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Facing the Fourth Industrial Revolution

MEXICO CITY – The current era of innovation, in which cutting-edge technologies are disrupting entire economic sectors at a breathtaking rate, has been called the Fourth Industrial Revolution. It is also the theme of the World Economic Forum’s annual meeting this week in Davos, Switzerland – and rightly so. In the coming years, the scope and pace of innovation will transform how we produce, distribute, and consume. To maximize the benefits, we must take steps now to prepare our economies and societies, with a focus on three key areas: education, the business environment, and connectivity.

Human capital is vital to an economy’s success, and Mexico is no exception. That is why my government is focusing so heavily on improving education at all levels. For example, we recently launched “Education Infrastructure Notes,” private investment vehicles that will allow us to channel roughly $3 billion to improve elementary-school facilities within the next three years. In addition, during the current school year, we have delivered tablet computers to almost half of Mexico’s 2.3 million fifth-graders.

We are also working to ensure that current and future generations gain the skills they will need to thrive in an evolving labor market. Last year, more than 110,000 students in Mexico earned degrees in areas such as engineering, manufacturing, and construction – a higher figure than in some of the most developed countries, including France, Germany, and the United Kingdom.

To reinforce this progress, we are also increasing public investment in science and technology at universities and public research centers throughout the country. In the last three years alone, the number of scholars in our National Researchers System has increased by 26%, and we have almost doubled public expenditure on research, development, and innovation. Recognizing the vital importance of the linkages among government, industry, and academia, we have also increased the number of technology-transfer offices to support the development of new products and businesses in areas such as biotechnology, energy, and information technologies.

At the same time, we are working tirelessly to improve the business and investment environment. For starters, we have made major strides toward macroeconomic stability. Our central bank has established an independent monetary policy that ensures price stability and low inflation; in fact, in November, the annual inflation rate, at 2.21%, was the lowest in Mexico’s history. And our debt remains low and diversified. The debt-to-GDP ratio for 2015 is expected to stand at 46.9% – well below the Latin American average of 55.6% – and should stabilize at 47.8% in the coming year.

We have also pursued energy reform, which has lowered electricity costs, eliminated monthly increases in gasoline prices, and expanded gas pipelines throughout the country, thereby boosting competitiveness. For the first time in decades, all energy-sector activities are open to private capital – a strategy that will attract an estimated $12.6 billion in investment every year. Similarly, enabling foreign investment in the telecommunications sector has lowered prices for landline and cellular services, while improving quality and coverage.

Given that micro, small, and medium-size enterprises are the main drivers of Mexico’s economy, we are using digital tools to make it quicker and easier for entrepreneurs to start their own businesses, while facilitating their access to commercial bank funding. Our Young Credit Program gives entrepreneurs a loan of up to $9,000; for those seeking to consolidate an ongoing business, the total may be as much as $150,000.

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The third key step to prepare our economy for the Fourth Industrial Revolution is connectivity. Mexico is one of the few countries that formally recognize the right of its people to a broadband Internet connection. So far, we have established 65,000 public places, such as schools, libraries, and squares, with broadband connections. This will help us to reach our goal of providing high-speed Internet service to 70% of households and 85% of micro, small, and medium-size businesses.

But connectivity is not only digital; physical infrastructure is also vital. Already, Mexico is a manufacturing powerhouse and one of the world’s top sellers of goods like television sets, vehicles, auto parts, computers, and mobile phones. Improved infrastructure would enable us to boost the value and variety of our export-oriented industries.

That is why we are channeling more than $460 billion toward building and modernizing thousands of kilometers of roads and highways, as well as expanding and improving our mass transit and railway systems. Other large-scale infrastructure projects include a new international airport in Mexico City and seaport development that will almost double existing capacity on the Pacific Ocean and the Gulf of Mexico. In the long run, we will make Mexico a world-class logistics platform.

Finally, Mexico is committed to continue boosting foreign trade, a powerful growth engine. Over the last three years, we have expanded our network of free-trade agreements to include the Pacific Alliance and, more recently, the Trans-Pacific Partnership. That will make a total of 13 free-trade agreements, providing preferential access to 52 countries with 1.3 billion potential consumers.

Our government has already made critical decisions to prepare Mexico’s economy for what lies ahead – and is backing them up with concrete action. We must build on this progress to address outstanding challenges, including rising demand for a wide range of specialized knowledge professionals and an urgent need to improve connectivity, especially in remote rural areas (where 9% of Mexico’s population lives). We must give our citizens and businesses the tools they need to take advantage of the opportunities that the Fourth Industrial Revolution creates, and ensure that future generations, too, can reach their full potential in a rapidly changing world.

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