Mexico Overview

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Context
Strategy
Results

With a population of almost 130 million, a rich cultural history and diversity, and abundant natural resources, Mexico has the 11^th largest economy in the world. The country has strong macroeconomic institutions and it is open to trade and private investment. The authorities have implemented stable and sustainable monetary and fiscal policies, which have made the Mexican peso the most highly traded emerging market currency. Currently, it is the world’s 15th largest exporter due to the strengthening of its productive capacities, diversifying away from raw materials such as oil, and deepening its production complexity on manufactured products that are integrated into regional and global value chains.
However, despite all this progress, over the last three decades Mexico has underperformed in terms of growth, inclusion and poverty reduction compared to similar countries. Its economic growth averaged just above 2 percent a year between 1980 and 2018, limiting progress in convergence relative to high income economies. On a per capita basis, average growth was close to just 1.0 percent. The country’s per capita GDP today stands at 34.0 percent of U.S. per capita GDP, compared with 49.0 percent in 1980. In this context, progress towards poverty reduction has been moderate. The total share of the population living below the monetary poverty line in 2018 was 48.8 percent, close to the level observed in 2008. The median per capita income (MePCI) has recently recovered slightly after several years of decline. After a decline between 2010 and 2014, the annualized growth rate of MePCI in Mexico was 1.8 percent between 2016 and 2018, still well below the average for the LAC region.
Low growth rates and significant inequalities continued to raise the question of how Mexico can grow more rapidly and become more inclusive? These are the central issues covered in the recent Mexico Systematic Country Diagnostic (SCD).
But Mexico is a country with significant opportunities and potential. Its macroeconomic stability is the cornerstone to foster investments and a growing private sector. Improvements in productivity growth, stronger institutions, and quality of service delivery and infrastructure, coupled with attention to reducing regional and household income inequalities, would bring shared prosperity. Its trade agreements, enviable geographic position, and growing domestic market, make Mexico a prime destination for investment.

Last Updated: Apr 13, 2020
The World Bank Group (WBG) discussed and supported the new Country Partnership Framework (CPF) for Mexico on February 27, 2020. The CPF covers a six-year period (2020-2025) and aligns the WBG’s engagement with the government’s National Development Plan. The CPF builds on the analysis of the Systematic Country Diagnostic (SCD) and reflects the views and strategy of the authorities on the way to foster growth and poverty reduction.

Last Updated: Apr 13, 2020
A few examples of the work of the World Bank in Mexico are:
Deepening financial inclusion and enabling innovation in the financial industry: The Financial Inclusion Development Policy Financing supports the government’s efforts to increase financial inclusion. Through a single integrated package of policy and institutional reforms, the project facilitates the provision of financial services to micro, small, and medium size enterprises (MSMEs) and traditionally under-served populations in the country, fostering competition and the use of new technologies. The operation supports the Fintech legal and institutional framework in Mexico, one of the first of its kind in the world, which enables the authorization, operation, and supervision of Fintech institutions focusing on crowdfunding institutions and electronic payment funds institutions. The experience of Mexico through this ground-breaking work, is a global public good in terms of knowledge that can be transferred to other regions and countries in the world.
Supporting women, rural finance inclusion, jobs, and poverty reduction in Mexico’s poorest states. The Expanding Rural Finance Project aims to increase the availability of finance to rural MSMEs through a newly established network of private financial intermediaries (PFIs) in areas where commercial banks have not been able to reach local producers. Lending through PFIs, credits are given to producers and entrepreneurs who live in rural areas of under 50,000 inhabitants to support activities that promote inclusion, job creation, and poverty reduction mainly in the agriculture, livestock, forestry, and fishery sectors. After three years of implementation, more than 150,000 loans have been delivered (average loan size of US$1,500), 70% in rural areas in the poorer states of the South, 86% to women, and 10% in communities classified as marginalized or highly marginalized by the National Council for Population. Rural microenterprises and SMEs have benefited from improved access to finance and expanded economic activity, and the funding is helping PFIs reach more clients and grow their activities in rural areas. A feature story and video in Spanish is available on the following link: Pequeños préstamos para llegar a grandes mercados.
Linking the poor to productive and social programs in Mexico. The integral approach under the Social Protection System Project allowed the linkage of the poor and vulnerable, particularly in the hardest to reach and most remote communities, to multiple social and productive interventions and the development of tools (i.e., the spatial data infrastructure system and the virtual e-learning platform) that contribute to an integrated social protection system. Through income generating programs in rural areas and labor related programs in urban areas (e.g., Program to Support Microentrepreneurs and Rural Women), the Project connected beneficiaries to productive opportunities to enhance their social mobility and ability to generate income, contributing to the long-term goal of breaking the intergenerational cycle of poverty. Almost 1.8 million beneficiaries (63.3 percent of whom were women) were participating in complementary social programs as of end 2018, and 318,217 beneficiaries had joined productive inclusion programs (54.5 percent of whom were women) as of end 2017. The Project also supports the implementation of policies to increase financial literacy as well as the delivery of social protection benefits in an integrated manner with a beneficiary-focused approach. A feature story in Spanish is available on the following link: En qué gastan mujeres y hombres sus ingresos económicos.
In Mexico, forests deliver jobs, climate commitments, and women economic empowerment. The Strengthening Entrepreneurship in Productive Forest Landscapes Project builds on the Forest and Climate Change Project’s successes and aims to remove barriers to women’s ownership and control of assets in the forest sector in Mexico. Through the Forests and Climate Change Project, 265,632 beneficiaries from marginalized and vulnerable forest communities were provided with capacity building and investment support to manage forest assets sustainably, leading to strengthened forest resource management and increased income opportunities. The Project’s strong focus on women is reflected through the targeted mechanisms to directly benefit women, including the establishment of specific funding windows to mainstream women’s access to the government’s forestry programs. Two feature stories and videos in Spanish on women forestry projects in Mexico are available on the following links: In Mexico, forests deliver for jobs and climate commitments and Rural poverty and natural wealth – Pathways towards sustainable rural development

Last Updated: Apr 13, 2020