On Monday, what was announced last week at the meeting of Mexico’s Economic Development Advisory Council was presented by President Sheinbaum. Plan México represents the vision of industrial policy that this administration seeks to promote through investment incentives and collaboration between the government and the private sector.
The plan acknowledges key areas to focus on, but the challenges for its implementation are significant.
The plan proposes to strengthen micro, small- and medium-sized enterprises. In Mexico, small businesses have a short life span.
The National Institute of Statistics and Geography (Inegi) has observed that companies in Mexico die before they are able to start growing and strengthening them will require more than just good intentions. A small business, in which a group of individuals risk their capital, needs social and economic conditions that go beyond just subsidies or fiscal favors.
These companies are more susceptible to extortion. In this sense, the simplification of paperwork — also contemplated in Plan México — becomes key.
Each procedure, and each window to carry it out, opens a door to be extorted. If extortion from organized crime is added to the extortion involved in red tape, the yield required by small businesses becomes increasingly higher. This cost takes companies out of the market that could have grown, but the lack of rule of law forces them to close. Yes, let there be better regulation, but it has to be the right kind.
The plan also intends to build stronger links between educational institutions and the industrial sector. Undoubtedly, the conversation between the two — and I would add the public sector — is essential to understanding the current and future needs of companies. Without human capital, it will be impossible to add more value. The most competitive states in the country have the strongest links between the three sectors.
One of IMCO’s most emblematic studies — Compara Carreras (Compare Degrees) — shows that the ten most studied bachelor’s degrees in Mexico have stayed practically unchanged over the last ten years. The world is changing, the country is changing and education is not adapting. Will this administration be able to turn around the educational policy that it has pursued in recent years?
The idea of import substitution, however, is what we need to pay even more attention to. Of course, supply chains must be strengthened, companies of all sizes must be given the necessary certainty so that they can risk their capital under the best possible conditions, and the private sector must be allowed to evaluate the investments to be made. But we must not give in to the argument that everything must be produced locally. This would squander comparative advantages and would result in the misallocation of resources, labor and capital, in a way that would not be most useful to society.
The import substitution that prevailed during several decades of the last century led the country into a situation where there were hundreds of public companies because, over time, the lack of entrepreneurial expertise was rewarded. If the private bicycle company went bankrupt, the government intervened by injecting resources.
The government of President Claudia Sheinbaum, if it wants this plan to be successful, will have to be careful not to go to extremes. Provide infrastructure, energy and rule of law. But in addition — and perhaps this is the biggest challenge — it will need to work under a new judicial system that could make it very expensive to attract investment.
Domestic challenges are many, but on top of everything else, the start of Trump’s second term in office is just days away.
This article was translated, edited and republished with the permission of Valeria Moy, whose column regularly appears in the newspaper El Universal.
You are so right about that . The “Devil” is in the detail of “PLAN MEXICO”, A lot of wishful thinking, but no real “substance”. All the things listed are going to be very hard to achieve in short term.
Fabulous article. It indeed seems like another wishful thinking railroad scheme. There are HUGE obstacles ahead… The plan per se is of course wonderful. Let’s give Claudia the benefit of the doubt and hope she’s not just more political puffery.
Finally, someone is addressing the root of the issue—education! Thank you, Valeria Moy.
Education is the foundation for lasting change; without it, no reform can truly succeed. Mexico must invest every available resource into educating its people at all levels. This alone would address systemic challenges at the micro level—the very details where corruption, inefficiency, and economic stagnation take root.
Corruption, extortion, and ineffective policies struggle to survive in an educated society. Well-informed citizens demand accountability, question senseless laws, and reject politically inept leadership. More importantly, education empowers individuals to make sound decisions at the ground level, where real change happens.
Sustainable economic growth doesn’t come from blindly injecting money into the system but from ensuring that those receiving opportunities and incentives have the knowledge to use them effectively. Imagine if all the wasted resources had been funnelled into building world-class educational institutions—starting from grade one—staffed with top-tier faculty. The long-term impact would be immeasurable.
Food for thought: If education were Mexico’s top priority, how many of today’s persistent issues would already be solved?
Government sucks everywhere when they try to intervene in business matters. Government’s job is to create an environment that allows business and job creation to prosper. More than anything, that is education of the workforce, public safety and infrastructure. Mexico’s amazingly anemic economic growth is proof government is failing in these primary responsibilities. How else do you explain why a country with a young and hard working people struggles to grow by little more than a paltry percent or so?
Mexico’s poor performance is not caused by its people. It is the direct result of government ineptitude, corruption and socialist misdirection. Sad.
Wow! A real informative article on important economic issues! More like this, please and less like Sunset Magazine touristy stuff.