Mexico's New President Faces Big Challenges
Mexico's New President Faces Big Challenges
AS/COA’s Eric Farnsworth shares economic recommendations to strengthen Mexico’s global competitiveness as President-elect Enrique Peña Nieto faces many challenges during his administration.
When Enrique Peña Nieto was sworn in as Mexico's president on Saturday, he agreed to lead a country of 115 million people that ranks as the world's thirteenth largest economy and has become one of the top ten tourist destinations in the world.
Peña Nieto will make use of such data when he seeks foreign investors. But when he looks inside his massive country, the new president will also have to handle a territory plagued by extreme poverty, drug violence and special interests that can block the road to prosperity.
So what does he need to fix in this up-and-coming nation? It's a long list, but after consulting with several economic and political experts, we've broken it down into the following:
Economy
In the months leading up to the presidential election, Peña Nieto aired an ad in which he told voters that his main objective as President of Mexico will be for people to be able to "afford more" with their earnings. Without batting an eyelid, the candidate also added that under his presidency people would "earn more," for the work they do.
How will this happen?
…Economic analysts widely agree that competition from Chinese manufacturers, the U.S. recession, and the strange H1N1 virus that has hampered the Mexican economy in recent years, forced it to contract by a whopping 6 percent in 2009….
Eric Farnsworth, a Latin America analyst at the Americas Society/Council of the Americas think tank in Washington D.C., argues that to take advantage of this economic momentum, Peña Nieto must invest in infrastructure, widen the country´s tax base and tackle monopolies that generate significant economic inefficiencies.
"I think tax reform really needs to be a priority," Farnswoth said, noting that at the moment almost 40 percent of the Mexican government's budget is basically supplied by cash transfers from state-oil company Pemex.
"That's taking money from Pemex that would be invested in the energy sector. The energy sector is starving and that is directly impacting Mexico's global competitiveness," he added….
