The Plan México Project

The nitty-gritty specifics needed to get Sheinbaum’s industrial policy right.

A good industrial policy should, in the immediate term, upset more people than it pleases. A bad industrial policy is thought of as a broad subsidy for the whole economy as opposed to what it really is:

Picking winners and losers.

It’s a phrase that has historically been used to criticise government meddling in the economy. Industrial policy was seen not only as unfair, but worse, as an inefficient deviation from the market’s true wishes. And the market is always right, said a breed of classical liberal economists currently outnumbered by the pandas at Mexico City zoo.

Industrial policy is back; embraced by left, right, and centre across the world. The question before governments now isn’t whether to get involved in the economy, but how. It was a question that concentrated the attention of the attendees at a conference moderated by The Mexico Political Economist at the Metropolitan Autonomous University (UAM) in Mexico City this week.

The economists from across Latin America present broadly concluded that specificity was at the heart of any successful industrial policy. The art of knowing how to pick and choose the industries and sectors that present the biggest opportunities for development and growth. They must be areas where Mexico already does or could excel at, innovate in, and scale up—bringing desperately needed economic growth and jobs through productivity rather than subsidies.

In theory, president Claudia Sheinbaum’s administration has already done this in the form of Plan México—the country’s flagship industrial policy to 2030. On paper it covers the basics. It identifies sectors and industries where the State, the private sector, and civil society can work to boost economic growth, development, and prosperity.

The issue is that the Plan is far too broad. The sprawling sectors it describes, when combined, add up to what could be defined as “the Mexican economy.” And the steps it outlines, though laudable, are so vague as to mean nothing. The Plan’s promises of updated processes, simplified regulations—all smattered with buzzwords like “digitalisation” and “AI”—really don’t say much of anything.

To make matters worse, as the Plan has been implemented, every bit of economic news has been said to be happening “within the framework of Plan México” without explaining how the government’s industrial policy enabled or will enhance, say, the planned expansion of an appliances factory.

And that’s when there is clarity to the announcement. Oftentimes, the government promotes “actions” like awarding 100 startups the ability to stick a “Made in Mexico” label on their products without saying much else.

Mexico’s government has yet to pluck the courage to actually pick its champions. All the while, investment in the country sinks.

Get to Step Two already!

It feels that Plan Mexico hasn’t really got off the ground yet.

Of course, one has to start somewhere. That is especially true given the new economic era the world is currently entering. Economic policies and trade agreements are now being re-imagined in ways never previously conceived. It makes sense that conversations with, say, Canada—a country with which Mexico has been in a trade agreement for over three decades—feel like they’re starting afresh, with declarations to start planning to have a plan for the bilateral relationship soon.

But Plan México was published in January and little more detail has been added. Look at its official website and the most updated version of the Plan is one still clearly labeled “First Draft”. It is far past time Mexico got working on the next one.

Plan Mexico needs two main updates as it moves from blue sky thinking to action: