AMBITIOUS GOALS

Mexico 2017 | ECONOMY | INTERVIEW

TBY talks to Frederic García, President of Consejo Ejecutivo de Empresas Globales (CEEG), on making Mexico a more attractive FDI destination and promoting growth and development in the South and Southeast.

Frederic García
BIOGRAPHY
Frédéric Garcia has a master’s in international project management from the École Supérieure de Commerce de Paris, as well as an engineering degree from the École Nationale Supérieure d’Arts et Métiers. He is the CEO of Airbus Group for Mexico. From 2007-2014, he was CEO of Airbus Defense and Space Mexico. He has held titles such as General Manager of ITA (Inversiones y Técnicas Aeroportuarias), Marketing Director of ASUR, and, from 1992-1999, Business Development Manager in GTM (Grand Travaux de Marseille).

What can Mexico do to reassure international investors?

Despite the uncertain international context, we view Mexico as an attractive destination for investment due to the quality of its workforce, its preferential access to the largest economies of the world, its privileged geographic location, and—particularly in recent times—because of its structural reforms implemented in the telecommunications, energy, financial, and education sectors, among others. Mexico's economy and macroeconomic fundamentals are moving in the right direction. The IMF raised the nation's 2017 growth forecast, praising the economy's resilience. In addition, Standard and Poor's and Fitch Ratings have boosted their credit outlooks for Mexico. The peso has surged 22% since Trump took office, driven by diminishing expectations over the unraveling of NAFTA or an overhaul that would damage Mexico's economy. All these factors have contributed to improving the investment climate in Mexico and generating better competitive conditions that make the country a more attractive investment destination.

What role can multinational companies play in promoting growth and development in the South and Southeast of Mexico?

One of the most pressing challenges in Mexico is its high level of inequality. The state with the highest household income is Nuevo León, with USD66,836, more than 140% the national average. The state with the lowest household income is Guerrero with USD27,584, where the average household income is only 60.1% the national average. In that sense, one of the goals included in our Vision 2030 is to double the national GDP per capita and improve its distribution. Growth and development have not been equal within the country and it is therefore necessary to seek instruments that promote the incorporation of regions lagging behind in the South and Southeast. We believe the creation of special economic zones in these regions is a great initiative to promote investment. We have a committee specially focused on the development of the South and Southeast. The objective is to collaborate in closing the North-South gap by participating in the design of policies and instruments that promote the incorporation of these regions in Mexico by fostering investment. These regions have strong potential in sectors such as energy, tourism, and agriculture that need to be better exploited. One of the biggest challenges is the effective implementation of the rule of law, which needs to be urgently addressed.

What steps does the country need to take to continue moving in the direction of technological development and high-tech manufacturing?

As we made clear in the Mexico Vision 2030, in order to achieve a solid economic growth with the arrival of the Fourth Industrial Revolution, innovation and technological development must be strongly promoted. Mexico shows a historical lag in terms of its investment in science, technology, and innovation. Among OECD countries, Mexico has a low score on patents and relevant scientific publications, and public and private investment in R&D is below almost all countries of the OECD level. In 2014, R&D expenditure as a percentage of GDP in Mexico was 0.54%, in contrast to Japan (3.58%) or Germany (2.87%). We firmly believe Mexico must move from manufacturing to “mindfacturing;” the country must evolve from a manufacturing-based economy to a creative one. Mindfacturing generates greater value and better opportunities than the manufacturing industry and human capital will be the key to achieve this transition. To help accelerate Mexico's transition from a manufacturing-based economy to an innovation-based economy, we must focus our efforts on industries with high growth potential, such as the aerospace sector, which showed an average growth of 21% from 2010-2014. Global companies must participate in important sectors of the economy and through the investments we make in infrastructure, innovation centers, technology development, and human capital training. We have a positive effect on promoting innovation. Mexico must strive to capture a greater proportion of global companies' R&D investment globally. We have an ambitious but not impossible goal: to create the conditions for our companies to invest an additional 5% by 2030.