OECD Economic Surveys Mexico

1 OECD Economic Surveys Mexico January 2017. overview . This overview is extracted from the 2016 Economic survey of Mexico . The survey is published on the responsibility of the Economic and Development Review Committee (EDRC) of the OECD, which is charged with the examination of the Economic situation of member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area OECD Economic Surveys : Mexico OECD 2017.

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3 OECD 2017. Executive summary Growth is strong, but disparities persist across Mexico Productivity is picking up thanks to ambitious structural reforms Income inequality and gender gaps remain high 9. EXECUTIVE SUMMARY. Growth is strong, but disparities persist across Mexico Growth disparities across Mexican states are Ambitious structural reforms and sound increasing macroeconomic policies have ensured the (GDP per capita, 2005 = 100). resilience of the highly-open Mexican economy in 130. 5 fastest-growing states the face of challenging global conditions.

4 Yet, 125. 5 slowest-growing states growth has not been inclusive enough to achieve 120. better living conditions for many Mexican 115. families. Disparities between a highly productive 110. modern economy in the North and in the Centre 105. and a lower-productivity traditional economy in 100. the South, have increased. Mexico can reignite 95. growth by reprioritising its public spending 90. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 towards infrastructure, training, health, and Source: INEGI. poverty reduction.

5 1 2 Productivity is picking up thanks to ambitious structural reforms Total factor productivity is recovering Mexico 's productivity growth has recently (contribution to potential GDP per capita growth, %) picked up in sectors that benefitted from structural reforms energy (electricity, oil and gas), financial, and telecom sectors. Trade openness, foreign direct investment, integration i n t o g l o b a l va l u e ch a i n s , a n d i n n ova t i o n incentives have boosted exports, notably of autos. Yet other sectors lag behind, suffering from overly string ent local regulations, weak legal institutions, rooted informality, corruption and insufficient financial development.

6 Further 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 reform is essential to address these problems. Source: OECD (2016a), Economic Outlook database. 1 2 Income inequality and gender gaps remain high Income inequality is high and female labour Income remains highly concentrated, many force participation is lagging families live in poverty, insecurity is high and S90/S10 disposable income children's opportunities to do better than their %, 2015 (ages 25-54). decile share, 2014 parents could be improved.

7 Past policies have 25 80. 70 begun to correct these trends. But more needs to 20. 60 be done, especially for women, who suffer from 15 50. 40 many types of discrimination. For mothers of 10 30 young children, participating in the labour market 5 20. 10 is a challenge, reflecting insufficient provision of 0 0 affordable and quality childcare. Business Mexico OECD Mexico OECD. Income inequality Female labour force practices could also foster inclusiveness and be participation more responsible towards women, the disabled Source: OECD Income Distribution and Poverty Database and and other groups that suffer discrimination.

8 OECD Labour Force Statistics Database. 1 2 10 OECD Economic Surveys : Mexico 2017 OECD 2017. EXECUTIVE SUMMARY. MAIN FINDINGS KEY RECOMMENDATIONS. Make fiscal policy more inclusive, sustainable, and transparent Social expenditure is too low to eliminate Strengthen social expenditure on programmes to eradicate poverty and make society more inclusive extreme poverty, such as Prospera. Raise and broaden the minimum pension to expand the old-age safety net. Tax evasion and tax avoidance lower Co-ordinate the collection of income taxes and social security government revenue contributions.

9 Make greater use of property taxes. Further broaden income tax bases and remove inefficient tax expenditures. Fiscal data are difficult to interpret on an Fully separate PEMEX from the federal budget when feasible. international basis Present budget documents and fiscal data on both domestic and national accounts standards. Fiscal relations with SOEs are distortive Normalise the taxation of state-owned enterprises (SOEs) by shifting to a tax regime similar to that of the private sector. Adopt policies towards sustainable development People in extreme poverty are excluded from Simplify the administrative procedures for accessing cash the social safety net transfers.

10 Increase the role of social workers in reaching out to marginalised families. Teachers' performance evaluations have not Make transfers to Mexican states conditional on implementing been fully applied the national standard-setting for primary and secondary teacher performance. Female participation lags behind male's in the Expand public early childcare and pre-school coverage. labour market and women suffer from Extend the length of paternity and maternity leaves. discriminatory practices Better enforce the constitutional provision on gender discrimination, particularly in the workplace, boardrooms and credit markets.