Politics, Business & Culture in the Americas

Peña Nieto’s Plan to Tackle Economic Inequality

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Mexican President Peña Nieto laid out his ten point plan to tackle injustice and corruption in the country last month as part of his response to the murder of 43 students in Iguala, Mexico. Although the plan has been derided for lacking true punch and political support, one less discussed, but significant, piece of the plan is the proposal to create Special Economic Zones (SEZs) in three of Mexico’s poorest states.

Mexico is still a country of have and have-nots. With a Gini coefficient of .48, Mexico is the second most unequal country in the Organisation for Economic Co-operation and Development (OECD). This inequality becomes self-evident as one drives from northern Mexico to the country’s southern border—cities give way to the rural countryside, factories turn into crop fields, and paved roads turn into gravel. 

Guerrero, Chiapas, and Oaxaca are among Mexico’s economically worst-performing states. GDP per capita is less than a quarter than that of the capital in all three states, and they score lowest on the human development index. According to the National Institute of Statistics and Geography (INEGI), approximately 80 percent of the labor force in each state is employed in the informal sector, compared to the national average of 58 percent. More than twelve million people live in poverty or extreme poverty in just these three southern states.

In recent years, these states have been prone to violence at the hand of criminal drug organizations, much like the rest of the country. But unlike the more prosperous northern states, they have been unable to put forward viable solutions to combat crime and the corruption of their public institutions. Instead, men and women alike took matters into their own hands and formed fuerzas autodefensas (self-defense forces) to root out cartel operatives and corrupt government officials who had taken over their towns. In the case of the 43 disappeared students in Iguala, Guerrero, police, and even the town mayor, were found to be in league with the local drug gang.

Three SEZs have been proposed to drive development and restore security in these states. The first is an industrial corridor in the state of Oaxaca stretching from the Gulf of Mexico to the Pacific. The second is Puerto Chiapas—a deep-water port—in the state of Chiapas. And the third encompasses the municipalities adjoining the Lázaro Cárdenas Port, which straddles the states of Michoacán and Guerrero. Within the SEZs, the government has promised to ensure security, strengthen the local agricultural industry, offer lower financing rates, reduce tax burdens, and increase funding for rural schools and science scholarships, among other things.

Peña Nieto has taken a positive step forward by recognizing the disparities among Mexico’s states, but this is only the first of many needed steps. Only through careful design, implementation and management can the SEZs be successful. More long term, the restoration of the rule of law is essential for productive industry to take root and to re-establish the people’s faith in their government.

Tags: Economic Inequality, Enrique Peña Nieto, Special Economic Zones
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