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The Aftermath of the Renovation in Mexico

22 de enero 2019Por: Nuria Becerril BC&B.

According with the Mexican National Democratic Planning System, after the President’s investiture, the new presidential team counts with 120 days to make consultations with specialists in determined topics, sectors and regions in order to elaborate the National Development Program (NDP), which will contain a set of actions that derive from the Executive Power application of his attributions regarding regulation and promotion of economic, cultural, political, and social activities, protection of the environment, among other actions, with the purpose of transforming the reality of the country in concordance with our Constitution.

On past December 1st, 2018, five months after the largest electoral process that has occurred in the history of Mexico, the inauguration of President Andres Manuel Lopez Obrador took place. This event concludes the large presidential transition period that began in July 2018. According with the Mexican National Democratic Planning System, after the President’s investiture, the new presidential team counts with 120 days to make consultations with specialists in determined topics, sectors and regions in order to elaborate the National Development Program (NDP), which will contain a set of actions that derive from the Executive Power application of his attributions regarding regulation and promotion of economic, cultural, political, and social activities, protection of the environment, among other actions, with the purpose of transforming the reality of the country in concordance with our Constitution. The importance of the NDP resides in the dependent relationship that it will keep with the law initiatives, agreements and decrees that the Executive Power formulates, since at the same time the projects arising from the NDP and the sectorial, special and regional plans related with them will depend on the law initiatives that pass as laws.

The actions taken by the 4th transformation government (4T), as President AMLO denominates his presidential period, are leaving a singular scenario that is consequence of prioritizing the simplification and reduction of several areas of economy promotion and implementing an economy of austerity, the eradication of corruption and the establishment of new industrial policy axes: inclusion, diversification and innovation, aspects which are described in the Plan for a Nation for this presidential period. These actions include the substitution of specialized technical personnel from substantive operative positions who could have supported the new leadership in different government organizations. This has caused a major cut in employments in the different governmental sectors. Based on this austerity plan, and focused in a redirection of the resources in favor of the industrial policy axes from the context of the new 4T, the budget for research in science has been highly reduced from 24.764 billion dollars to 16.764 billion dollars, which represents less than 2% of the Gross Domestic Product (GDP). There is no budget left to maintain or to generate infrastructure for research. The resources will be redirected to: 1) compensating the grants for students in foreign countries and to the regular costs of the 27 registered academic research centers and 2) to general research. Applied research projects will not be accepted for grants or funding. The government budget to promote technology transfer from academia to industry has been removed. The generation of technology and its transfer, the ultimate purpose of innovation, encounters now a huge handicap. Technology startups will face many obstacles to be created, mainly, the funding. There are still no announcements of how the sectorial funding will operate. The National Institute for Entrepreneurship (INADEM) has been cancelled, as well as the PRO MEXICO organization, which coordinated strategies focused to strengthen Mexico’s participation in the international economy, and supported exports and the establishment of Mexican enterprises abroad. These actions highly affect entrepreneurship in Mexico.

At a first view, this 4T strategy of “starting from the scratch” yields a disadvantageous and challenging position for the country in the OCDE and in the global economy context. It will be a demanding task for the government organizations like 1) the Mexican Innovation Observer, who is responsible of strengthening the innovation ecosystem by evaluating the profitability and viability of the public innovation policies; of 2) organisms of new formation, like the Innovation and Promotion Unit (UNIPRO), part of the Secretary of Economy, which, according to the 4T plan, is focused on promoting innovation at the mesoeconomic and at the microeconomic level of the value chain of the financial sector aligned with the new industrial policy; and of 3) the public policies of economic development, which lay out a different way to promote entrepreneurship – pushing the social economy by promoting the formation of communities of producers, which in turn will conform horizontal commercial nets -, and therefore will create businesses that offer competitive goods and services, to reach the goals on the three pillars of innovation, inclusion and diversification directed to empower the nation and detonate its development to a first world country. Up to date, still no instruments for implementing these actions, in order to reach the 4T plan objectives have been designed, and the highest risk is that this 4T new plans and strategies are not applied and remain unfinished. The presidential period is just beginning. The 120-day deadline is close. Time and reality will tell if the 4T plan complied with its established goals. Hopefully the 4T aftermath is positive.

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