South vs North

Luis Rubio

There is no issue more critical for Mexico than the poverty that characterizes the country’s South. It is an issue that impacts Mexico’s entire national life. Southern Mexico is home to vast natural and human resources that cannot display the best of themselves. It is the place from where much of Mexico’s historic migration to the United States originates. The Mexican South is also the origin of a good part of the resentment that dominates national politics. There is not the slightest doubt that creating conditions for the development of the country’s South is a domestic priority. It is not just a matter of basic justice. Accelerated economic growth in the Mexican southern region would result in widespread benefits for the country especially in the context of the current economic recession. The paradox is that a successful strategy for the Mexican South would also be a source of certainty and of development for all Mexicans.

Mexico’s northern half (starting somewhere north of Mexico City) along with the Yucatan Peninsula, have grown at an average annual GDP rate above 5 percent and some cities in the region been growing above 7 percent for decades. In contrast, the states that form the Mexican South (Chiapas, Oaxaca, Guerrero, and some parts of Veracruz, Puebla, Morelos, and State of Mexico) have hardly changed from where they were forty years ago. Not only has the South not made progress: in relative terms, it has fallen behind dramatically. While the economy of  a state like Aguascalientes in the North has more than quadrupled in size during this period, the states in the South have remained nearly unchanged.

The López Obrador administration is not the first to be concerned with how to rescue the Mexican South, nor is it the first to design ambitious government programs to induce higher growth rates in that region. Since at least the 1970s, administration after administration have produced countless government programs aimed at generating higher growth rates. Nonetheless, the region has grown very little. Some of these past programs sought to create infrastructure. Others provided subsidies to the poorest families. Some administrations devised the idea of special development zones with tax incentives while other were just devoted to   strengthening electoral clientelistic networks. Unfortunately, there’s no reason to expect a better outcome with the current administration’s dogmatic line.

The López Obrador administration’s plan includes massive projects such as the Mayan Train and the Dos Bocas oil refinery. The most serious critics of the Mayan Train argue the lack of business rationale from the conception of the project. Specifically, they point that the train does not connect key points to make it not only a viable infrastructure project, but to turn it into a potential detonator of other investments. In addition, the train does communicate with tourist centers, the region’s main source of income. Meanwhile, the Dos Bocas refinery in Tabasco is being built at the worst moment when demand for gasoline is beginning to decline and when the state-owned oil company (PEMEX) is virtually bankrupt. Both the Mayan Train and the Dos Bocas oil refinery exemplify the problem with the López Obrador administration: they not only ignore the economic context but also there is no solid diagnosis behind them. They rather stem from the desire to do good but anchored in an idea of a Mexico that is long gone. But wishes are not realities. The economic recession and PEMEX’s dire situation threaten to further impoverish a region like southern Mexico that with good projects, could easily see much greater economic growth, especially if it industrializes agriculture, for which the area appears uniquely endowed. As the success of people from Oaxaca in Chicago shows, there is plenty creative capacity in that state. However, there is also an abundance of political, bureaucratic and social hindrances to development.

The case of Oaxacans in Chicago is crucial because it confirms that the problem is not one of capabilities or potential, but rather of realities at the local level. Put in simple terms, perhaps the most obvious difference between Aguascalientes and the southern Mexican states lies in the presence of myriad political bosses in the South who thwart development of people and companies. The realities of the Mexican South has also inhibited investment in infrastructure, making it impossible to attract, even under the best of circumstances, productive investment. The vicious circle of insecurity along with the presence of political, union, and teacher chiefdoms have held back not only progress but even actions by the Mexican government to develop adequate infrastructure as in other parts of the country.

People from southern Mexico are not different from the rest of Mexicans. We all need certainty to prosper. For decades, the North has enjoyed both legal and functional schemes, beginning with NAFTA, which generated huge opportunities. The North also could count with the government’s willingness to eliminate political obstacles to development, not only strengthening the but systematically raising average incomes. None of those elements has been present in southern Mexico, not even the most basic transportation infrastructure.

Instead of continuing to erode the sources of success of the northern Mexican states, the López Obrador government should learn from them and create sources of certainty and stability in the South.

* Luis Rubio is chairman of the Mexican Council on Foreign Relations (COMEXI) and of México Evalúa-CIDAC. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition.
 Twitter: @lrubiof