Sunday, June 23, 2024

Study ranks Mexico’s most and least competitive states for business

Mexico City is Mexico’s most competitive state for business while Oaxaca is the least competitive, according to an assessment by a Mexico City-based think tank.

The Mexican Institute for Competitiveness (IMCO) has published its 2024 State Competitiveness Index (ICE), in which it ranks all 32 federal entities, or states, based on their performance across 50 indicators in six different categories or “sub-indexes.”

State competitiveness index map
This map shows the most competitive and least competitive states, according to the think tank’s report. With the exception of Mexico City, which is the highest ranked, the most competitive states are in the north. (IMCO)

Those categories are innovation and economy; infrastructure; labor market; society and environment; law; and political system and governments.

According to IMCO, the ICE “measures the capacity of the country’s entities to generate, attract and retain talent and investment.”

Mexico’s most competitive states 

Mexico City — the country’s leading recipient of foreign investment — retains its status as Mexico most competitive state as it also occupied the No. 1 position on IMCO’s 2023 index.

Ranked second to fifth are:

  • Baja California Sur, which also ranked second last year.
  • Coahuila, which retained the No. 3 position.
  • Nuevo León, which improved to fourth place from fifth last year.
  • Querétaro, which jumped nine places to fifth from 14th in 2023.

According to the ICE, Mexico City has a “very high” level of competitiveness, while Baja California Sur, Coahuila and Nuevo León have a “high” level. Querétaro’s competitiveness level is “medium-high.”

Mexico’s least competitive states 

Ranking 32nd to 28th and thus occupying the last five positions on the index are:

  • Oaxaca, which also ranked as Mexico’s least competitive state last year.
  • Guerrero, which dropped one place to 31st.
  • Chiapas, which improved one place to 30th.
  • Michoacán, which dropped six places to 29th.
  • Puebla, which improved one place to 28th.

Oaxaca is the only state in the country with a “very low” level of competitiveness, according to IMCO. Guerrero, Chiapas and Michoacán have a “low” level, while Puebla has a “medium-low” level.

Exactly three-quarters of Mexico’s 32 federal entities — 24 of 32 — were deemed to have either a “medium-high” or “medium-low” level of competitiveness.

CDMX ranks first on 3 ‘sub-indexes’

Mexico City ranked first on three of the six “sub-indexes,” while Chiapas ranked last on two.

  • Innovation and economy: Chihuahua ranked first. Oaxaca ranked last.
  • Infrastructure: Mexico City ranked first. Chiapas ranked last.
  • Labor market: Mexico City ranked first. Chiapas ranked last.
  • Society and environment: Mexico City ranked first. Hidalgo ranked last.
  • Law: Coahuila ranked first. Zacatecas ranked last.
  • Political system and governments: Yucatán ranked first. Baja California ranked last.

Analysis by the IMCO director

In a series of posts to her X account, IMCO general director Valeria Moy commented on the latest ICE.

Valeria Moy at a press conference in November 2023. (Cuartoscuro)

In one post, she noted that Mexico’s least competitive states are concentrated in the south of the country.

“The model of development that should be implemented in that region, in my opinion, needs to be very different from industrialization as we have understood it until now,” Moy wrote.

In another post, the IMCO director said that none of Mexico’s 32 states performed well or poorly “on everything.”

“Even those in the first positions have serious problems to resolve,” Moy wrote.

With regard to Mexico City, the capital “has many advantages in relative terms, but also issues to deal with and urgently,” she said.

An image she included in the same post showed that Mexico City ranked first on the IMCO index for things such as “educational coverage” and “hospital beds,” but was among the worst-ranked entities on indicators that measure “attacks on journalists,” the local “crime rate” and “perceptions of security.”

View of Guadalajara church and plaza
Jalisco, home to Guadalajara (pictured), moved up six spots in the competitiveness ranking for 2024. (Unsplash)

One of the other states Moy looked at was Jalisco, home to the major city of Guadalajara, and one of Mexico’s most powerful criminal organizations — the Jalisco New Generation Cartel. The state ranked as Mexico’s 10th most competitive in 2024, up six spots from 16th last year.

“Jalisco — an extremely interesting state not just because of its industry but also the innovation created there — also has to resolve the serious security problem it has or its competitiveness will fall over time,” Moy wrote.

Advice to improve competitiveness 

IMCO acknowledged that an analysis of each and every state is required to develop strategies to increase their individual competitiveness. However, the think tank did offer some general advice aimed at boosting competitiveness.

  • It recommended that states design “local strategies” aimed at attracting investment related to nearshoring.
  • It advised states to create “digitalization strategies” to increase access to telecommunication services and the internet.
  • It recommended that states strengthen links between industry and educational institutions in order to “promote abilities related to STEM,” or science, technology, engineering and mathematics.

* IMCO’s 2024 State Competitiveness Index report (Spanish), which runs to more than 100 pages, can be download by clicking the “Índice” tab at the top of this page.

Mexico News Daily 


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