Opening of the 2018 OECD Mexico Forum and Presentation of the study “Getting it Right – Strategic Priorities for Mexico”

 

Remarks by Ángel Gurría

OECD Secretary-General

12 March 2018,  Mexico City, Mexico

(As prepared for delivery)

 

 


Secretary for Health, Secretary for the Treasury and Public Credit, Ambassador Aspe, Gabriela Ramos, Friends from the media, Ladies and Gentlemen:


Welcome to the 2018 OECD Mexico Forum during which we shall outline the way to “A Future with Inclusive Growth”. I would like to thank the Government of Mexico, the electoral authority, sponsors, panellists, political parties, candidates, the media and everyone involved in organising this event.

 

This is the third Mexico Forum that we have organised. Held every six years on the occasion of a change of government in Mexico, the Forum's purpose is to enrich candidates’ platforms and debate, and to focus discussions on substantive matters, on evidence, on the economic and social challenges Mexico faces, on policy and reform. The difference this time is that the Forum is being held before the campaigns are officially under way.

 

We have brought OECD experts on the key topics of Mexico’s public policy agenda to take part in the Forum alongside Mexican experts, representatives of the federal and subnational governments, the legislature, academia, business and civil society. We have produced this book, “Strategic Priorities for Mexico”, also for the third time, so that the candidates can incorporate it into their programmes and debates and the new administration can consider it when crafting reforms, thus allowing the new government to start work with a series of policies that draw on best international practice.

 

Over the past five years, Mexico has drawn up, approved and begun to implement the most ambitious reform package in the OECD, addressing challenges that have remained unresolved for decades. With the support of parties in the Congress, through the historic Pact for Mexico, the Government of Mexico has driven reform in areas that are key to the country’s development, including labour, the treasury, finance, telecommunications, economic competition, education, energy, electoral policy, the national Code of Criminal Proceedings, and the law on the protection of constitutional rights. Impressive, but also crucial. There can be no going back.

 

Educational reform merits special attention as a responsibility that bridges the generations. The system of merit-based teacher assessment is just beginning to be rolled out. Its consolidation and continuity will act as the foundation for the success and the quality of life of our children and grandchildren.

 

The OECD has worked with the Government of Mexico since the start of this administration on many of these reforms, which are already bearing fruit. Mexico’s school teachers are already being assessed and trained; mobile broadband prices have fallen by as much as 75%, while the number of subscribers has risen threefold; red tape for business has been cut by 36%; the proportion of informal workers is falling while employment is rising. Energy investment commitments stand at over US$ 175 billion. This is significant progress indeed, but the focus must remain on reform implementation.

 

It is essential to ensure that these reforms are not stopped in their tracks or even subverted. For Mexico’s sake, the new Government must base its actions on these reforms, fine-tune and update them, improve their implementation and extend them further still. At the same time, a second wave of complementary reforms must be launched as a matter of urgency in other key areas, namely to strengthen institutions and the rule of law; consolidate the integration, quality and capacity of state and municipal governments; implement the National Anti-Corruption System (SNA) nationwide, operate the judicial system in a more expeditious and transparent fashion, and combat insecurity.

 

These are the new pending issues. They are what the public are currently losing sleep over.

 

Mexico still faces huge challenges that require us to urgently reform our policies, our laws and regulations, and our institutions. They call on us to improve the capacity, the efficiency and the reliability of our government at all levels.

 

As the study notes, it will also be essential to press forward with further reforms of the tax system in order to improve tax performance and therefore reach a position where it is possible to make the investments needed to improve health, education, housing and security systems; reduce poverty and inequalities; and improve family support and social protection. Low tax revenues and an ongoing over-reliance on oil restrict the size of Mexico’s State, thus preventing it from tackling the public's growing needs. This must change.

 

In order to reduce informality, increase the benefits of formality, reduce the costs of formalisation and encourage and strengthen corporate and individual compliance with tax liabilities, it will also be necessary to adopt a cross-cutting, multi-disciplinary approach involving multiple ministries and levels of government.

 

Most Mexicans still live in poverty and/or vulnerable conditions; this is unacceptable. Large inequalities in income, wealth and opportunities continue to undermine the social fabric and act as a drag on growth. This is ethically and morally reprehensible, politically explosive and economically inefficient. 57% of the workforce are still working in the informal sector; this is debilitating. 63% of the population have no post-secondary education; this is frustrating. Only 47% of women are active on the labour market, and only 5% of large businesses have more than three women on their executive boards (compared to an average of 47% in the OECD countries).

 

There are other challenges too: Mexico has very low levels of productivity (around one-third that of the United States), low levels of education, low levels of research and development, low levels of tax performance and social expenditure. This saps our strength and places us at a disadvantage. At the same time, we have high levels of corruption and high levels of impunity. This prevents us from regaining our confidence; it numbs us, weighs us down, and paralyses us.

 

A paradox indeed!


Yet, at the same time, Mexico has vast potential. It is brimming with activity, talent and enthusiasm that we must harness and guide towards excellence, productivity, competitiveness and global citizenship. We have a young, hard-working population; one of the most powerful export platforms supported by one of the broadest networks of free-trade agreements on the planet; an entrepreneurial society; a proven capacity to drive structural reform and cut red tape; and one of the most efficient and sophisticated regulatory reform systems in the OECD.

 

With close to 130 million inhabitants; tens of millions of talented young people, crying out for us to provide them with access to the education and skills that will enable them to be successful in life; the world’s 14th largest economy; vast natural resources; one of the most biodiverse environments in the world; one of the most interesting, multicultural societies; an impressive linguistic heritage; and a cuisine that is modern but steeped in age-old tradition. We are one of the top 10 visited countries in the world! We are a great nation, and we are a large nation. How can we translate our strengths into well-being?

 

It is vital for us to continue to reform, improve and modernise our laws and regulatory frameworks, our policies and our programmes. Especially in a world that is becoming increasingly digital, in an international environment where everything is changing very quickly and where our competitors in Latin America and Asia are overtaking us. And the international environment has always reminded us that, although the best strategy for development is one that is driven from within a country, we must also make the best possible use of the support that we can derive from other markets, other investors, other scientists and other technologies, in order to supplement our own.

 

The problem today is that the growing wave of protectionism, populism and exclusive nationalism is challenging conventional wisdom. We are more vulnerable if our trading partners do not share this wisdom. The North America Free Trade Agreement negotiations are a good example. Therefore, the stronger we are on the inside, the stronger we are on the outside.

 

That is why it is so very important that the next administration continue to prioritise structural reform and better public policies. It is crucial for Mexico to continue the reformist work that it has embarked upon so successfully. Although it is entirely normal for an incoming government to want to make adjustments to public policies in order to bring them into line with the philosophy and platform that have brought them to power, it is also important not to become disoriented by losing direction and continuity. It is necessary to fine-tune and enrich reforms by drawing on the experiences of other countries, countries that have succeeded in promoting more resilient, more inclusive and more sustainable growth.

 

The OECD stands ready to support this work. We are very passionate about and committed to continuing to support the Government of Mexico. This Forum, along with the “Strategic Priorities for Mexico” report that we publish at the beginning of every six-year period, form our initial contribution to this new phase that Mexico is entering.

 

We are not trying to tell the Mexican people what to do in Mexico. You are the people best placed to know the answers. Our task is to share with you the things that other countries have already done to address the same problems. We want to hold up a large mirror for you to look into objectively and decide whether you are pleased with what you see or whether any changes are in order.

 

The Government that emerges from the elections on 1 July 2018 will need a sound programme of government, a convincing package of reforms and strong negotiating skills to drive through these changes in a Congress that may well be more fragmented than it is currently. This will require not only strong leadership, but also sound arguments, knowledge, evidence and objective analysis of best practice in public policy. We hope that this Forum, this book and your ongoing work with the OECD will help to broaden our vision for Mexico, strengthen our mission in Mexico, and raise our ambitions for Mexico.

 

Ladies and gentlemen, let us make this Forum a place of excellence that helps us to design, promote and deliver better policies for better lives for Mexico. Thank you very much.

 

 

See also:

OECD work with Mexico

 

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