Breathe
By Rosanety Barrios
Last November 16, the collective Mexico, How are we doing? (MCV) published the update of its Social Progress Index, at the end of 2022. This index is a very valuable contribution as a multidimensional unit of measurement, different from the traditional economic growth indicator, the variation of the Gross Domestic Product.
MCV constructed an index showing the evolution of social progress since 2015 by state and national average. Its findings are deeply revealing, the states with the greatest lag are Guerrero, Oaxaca and Chiapas, those with a historical lag also in terms of economic growth.
What MCV tells us is that the states in which there has been a greater advance in GDP, there are conditions that facilitate social development. In other words, while it is confirmed that economic growth does not in itself create well-being, it is a reality that, without such growth, achieving social development is a monumental challenge.
This leads us to conclude that it is neither possible nor desirable to leave economic growth aside. It is essential that public policy provide minimum conditions for large capital to come to our country to invest, create well-paying jobs and, of course, comply with their tax obligations in order to support a social policy based on the rule of law.
In other words, a government that effectively seeks to leave no one behind, end poverty and bring about inclusive development must address macroeconomic indicators and have mechanisms in place to ensure the desired microeconomic benefits.
A particularly relevant aspect addressed by MCV is the expected effect of relocation or "nearshoring": investments go to those localities where there is the greatest social progress, that is, the effect of growth underpinning development continues to call for investments, so that the most backward states require some substantial change in public investment, in order to trigger progress and thus build conditions to attract new investments.
The clearest example is the construction of infrastructure that private investment will not carry out: roads, ports, hospitals, schools and fundamental services such as water and energy are preconditions for the arrival of large investments from relocation.
If energy is a fundamental input, required for any basic service such as education and health, then we can conclude that the development of energy infrastructure is indispensable not only in those regions where nearshoring is seeking the service, but especially in the states with the greatest lag in social progress.
The only way for the south of the country not to continue to lag behind the north is for the State to decide to concentrate its investments in these regions, which are not attractive for private investment. And if money is scarce, there is nothing to doubt, the Constitution and the laws on the matter establish various mechanisms through which it is possible for private capital to develop energy infrastructure where it is attractive and provide resources for specific social programs.
An example of this is the Universal Electricity Service Fund. This fund was created to bring electricity to those who have less and is fed by the imbalances of the Wholesale Electricity Market (MEM). But the MEM has seen its growth halted, with the result that the main agent is the CFE itself, so that the state-owned company is the one that bears most of the contributions. In other words, it is not possible to expect the private sector to participate more in this fund if competition is inhibited.
This vicious circle has limited the State's capacity to strengthen the social policy required to accelerate social progress in the most backward states. There is nothing to think about, Mexico urgently needs to bring energy of the best quality, clean and at the lowest possible cost to all corners of the country. If energy is not an objective but a fundamental input, if the objective is for those who have the least to have more and better jobs, a first class universal health service, quality education and to move around with peace of mind and security, then we must consider that the Mexican energy sector can be a lever for this inclusive development.
Not taking advantage of all the mechanisms provided for in the Constitution is an unacceptable waste. Everyone talks about the opportunity of nearshoring, but so far nothing has been done to take advantage of it. In energy matters, it is possible to correct the backwardness that is hurting us as a society by opening the door to joint investment by the State and private initiative, attending to nearshoring and conducting the social policy required to achieve social progress. So, first the poor, but seriously.
The opinions expressed are the responsibility of the authors and are absolutely independent of the position and editorial line of the company. Opinion 51.
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