The productivity issue is the cornerstone of Mexico’s future. In the long term, growth rate, wage levels and employment creation depend from it. From this perspective, turning productivity into the underlying principle of Mexican economic policy may seem self-evident. The need for it is due to the country’s stalemate in this matter: as an illustration, Mexico has currently the same level productivity as it did in 1979. With the 2013 inclusion of the section “Democratizing Productivity” within the National Development Plan, Peña Nieto’s administration has sent a good message. However, the question is whether productivity’s “democratization” and its operations via the National Committee on Productivity (CONAPRO) will only be empty rhetoric.
Democratizing productivity implies at least three definitions: one, it’s an eloquent term to say that the current administration’s productivity policy will be built through recommendations issued by CONAPRO specialists as well as employers/employees (it is worth remembering that specific features will be presented by the end of August); two, as President Peña remarked in his speech, it’s a rhetorical figure to explain how with further productivity, more benefits to the economy and, consequently, more benefits for the general population will be ensured (in other words, a vacuous platitude); three, it implies that support and production encouragement will be broadened for unexplored sectors where Mexico has economic comparative advantages at national and local levels. If democratizing productivity corresponds to this last definition, then there is plenty of material for discussion.
Let us start by analyzing CONAPRO. On one hand, its organizational structure could not be questioned from the political point of view, but from a technical perspective, it certainly has several mistakes. Despite its great political weight within the presidential cabinet, the head of the Ministry of Finance and Public Credit (SHCP) should not preside this institution, given that his decision-making on fiscal, tax and revenue matters are not necessarily aimed in having a positive impact on productivity. Likewise, the Committee’s Technical Secretariat should not be headed by the Secretary of Labor, ever since productivity, at least in the short-term, does not necessarily translate into more employment and pro-employment policies usually turn out to be unproductive. Increasing productivity would mean affecting all interests that have paralyzed its growth in every aspect: labor, education, infrastructure, security, legal system, etc. If there was an ideal candidate for heading the Committee, it should be the Secretary of Economy. Better yet, a “productivity tsar”: an independent individual with broad political powers and who would report directly to the President.
On the other hand, there are at least five points that the Committee should work on. Firstly, there is a need to boost productivity using local comparative advantages: as illustrated by the CIDAC Index, not every state has the same comparative advantages nor do they have the same conditions to develop all production activities. Secondly, it is imperative to fight informality, which is by definition, unproductive. Thirdly, there is a need to push forward a transition in certain markets to goods and services of greater added value. Fourthly, the policy of helping micro, small and medium-sized companies of low added value should be dropped aside: supporting them is an unproductive expense. Fifthly, if productivity implies technological efficiency, the possibility of transforming CONACYT (National Council for Science and Technology) into a Secretary of State should be reflected upon, by highlighting the enormous relevance of research, development and application of science and technology, it would ideally have a tenure directly linked to technological development and productivity. In fact, even if the energy sector opens up, a struggle between physical and financial capital, as well as job creation, would ensue. Without a technological knockout we won’t observe a change on the growth of productivity rates and, consequently, on long-term economic growth.
Government shouldn’t be thought of as a centralized power responsible of enhancing an industrial policy via CONAPRO. The main role of the Committee, as well as the federal and local governments is to boost economic activities where opportunity areas are defined by evaluations of concrete comparative advantages and, above all, not falling back into the old formula of feeding populist chimeras and bureaucratic monsters.
CIDAC
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