The missed opportunities for Mexico’s economy

Mexico is the country that never misses the chance to miss an opportunity, an analyst recently said when discussing nearshoring and the blow that the judicial reform would represent to the economy.

Looking at it from the outside, he continued, it’s hard to understand why Mexico insists on making decisions that hinder its growth.

The judicial reform will have harmful impacts on the country, not just from an economic perspective of course.

I think it’s naive to argue that it will “democratize” access to justice and eliminate corruption. Those who promoted and voted for it know that it will lead to setbacks, making the country less democratic and more authoritarian.

Before the reform, the GDP growth expectations for Mexico’s economy were around 1.7% this year, even below the mediocre 2% that had been so criticized. If Mexico grows at that rate during a period of nearshoring and in an election year with rampant spending, what can be expected in a year without these economic drivers?

Growth forecasts will be adjusted following the publication of the reform. Some banks have already done so, estimating that Mexico will grow 1.2% this year and 1% next year.

Beyond the exchange rate — which responds to much more than just internal policies — the real problem will be what we don’t see: the investment that won’t happen, the foreign investment announcements that won’t materialize, the jobs that won’t be created, the growth and development that won’t arrive.

That will be the real crisis: the stagnation of an economy that could have grown but chose not to.

In terms of magnitude, the judicial reform is the most harmful so far, but the ones on the horizon will not be harmless, and the relationship with our trading partners will only get more strained.

The elimination of the figure of state-owned productive enterprises could violate Chapter 14 of the USMCA by restricting investment in the electricity sector. The reform limiting the trade of genetically modified corn would violate Chapter 3 by restricting access to a market not excluded from the agreement. Additionally, the elimination of autonomous bodies would contradict other articles, such as Article 18 on telecommunications and Article 21 on economic competition.

In the specific case of the judicial reform, there is concern that administrative acts may not be impartial, which would violate Chapter 29 of the USMCA. Intellectual property protection could also be compromised, contrary to what is established in Chapter 20.

These issues could arise from a judiciary that, due to a lack of independence and skill, fails to fulfill its duty to maintain fair conditions for all economic actors. The 2026 review could turn into a renegotiation.

Just as today we don’t know what would have happened if the banking sector hadn’t been nationalized in 1982, or if Mexico hadn’t opened up to international trade, or if the 1994 crisis hadn’t occurred, or so many other things — the list is long — we won’t be able to fully grasp the impact of missed opportunities or the gradual regression these reforms represent.

They say that “what if” doesn’t exist. That may be true. But it could also be that we are simply unable to see it.

This article was originally published in Spanish by El Universal newspaper.

Valeria Moy has been the director of the Mexican think tank IMCO (Mexican Institute for Competitiveness) since 2020. She is an economist with degrees from the Autonomous Technological Institute of Mexico (ITAM) and the London School of Economics. She is a regular columnist for El Universal and El País newspapers and was named one of the 100 most powerful women in Mexico by Forbes.