A couple of weeks ago, I visited Mexico City—one of my favorite cities in the world. It’s a remarkable place, not least because of the food, the museums, and the culture, but also because of the incredible economic changes taking place in Mexico right now—both in the capital and all around the country.
Every time I visit, I think the same thing: if I were starting my career, especially if I lived in a nation where I couldn’t explore my full potential, I’d try my luck in Mexico. Why? Because Mexico is finally beginning to unlock its true potential as an economic powerhouse.
At the heart of this potential lies a sweeping set of reforms. These initiatives include significant changes to move more businesses out of the informal economy, lower the cost of borrowing and modernize the financial sector, educate and train Mexico’s young workforce, and reduce corruption. Perhaps the most important initiative, a key priority of President Enrique Peña Nieto, has been reforms to the energy sector.
For decades, Mexico’s energy sector has been a national monopoly. The policies now working their way through Mexico’s Congress will kill the monopoly and open development to foreign investment. It’s difficult to underestimate the importance of this reform. Mexico has huge energy reserves, but hasn’t had the ability to truly capitalize on them. The important thing to remember is that for all of Mexico’s problems, it is a functioning democracy, and the capital from energy investment will flow to other sectors of the economy far more effectively than in an autocratic oil state.
What sets Mexico apart from many other emerging economies is that it has the combination of some key factors for success: a diverse set of resources and industries, its proximity to the world’s largest economy, a relatively stable currency, and—critically—a proactive, democratic government.
To be clear, I remain bullish on the U.S., and the May jobs numbers are further proof that the U.S. economy is on the right track. But we could learn a thing or two from our neighbors—in particular, the Mexican government’s willingness to take bold steps in order to foster long-term growth.