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What Will It Take to Boost Mexico’s Role in World Trade?

Mexico’s government and private sector have been working overtime to increase global trade, but significant barriers still remain.

Par Mark Gottfredson, Rodrigo Rubio and Paco Jimenez Trejo

First published on juillet 18, 2016
min


This article originally appeared on FT.com (subscription may be required). There’s little doubt that Mexico’s government and private sector have been working overtime to increase global trade. A recent report by the World Economic Forum and Bain & Company spelled out a host of efforts either completed or underway. Among the many: the Secretary of Economy (SE) eased the import-export process and lowered the transaction costs associated with importing goods that are inputs for export products. The Mexican Tax Administration reduced the time it takes to issue import-export permits and simplified the tariff code identification system. Meanwhile, ProMexico, an SE unit, has industry-specific programmes to promote foreign direct investment and exports, including efforts to provide businesses with financing and market data, and to improve connections with international buyers and sellers. And there are many projects to upgrade Mexico’s transportation infrastructure, including construction of Mexico City’s new $12.5bn airport and plans to put $5bn into a network of 117 ports, with significant investment in the port of Veracruz. These initiatives, among others, are enabling the country to overcome trade obstacles. They’ve helped push Mexico from 65th place to 61st place among 138 economies in the World Economic Forum’s bi-annual Enabling Trade Index. But while Mexico is moving in the right direction, significant trade hurdles remain–and there is a great deal to be gained by removing them. Based on Bain research conducted for the WEF, reducing even a limited set of supply chain barriers to trade halfway to global best practices would result in Mexico’s imports increasing by 11.2 per cent, exports rising by 26.3 per cent and an overall 4.4 per cent gain in GDP. The WEF Enabling Trade Index looks at four specific areas: market access; border administration; infrastructure, transportation and logistics; and operating environment. Where does Mexico stand in each of these? Read the full article at FT.com. Mark Gottfredson is a partner in Bain & Company’s Dallas office. Rodrigo Rubio and Paco Jimenez Trejo are partners in Bain & Company’s Mexico City office.

This article originally appeared on FT.com (subscription may be required).

There’s little doubt that Mexico’s government and private sector have been working overtime to increase global trade.

A recent report by the World Economic Forum and Bain & Company spelled out a host of efforts either completed or underway. Among the many: the Secretary of Economy (SE) eased the import-export process and lowered the transaction costs associated with importing goods that are inputs for export products. The Mexican Tax Administration reduced the time it takes to issue import-export permits and simplified the tariff code identification system.

Meanwhile, ProMexico, an SE unit, has industry-specific programmes to promote foreign direct investment and exports, including efforts to provide businesses with financing and market data, and to improve connections with international buyers and sellers. And there are many projects to upgrade Mexico’s transportation infrastructure, including construction of Mexico City’s new $12.5bn airport and plans to put $5bn into a network of 117 ports, with significant investment in the port of Veracruz.

These initiatives, among others, are enabling the country to overcome trade obstacles. They’ve helped push Mexico from 65th place to 61st place among 138 economies in the World Economic Forum’s bi-annual Enabling Trade Index. But while Mexico is moving in the right direction, significant trade hurdles remain–and there is a great deal to be gained by removing them. Based on Bain research conducted for the WEF, reducing even a limited set of supply chain barriers to trade halfway to global best practices would result in Mexico’s imports increasing by 11.2 per cent, exports rising by 26.3 per cent and an overall 4.4 per cent gain in GDP.

The WEF Enabling Trade Index looks at four specific areas: market access; border administration; infrastructure, transportation and logistics; and operating environment. Where does Mexico stand in each of these?

Read the full article at FT.com.

Mark Gottfredson is a partner in Bain & Company’s Dallas office. Rodrigo Rubio and Paco Jimenez Trejo are partners in Bain & Company’s Mexico City office.