Public Sector

     

    A true partnership for development implies that the role of Government is one in which this actively participates in the promotion of private sector competitiveness to help the latter face the international challenge of an open economy. In addition to maintaining economic stability to reduce inflation and interest rates, my Government will implement WTO-friendly policies.

    Four important ones which immediately come to mind are:

     

      Concluding Remarks

     

    The package of policies outlined before, intends to create a new partnership with the private sector interested in investing in Mexico. Its intended impact is to achieve as a minimum, rates of economic growth of 7 % per annum within a context of sustainable production in an increasingly globalized economy. The target rate is ambitious, I know. It is also the minimum required to make substantial progress in reducing Mexico«s unacceptable high levels of unemployment and poverty as we enter the XXI century.

    I believe that such an ambitious target is not outside our grasp, if we can forge the new partnership between private and public sector which I propose. But I also know that if a reform package is not credible, it will not achieve its intended impact. That is why I propose a partnership based in market rules, clear and transparent legislation to regulate our interaction, and above all, the correct incentive framework to provide real international competitiveness to private enterprises operating in Mexico.

    Establishing the credibility of an economic package proposed by a new Government in Mexico will not be an easy task. The "sexenio" crisis which have marked the last political transitions work against such credibility. Worse yet, the fact that my administration will be the first one to come from Mexico«s opposition may add skepticism to an already biased feeling of potential crisis in the transmission of power.

    In evaluating the credibility of the reform program I have just proposed to you, I encourage you to look at the following three factors which should make of it a credible one:

    Thanks for your attention