Saturday, October 15, 2011

Peña Nieto's One Misfire

El Universal published a sketch of the economic proposals of Beltrones and Peña Nieto earlier this week. Obviously, a couple hundred words isn't much of a space for economic outlines, and there is an enormous distance between campaign plans and the reality of negotiating budget packages and structural reforms. Nevertheless, as boilerplate goes, I liked most of what Peña Nieto had to say. His top five priorities were: macroeconomic stability, fostering competition, driving Mexico's energy interest, greater investment in human capital, and increase credit. All sensible ideas!

However, he writes about competing with India and China, which I think is the one misfire of his list. There are two billion people in those nations who will work for wages far lower than what a Mexican would typically earn. Given that, competing with China and India is a bit like racing a racehorse. The trick is to find stuff to sell to those nations so as to benefit from their growing demand (this is what South America has done, but of course Mexico doesn't have loads and loads of soy), and otherwise differentiate Mexico from the Asian giants as much as possible.

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