Directorate for Public Governance and Territorial Development

OECD Territorial Reviews: The Mesoamerican Region: Southeastern Mexico and Central America

 

Countries/regions covered | Chapter 1 | Chapter 2 | Chapter 3 | How to obtain this publication

 

  

ISBN 92-64-02191-4
Publication Date:
March 2006
Pages: 198
Number of tables: 36
Number of graphs: 13

 

OECD Territorial Reviews: The Mesoamerican Region:
Southeastern Mexico and Central America

The Central American economic integration process, which dates back to the 1950s, entered a new era in 2001 with the launching of the Puebla Panama Plan. This plan helped shift the focus to the greater “Mesoamerican region” (MAR), which includes the seven Central American countries plus the nine southeastern states of Mexico. In this context, the OECD Territorial Review of the Mesoamerican Region marks two major firsts: a comprehensive regional development study of the entire Mesoamerican region and the OECD’s first ever multi-national territorial review.

This review recognizes that economic integration per se is just part of the solution to the Mesoamerican region’s challenges. Realising the economic potential of the MAR requires regional policies that can better exploit its many comparative advantages and better governance at mesoregional, national and local levels. The MAR could spur development through inclusive competitiveness policies that address cross-cutting measures for all firms, such as improving the region’s human capital, firms’ quality standards and networks between cities, as well as specific policies for promising sectors, including tourism, agro-industry, light manufacturing and logistics. To achieve true bottom-up economic integration, the review looks at improving the limited capacity at the sub-national levels to effectively and efficiently provide local public goods. Recommendations for governance reform include:

  • improving co-ordination across borders and between levels of government within the same borders;
  • strengthening administrative and planning capacity at the national and sub-national levels;
  • reforming regional governance institutions; and
  • introducing territorial development policies.

Overall, the Review’s geographic and thematic scope is broad. Thus, what results is a comprehensive development agenda for Mesoamerica that will necessarily require a prioritization exercise at both the country and regional level.
The OECD Territorial Review of the Mesoamerican Region is integrated into a wider programme of national territorial reviews undertaken by the OECD Territorial Development Policy Committee. The overall aim of these reviews is to provide practical policy advice to governments focusing on multi-level governance and regional competitiveness.


Countries/regions covered

The term Mesoamerica has been used since the adoption of the Puebla Panama Plan (PPP) to indicate the region comprising:

  • the nine federal states of the southeast region of Mexico: Campeche, Chiapas, Guerrero,Oaxaca, Puebla, Quintana Roo, Tabasco, Veracruz and Yucatan; and
  • the seven Central American countries: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

 


Chapter 1 Trends and Challenges in the Mesoamerican Region

Chapter 1 illustrates the most defining characteristics emerging from the analysis of the Mesoamerican region’s (MAR) principal socio-economic indicators. Mesoamerica’s existing rich economic potential stems from its strategic geographic location, its natural and cultural environment and its light manufacturing industries. However, the difficult overall conditions of MAR economies remain, as the region is characterised by GDP gaps between countries, high poverty levels, rural-urban disparities, individual income disparities and the persistence of the large informal economy.

The chapter is divided into three parts. Part 1.1 defines the unit of analysis of this Review and provides the rationale for analysing the Mesoamerican region. Part 1.2 highlights Mesoamerica's shared regional potential and discusses related opportunities for economic development. Part 1.3 first assesses the region's macroeconomic situation, and then analyses the stark regional and individual disparities that characterise the MAR.

 


Chapter 2 Improving Competitiveness and Social Cohesion

This chapter seeks to highlight the opportunities for Mesoamerica to improve its international competitiveness. Competitiveness has become part of the explicit agenda for policy makers in the region, in many cases through a national co-ordination body or “competitiveness council”, and a range of policy measures have been introduced that aim to improve the general business environment or support specific sectors. However, firms in the region continue to face a number of obstacles that inhibit growth and that reduce the incentives for investment. Some of these obstacles are regional in nature, adhesion to trade agreements for example; others are more general (or horizontal) and relate to the level of development of the countries of the region, such as skills and educational attainment; while others are more specific to local contexts and, in general, appear responsive to more local solutions than those currently in place.

The chapter is divided into four parts. Part 2.1 discusses progress in regional (MAR) co-ordination and integration, highlighting the significance that this process has on creating opportunities for firms to integrate into regional and global markets. This section then assesses the different competitiveness policies in the region and underlines the common priorities that have emerged. Part 2.2 identifies the cross-cutting (horizontal) determinants of competitiveness that are applicable to all countries and industries. These levers to increase competitiveness include human capital development, technology upgrading and networking across the region’s major cities for greater specialisation. Part 2.3 assesses how Mesoamerica could better capitalise on its economic potential, based on the region’s factor endowments, in four major industries: tourism, agro-industry, light manufacturing and assembly (textile and other products), and logistics. This section also includes a discussion on how the cluster framework could be further exploited to improve the effectiveness of firms in these and other sectors. Part 2.4 explores important strategies for linking the poverty reduction and competitiveness agendas to enhance the effectiveness of both strategies.

 


Chapter 3 Towards More Effective Governance

Chapters 1 and 2 of this report highlight two key aspects. On the hand, the fact that further economic integration of the Mesoamerican region (MAR) can be an important factor for its development. On the other hand, the preceding chapters have underlined that integration per se is not a solution to the problems of Mesoamerican countries and that much of their potential resides in a number of unused resources that should be identified and mobilised through more co-ordinated and inclusive action at all levels of government.

Looking at Mesoamerica’s integration process from a governance perspective, this chapter discusses ways to couple the on-going process of economic integration of Mesoamerica with a process of integración desde abajo (bottom-up integration), whereby strategic policy decisions are nourished by knowledge held at different levels of government and supported by appropriate horizontal co-ordination mechanisms at both national and local levels. The chapter is divided in two parts. Part 3.1 considers the status of mesoregional governance, that is, to what extent are countries co-ordinating their policy in the region. Part 3.2 looks at multi-level governance issues and discusses to what extent decentralisation and bottom-up initiatives can contribute to engage and co-ordinate the relevant actors at all levels of government in the development processes.

 


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