Opportunities south of the border

Bureaucracy continues to cause a lag for Mexican economic development, and political infighting is a formidable obstacle to reform. These observations surfaced at the Mexico Energy Forum in Houston May 29.

Bureaucracy continues to cause a lag for Mexican economic development, and political infighting is a formidable obstacle to reform. These observations surfaced at the Mexico Energy Forum in Houston May 29. According to Jorge Tejeda, Managing Director of Banamex-Citigroup, Mexico needs to reduce bureaucracy to entice foreign investment. The North American Free Trade Agreement (NAFTA) has shown positive effects in the Mexican economy, Tejeda said, and more opportunities will surface in the future. The obstacles to progress, he said, are "fierce competition" in foreign markets and the need for "structural reforms."
David Shields, energy columnist and analyst, agrees the Mexican government needs to make a move toward creating a more favorable investment climate. Internally, there has been significant resistance to the privatization reforms President Vicente Fox has implemented in the state oil company. And "political revenge" compels members of Mexico's Congress to reject President Fox's attempts at reform, he said. Despite some seemingly pessimistic observations, Shields voiced optimism that "anti-reform" policies will fail as a result of "political realities" that pit internal government sects against one another. In short, internal discord will likely stymie dissent. Though ideologies don't change much, generations do, Shields said. In other words, optimism could well increase over time. As a result, he said, making investments today could prove to be profitable in the long term.

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