Over the past 30 years Mexico has not taken advantage of its opportunities to drive economic growth, Mexico’s richest man said Sunday at the 2017 Mexico Business Summit in San Luis Potosí.
Carlos Slim Helú — majority owner and chairman of Grupo Carso, América Móvil and Telmex — said that Mexico had not managed the oil boom of the 1980s and ’90s well because it spent rather than invested US $50 billion of income and went into debt for a similar amount.
He also said that large amounts of investment capital that have flowed into Mexico over the past decade as a result of the North American Free Trade Agreement (NAFTA) were not reinvested and that the content of many exports is not Mexican-made.
Considering options to turn the situation around and stimulate future growth, Slim identified five key areas:
1. Create employment
Slim said Mexico needs a better educated, rising middle class with higher incomes in order to stimulate consumption and strengthen the economy.
To achieve it, he said, more labor-intensive projects are needed, citing as an example the construction of the new Mexico City airport, in which he has a personal interest as a contractor. The massive infrastructure development will have a spillover effect on salaries worth 50 billion pesos (US $2.6 billion), he said.
Slim also suggested that a three-day work week would generate more employment because “one person would work three days and another the other three days.”
2. Refocus public spending on social programs
Spending on health and education is irreplaceable, according to Slim, but he said that social expenditures should be reviewed, arguing that a salary or salary in kind may be of more benefit to certain sections of the population than government programs.
“We must look at how social programs can be transformed into a salary in kind for certain groups in society who are not integrated in the formal economy — housewives, for example,” he said.
3. Change the education model
The education system is too dogmatic, Slim said, because it favors rote learning over research and debate. He also said the internet could be used as a tool to counteract a trend in which students leaving school early to enter the workforce.
“People could study online, without the need to travel to school. At Telcel we’ve rolled out a platform that enables people to connect and access educational content without having to pay for the use of the network,” he said.
4. Investment in telecommunications infrastructure
Mexico has the lowest market penetration for internet in Latin America with 30 million people who should be connected but aren’t. Not providing telecommunication services to them “is a big mistake,” Slim said.
He pointed out that a 2013 telecom reform that introduced different regulations on Telmex and Telcel compared to those of its competitors because of its preponderance in the market (more than two-thirds market share) acts as a disincentive for his companies to fill the gap.
“. . . If we go into the areas where there is still no coverage we would have 100% of the market and we would be preponderant.”
He also took aim at competitor AT&T for not stepping up to provide greater telecommunications coverage across Mexico, saying that the company “wants to get on to the Telcel and Telmex network but doesn’t want to invest.”
5. Urban redevelopment
Finally, Slim argued that cities need to be redeveloped so that people can live, work, study and have access to recreation without having to travel excessively.
Source: Expansión (sp)