Knowledge @ Wharton
Over the past decade, Mexico’s manufacturing output has steadily increased, especially in the automotive, auto parts and electronic sectors.
And yet Mexico currently ranks 64 of 148 countries in terms of infrastructure, according to the Global Competitiveness Index of the World Economic Forum. Economists agree that Mexico’s prospects for becoming a truly industrial economy will remain limited unless the country accelerates its construction of the roads, railroads, ports, energy plants and other physical infrastructure essential in any modern industrial economy.
According to Barbara Kotschwar, research fellow at the Peterson Institute for International Economics in Washington: “Now is the moment for Mexico to get serious about its infrastructure . Latin America is woefully underfunded in terms of its infrastructure, and studies cite its infrastructure weakness as a major reason for Latin American underdevelopment.”
With that goal in mind, the Mexican government last year published its National Infrastructure Program for 2014-2018, a comprehensive array of projects that would cost the public and private sectors a combined total of about $600 billion. Under the umbrella of the program, Mexico expects to upgrade not only its transportation sector, but also its communications networks, along with its energy sector — including power, oil and gas — water; health care; urban development and housing, and the infrastructure for tourism.
What are the prospects that implementation of the program might wind up falling short of its ambitious goals? Observers note that with oil prices continuing to weaken, Mexico’s public sector may not be able to adequately fund key elements of the program. Also, they question whether the country has the organizational capacity to pull off such an ambitious plan.