On June 18, Mexico received disappointing news as it slid down to the 62nd position in the IMD World Competitiveness Ranking, a drop from 55th place among 70 evaluated countries. This ranking, known globally for assessing economic and business capabilities, considers various factors including economic performance, government efficiency, business efficiency, and infrastructure. Unfortunately, infrastructure emerged as a significant weak point for Mexico, particularly in areas such as health, education, and overall foundational services.
Infrastructure, at its core, refers to the essential systems that support daily life and economic activity. This includes tangible assets like energy sources, transportation networks, and utilities, as well as digital systems for communication and information technology. The report highlights that Mexico’s basic infrastructure needs urgent improvement.
Investment in infrastructure is crucial for attracting business. Recommendations suggest that developing countries should invest between 4% and 8% of their GDP in infrastructure. However, Mexico’s investment has significantly dropped from around 5% in the early 2000s to just 2.5% to 3% in 2023. The federal budget for 2026 indicates a continued trend of about 2.5% for infrastructure spending. Other nations, such as Hungary and Estonia, are investing more, at rates of 6.6% and 5.5% respectively.
The World Bank has specified the recommended distribution of infrastructure spending for developing nations: 39% for energy, 31% for transportation, 23% for telecommunications, and 7% for water and sanitation. Mexico, however, has been heavily investing in energy and transportation while neglecting telecom and water management, largely due to the emphasis on specific governmental projects.
President Andrés Manuel López Obrador (AMLO), alongside his successor Claudia Sheinbaum, has focused infrastructure projects on regions governed by their political party, prioritizing more famous initiatives in the south of the country. These projects include substantial investments like the Felipe Ángeles International Airport and the Olmeca oil refinery. To further extend this focus, the new Plan de México is set to incorporate additional train lines linking various parts of the country.
For foreign investors, robust infrastructure is a vital consideration. While cities like Mexico City and states like Tabasco receive substantial investment, other states, including Nuevo León and Jalisco, are lacking in adequate infrastructure support.
The World Bank advises that to ensure sustainable development, a substantial portion of funding should also be allocated for the maintenance of existing roads and networks. The Mexican government has planned a future budget of around MX$69.3 billion (about US$4 billion) for new road infrastructure and an additional MX$50 billion for improving and maintaining current roads. However, Mexico is still lagging in road maintenance when compared to other Latin American countries.
As the complexity of infrastructure increases with technological advancements, there is a pressing need for greater connectivity and private investment. While the current administration acknowledges these requirements, it continues to limit private sector involvement, leading to minimal public funding for necessary improvements. To positively impact its future competitiveness, Mexico must focus on strengthening its infrastructure across the board, especially in areas such as energy and digital connectivity.
