What the fourth industrial revolution means for Mexico

The Fourth Industrial Revolution – the theme of Davos 2016 – describes an era of innovation, where cutting-edge technologies are constantly disrupting industry. This trend will not only continue but intensify, transforming every step in the way we produce, distribute and consume. We have to prepare our economies and societies to successfully take advantage of these changes.

I believe this means focusing on three key areas: education, the business environment and connectivity.

Education for a new world of work

Since we know that Mexico’s most valuable competitive advantage is its human capital, education is crucial. At the elementary level, we recently launched “Education Infrastructure Notes”, private investment vehicles that will allow us to channel approximately 3 billion dollars to improve school facilities within the next 3 years. In addition, in the current school year, we have delivered more than a million tablets to almost half of the 2.3 million fifth grade students.

Today, over 110,000 students graduate each year in targeted areas such as engineering, manufacturing and construction, a higher figure than in some of the most developed countries, like France, Germany and the United Kingdom. We want present and future generations to have the skills they need to thrive in the new workplace.

To that end, we are increasing public investment in science and technology at universities and public research centers all over the country. In the last three years alone, the number of scholars in our National Researchers System has increased by 26%, while we have almost doubled Mexico’s expenditure on research, development and innovation.

In the Fourth Industrial Revolution, the links between government, industry and academia are more important than ever. To support our economy, we have increased the number of technology transfer offices to share knowledge and support the development of new products and businesses, in areas such as biotechnology, energy and information technologies.

I believe this means focusing on three key areas: education, the business environment and connectivity.

Creating the right environment

At the same time, to improve the business and investment environment, we have made major strides towards macroeconomic stability. Our central bank has established an independent monetary policy that ensures price stability and low inflation. In fact, in November, the inflation annual rate was 2.21%, the lowest in country’s history. In addition, Mexico’s debt remains low and diversified. The expected debt to GDP ratio is 46.9% for 2015, which contrasts with Latin America's average of 55.6%. Moreover, the Mexican debt to GDP ratio is expected to stabilize at 47.8% by 2016.

Likewise, to foster a business-friendly environment, our energy reform has led to greater competitiveness, by lowering the cost of electricity tariffs, eliminating the monthly rise of gasoline prices and expanding gas pipelines throughout the country. For the first time in decades, private capital investment is allowed in all sector activities. It is estimated that this strategy will attract more than 12.6 billion dollars of investment every year. By the same token, our telecommunications reform enabled foreign investment, lowering fixed and mobile phone services prices, and improving quality and coverage.

Entrepreneurs, as well as micro, small and medium sized enterprises, are the main driver of Mexico’s economy. We are using digital tools to make it quicker and easier for entrepreneurs to go through the process to start up their own businesses, while facilitating their access to commercial bank funding. Our Young Credit Program gives entrepreneurs a loan for up to 9,000 dollars. If what they need is to consolidate an on-going business, this loan could be for up to 150,000 dollars.

Improved connectivity for the 21st century

Connectivity is the key in an increasingly digital economy. Mexico is one of the only nations in the world whose constitution formally recognizes the right of its people to a broadband internet connection. The goal is to connect 70% of households and 85% of micro, small and medium-sized enterprises to high speed internet. In order to reach this target, we have established 65 thousand public places with broadband internet connection, such as schools, libraries and squares.

In the same way, we are channeling more than 460 billion dollars for infrastructure, to successfully integrate Mexican products and services into the 21st century global economy. Mexico has become a manufacturing powerhouse. It is one of the top global sellers of TV sets, vehicles, auto-parts, computers and cellphones, among several other products. With improved infrastructure, we will certainly reinvigorate our competitiveness, by setting the stage for expanding the value and variety of our high-tech, export-oriented industries.

With that aim, we are building and modernizing thousands of kilometers of roads and highways, as well as improving our mass transit and railway systems. Besides, we will construct a new Mexico City International Airport and will almost double our seaports capacity on the Pacific Ocean and the Gulf of Mexico, among other large-scale infrastructure projects. Our aim is to make Mexico a world-class logistics platform.

Since we know they are a powerful engine for economic growth, Mexico is committed to continue boosting commercial exchanges. Over the last three years, we have expanded our network of free trade agreements (FTAs); we have joined the Pacific Alliance and, more recently, the Trans-Pacific Partnership. With them, our country will sum 13 FTAs that provide preferential access to 52 countries with 1.3 billion potential consumers.

Conclusion

In sum, we have made key decisions to break the barriers to the use of information and communication technologies and to reduce the digital gap in our society. Like many countries, we face challenges. Our industry and businesses demands increasingly specialized professionals in a wide range of knowledge areas. Besides, 9% of the total national population live in remote rural communities that require improved connectivity.

Now, in Davos, we should look further and provide our citizens and businesses with the necessary tools to take advantage of the opportunities that the Fourth Industrial Revolution will bring. We must make it possible for next generations to reach their full potential in an ever-changing world.