Mexico has embarked on a bold package of structural reforms that will help it to break away from three decades of slow growth and low productivity. Major structural measures have been legislated to improve competition, education, energy, the financial sector, labour, infrastructure and the tax system, among many, and implementation has started in earnest.
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This country note from Going for Growth 2015 for Mexico identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
Following several years of modest growth, Mexico needs to adapt to new sources of growth to continue catching up with advanced economies.
Mexico demonstrated good resilience during the crisis, with growth in GDP per capita stronger over the 2006-2011 period than the earlier 5-year period.
As Mexico seeks to boost economic growth, pressures on its natural resources and environmental outcomes may intensify, jeopardizing the sustainability of that growth and the well-being of the population.
Mexico has achieved a high degree of decentralisation in public services, but the Mexican fiscal federal system has important shortcomings. States and municipalities have become heavily dependent on federal transfers to finance a growing share of public spending.
Informality has important implications for productivity, economic growth, and the inequality of income. In recent years, the extent of informal employment has increased in many of Mexico's states, though highly heterogeneously.
Legal systems provide the basic institutions for firms and markets to operate. Their quality can have important consequences on the size distribution of firms, who rely on them for contract enforcement. This paper uses the variation in legal system quality across states in Mexico to examine the relationship between judicial quality and firm size.
Country Notes from OECD Economic Policy Reforms: Going for growth 2011 presenting OECD recommendations for structural reform priorities for individual countries.
Improvements in the macroeconomic policy framework over the past two decades and prudent regulation of the financial system have contributed to reduce output volatility in Mexico relative to other OECD countries.