Risks and Opportunities in a Time of Reforms and Social Changes - Assignment Example

Mexico: Adaptation, risks and opportunities in a time of reforms and social changes Introduction Mexico has experienced many positive changes that it is easy to forget where it was at the end of the last century. Poor governance had caused the country to have high poverty rates (Saragoza, Ana, and Silvia 150). The public had suffered from rampant crime and illegal trade (Saragoza, Ana, and Silvia 150). In addition, it has weak institutions that left the public at the mercy of influential persons. Furthermore, the ruling elite made social organization difficult (Rubenstein 499). The challenges facing the country are attributed to poor governance that characterized its twentieth century. The country still has a significant poor population (Rubenstein 498). The Rise of Mexico The Mexican economy and society have experienced significant growth. Although President Pena is affiliated with the Institutional Revolutionary Party (PRI) that governed the country in an authoritarian and corrupt manner during the 20th century, he has demonstrated a willingness to champion legislative reforms that are aimed at creating value in the country, improving its competitiveness and fueling economic growth. In addition, he has been working with the congress to marshal support for his legislative agenda. The violence that has spoiled the image of the country is concentrated in small areas. In addition, it is also starting to decrease significantly. Educational reform After attaining independence from Spain, the priority of Mexico was to develop a national identity as opposed to the development of human capital (Zinny and McBride 1). The measure was motivated by the need to create a national character that is distinct from that of its colonial powers. Consequently, Latin America was characterized by highly centralized states (Zinny and McBride 1). Learning institutions were developed to be top-down institutions (Zinny and McBride). In addition, the curriculum was rigid. At the end of the twentieth century, it was evident that the country was suffering from both lack of access and poor quality education. In the 1980s and 1990s, Mexico sought to decentralize its education system (Zinny and McBride). However, it only transferred the same bureaucratic mechanisms that had undermined the education process at the national level to the local levels. In addition, although there was increased access to education, the quality of education provided in the country did not improve much. As a result, the education standards in the country fell behind those its European and Asian counterparts. The recent reforms are aimed at addressing the poor quality of the education system in the country (Zinny and McBride 1). The national government has opted to play a greater role in the evaluation and certification of teachers to enhance the quality of the profession. In addition, schools have been given an opportunity to find creative ways of enhancing the learning process and student outcomes (Zinny and McBride 1). Energy reform President Enrique Pena Nieto has opened up the state controlled electricity, gas and oil sectors (Stevenson 1). Although the state owned energy company, Pemex retains the priority allocation of oil fields, private investors have an opportunity to participate in the booming energy sector. In addition, the president has committed to establish regulatory bodies that will oversee the implementation of these reforms (Stevenson 1). As a result, it is evident that the government is committed to ensuring that the country operates under a new energy regime. Energy is very important in the growth of any country because it is used for both commercial and economic purposes. In addition, changing the nationalization of the energy sector that had begun in 1938 when foreign oil companies were nationalized helps to prepare the country to compete in the current international economy (Stevenson 1). Telecommunication reform The government of President Enrique Peña Nieto has also implemented telecommunication reform. It has moved to expand its role allowing it to battle monopolies (Mallen 1). These reforms have many positive implications for its telecoms sector. Banning monopolies will open the Mexican telecoms market that will allow both small players and new entrants to compete in the market. As a result, the consumers will have a greater variety from which to choose. The availability of choice will force the industry players to compete on both price differentiation and product features. Consequently, the consumers will benefit from reduced communication an data charges. Before these reforms were introduced, the Carlos Helu Slim controlled two thirds of the telecoms market (Mallen 1). The information age requires a robust telecommunications sector. The absence of monopolies will encourage innovation as the telecom companies compete with each other. The Mexican economy will benefit from such a competition. First, they will increase access to communication among the people. Second, it will help the country to compete with the rest of the world in information technology. Third, it will increase the access of information and connectivity with the rest of the world. In the era of globalization that is very important since it enables the Mexican people to participate in global commerce. Fiscal reform The fiscal reforms are closely related to the energy reforms because the government needs to shore up its tax revenue to replace what it will lose from the privatization of oil and gas fields. In addition, it needs to wean itself off oil. A third of the total government revenue comes from oil (Hidalgo 1). Furthermore, it is a response to the consistent decline in the production of oil in the country (Hidalgo 1). The government hopes that the fiscal reform would simplify the complex tax regime in the country. The World Bank ranks the country at number 107 out of 185 in the ease of doing business (Hidalgo). The fiscal reforms are expected to help it collect more revenue. A complex tax regime is not only inefficient for business but it also creates an incentive to cheat on their taxes. The government believes that the reforms will make the country an attractive investment destination. First, the energy reforms are aimed at reducing the cost of doing business in the country, which is a major determining factor in choosing areas to set up operations. Second, it hopes that it will benefit from the expertise that the private sector will bring. For example, it hopes that they will enable the government to find deep water or shale gas production. The government hopes that the education reforms identifies what works and what does not work (Zinny and McBride 1). In addition, it expects that they will result in greater resource utilization. The Risks that the reforms present The privatization of oil and gas poses the risk of widening the gap between the rich and poor. The people that stand to benefit from this move are the owners of capital because they have the resources to invest. As a result, their wealth portfolio stands to grow significantly due to the measures. Due to the poor governance, that the country has experienced such a phenomenon could cause social unrest. The Mexicans are wary about the ability of the government to overcome the corruption that has characterized its economic landscape for years. There is the risk that government officials will seize on the privatization policy to solicit and receive kickbacks. Consequently, there is a significant need for changing the perceptions of the people. Achieving this need will require a deliberate effort to implement social change within the country. In addition, there is a risk that the patience of the people my run out before the positive effects of the reforms are felt. People are by nature wary of change. If the public loses faith on the reforms it may put pressure on the political leadership to change them. Should this happen the republic of Mexico will miss a great opportunity to build a strong and modern economy that can compete in the world. There is a risk of increased conflict between the national government and the state governments. The state governments fear that their authority may be undermined by the reforms (Zinny and McBride 1). In addition, unions may also prove to be a stumbling block as they seek to safeguard the short term interests of their members. There is also the risk that the reforms may fail to address the core source of the problem. A good fiscal reform involves reforms in both tax collection and how it is spent. In contrast, Mexico has focused on revenue collection reform but has failed to change how it spends the money. The government should have executed a number of spending cuts. Although the various reforms are good and reflect a willingness to move in the right direction, whether it will be effective will depend on their implementation. The country has suffered poor leadership under the ruling party before and it is unclear whether the party has changed significantly. In addition, the President has to battle against the anti-reformers in his party. In the end, the success of the country will depend on the determination of the political leadership and its ability to create a coalition to support the new reforms. Furthermore, the effectiveness of the reforms will be severely limited if the country does not address its security problem. The drug cartels not only scare away investors but also undermine the efforts of the citizens to empower themselves economically. In addition, the corrupt police and security agencies should also be reformed so that they can safeguard the rule of law. A country that upholds the rule of law creates a good environment for enterprise. The country needs to do a lot more than the four reforms. The modern global economy is very competitive. Most countries around the world are implementing similar reforms. As a result, the country needs to ensure that it does not stop there. Instead, it should reform the other sectors such as housing and the provision of social services. There should also be efforts to provide a safety net for the poor and most vulnerable Mexicans. There is a risk that the nonprofit sector and the business community may not be involved in the economic reforms that are being implemented. The nonprofit sector plays a significant role in the Mexican society. It addresses the needs of disadvantaged Mexicans. In order to achieve its fullest potential, the country must have an inclusive process that provides a platform for non state actors to participate in the development process. The Opportunities that the reforms present If the reforms are successful then the economy of the country will benefit from an increased GDP, improved purchasing power and the creation of jobs. The people of Mexico will have an improved standard of living. In addition, the reforms will lower the price of gas which is mostly imported and the electricity rates. Consequently, the bottlenecks that have prevented it from reaching its full potential will be dealt with freeing it to grow. The reforms have created a growing middle class in the country. Investors are attracted to countries with large middle class populations because they have a high purchasing power. As a result, more investors are expected to set up operations in the country especially as the war on drugs winds down. In addition, the country has an opportunity to take advantage of its strategic location between the Pacific and the United States of America. The education reforms will enable the country to have a talented and skilled workforce. The investment community values markets where it can find a ready pool of employees. In addition, it will help to drive innovation in the country. The global economy demands that for a country to be competitive, it needs to create value added goods and ideas domestically. Innovation plays a significant role in achieving that objective. The reforms may provide an opportunity to empower the people. The economic participation and the quality of the Mexican democracy has been a source of great concern (Holzner 87). An empowered citizenry will be able to play a greater role in the democratic process. Conclusion Mexico is one of the leading economies in South America. The reforms that President Enrique Pena Nieto has instituted have played a significant role in transforming it from a developing country to a strong economy with the potential of registering greater economic growth. However, for it to realize its fullest potential it must seize on the opportunities that they present while ensuring that it avoids the risks that the reforms present. Finally, if Mexico maintains the status quo then it should be able to perform well as a country. Works Cited Holzner, Claudio. The Poverty of Democracy: Neoliberal Reforms and Political Participation of the Poor in Mexico Journal of Latin American Politics & Society 49.2, (2007) 87-122 doi:10.1353/lap.2007.0021 Hidalgo, JC. Mexico’s Fiscal Reform: the Good, the Bad, and the Ugly. 10 September 2013. Web. 13 August 2014. http://www.cato.org/blog/mexicos-fiscal-reform-good-bad-ugly Saragoza, Alex, Ana P. Ambrosi, and Silvia D. Zárate. Mexico Today: An Encyclopedia of Life in the Republic. Santa Barbara, Calif: ABC-CLIO, 2012. Print. Stevenson, Mark. Mexicos President Enrique Pena Nieto Signs Landmark Energy Reform into Law. 8 December 2014. Web. 12 September 2014. http://www.huffingtonpost.com/2014/08/12/mexico-energy-reform_n_5672055.html> Mallen Rey Patricia. Mexicos Telecom Reform Pits President Enrique Peña Nieto Against Billionaire Tycoon Carlos Slim Helú. 31 March 2014. Web. 12 August 2014. Rubenstein Anne. Refried Elvis: The Rise of the Mexican Counterculture. journal of Social History 34.2 (2000) 498-501 Zinny, Gabriel & McBride, James. Mexico’s Education Reforms and Latin America’s Struggle to Raise Education Quality. 23 January 2013. Web. 12 August 2014. http://www.brookings.edu/blogs/education-plus-development/posts/2014/01/23-mexico-education-reform-quality-zinny Read More