Juan Pablo Castañón Castañón : Interview

Interview : Juan Pablo Castañón Castañón

What key areas of the economy need further reform to reach sustainable growth levels?

JUAN PABLO CASTAÑÓN CASTAÑÓN: Increasing GDP can be achieved by combining several approaches. Above all, Mexico needs to face economic challenges with a compliant and responsible corporate culture. Private companies have to work to add value through their activities and develop an integrated value chain that allows local small and medium-sized enterprises to enter the global competitive market. In addition, Mexico needs to support communication between private companies, research and development (R&D) centres, and academic institutions to develop knowledge and generate hard and soft skills that will help businesses face their growth challenges. Moreover, public policies facilitate key initiatives to promote multi-disciplinary applicable skills and knowledge for every sector of the economy.

To simplify business practices, the government signed an agreement in 2018 for a decree called dos por uno (two for one), which aims to responsibly deregulate business practices by removing two regulations for each new one created. By digitalising those operational practices, the country can foster more sustainable and dynamic growth.

What initiatives are being taken to reduce the gap between some of the country’s states?

CASTAÑÓN: The Federal Law for Special Economic Zones (SEZs) will undoubtedly be economically and socially beneficial for regions of the south and southeast. For the law to reach its full potential, the government must invest in supporting infrastructure. These regions need to develop their port and road networks to connect to the Bajío region, Mexico’s most dynamic industrial area.

The development of adapted and modern energy infrastructure is another priority. For instance, southern regions are still not properly connected to the energy network, making it difficult for investors to develop industrial projects there. These regions also require more sophisticated education infrastructure, with a long-term goal of supporting the zones with qualified human capital. To this end, SEZs need to incorporate a triple helix model that will help develop expertise and inter-institutional collaboration to encourage sustainable, local economic growth.

How can public institutions and private companies support more dynamic research?

CASTAÑÓN: Although President Enrique Peña Nieto’s administration has prioritised R&D, there is room for improvement. The national system is more focused on rewarding basic scientific research than applied research, which creates a quality and investment gap. From the perspective of private companies, the country needs a national council for applied research and for policies that encourage private companies to innovate, conduct research and release patents. In 2016 Germany submitted 15,000 patents and Korea 14,000, while Mexico only submitted 317, suggesting it is at a disadvantage against its OECD counterparts.

How could business practices be enhanced to ensure more transparency?

CASTAÑÓN: Economic actors need to incorporate and foster a more robust culture of compliance to enhance business transparency. In the private sector, companies should work under a common set of ethical practices and codes. For instance, the CCE introduced a code for integrity and business ethics in 2017 that aims to reward and certify companies that decide to work by its guidelines. In addition, there is a fundamental need for public institutions to remove pre-electoral incentives linked to political campaigns and activities, and for public elections to be held with the most neutrality possible, facilitating the work of the anti-corruption system.