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On January 5th the Mexican Minister of Communications and Transport, Dionisio Perez-Jacome, accompanied President Felipe Calderon in inaugurating the latest in a series of spectacular infrastructure projects being unveiled across the nation. Soaring 403 metres above a gorge in the north western Sierra Madre Occidental mountain range, the Baluarte Bridge stands as a gleaming, superlative icon of optimism for the future of Mexico’s economic development.
It is the second highest bridge in the world – after China’s Si Du River Bridge – and the world’s highest cable-stayed bridge. London’s new ‘Shard of Glass’ skyscraper, which will be the tallest in Western Europe, would fit comfortably underneath it. However more importantly to Mexicans living in the states of Sinaloa and Durango which the bridge connects, the new highway will shave an estimated three hours off the journey time between the state capitals of Mazatlan and Durango.
“The Durango-Mazatlan highway project encapsulates this government’s vision for the future of Mexico,” said Perez-Jacome in a recent interview with The Report Company. “It will boost commercial activity in the region by saving both time and distance, while boosting productivity.”
The bridge has become one of the flagship projects of President Calderon’s ‘National Infrastructure Programme 2007-2012’ (NIP) which has earmarked some US$226 billion dollars of investments to increase the coverage, quality and competitiveness of Mexico’s infrastructure.
Indeed Calderon has staked much of the legacy of his presidency on achieving this goal through an unprecedented development programme. The plan has seen the inauguration or modernisation of more than 19,000 kilometres of highway, and the construction or expansion of over 3,200 hospitals and clinics – the equivalent of two projects finished each day. Public sector investment in the state-run hydrocarbons giant Pemex has quadrupled, while the NIP will add five new ports and three commercial airports.
On launching the programme in 2007, President Calderon recognised that “nowadays, competitiveness, economic growth, and countries’ opportunities for well-being depend largely on the solidity and modernity of their infrastructure.” However this wasn’t always the case.
Decades of under-investment in the sector have held back Mexico’s competitiveness and productivity. Just ten years ago, Mexico figured lowest amongst all Latin American nations in terms of the portion of GDP allocated to investment in infrastructure. However, during the current administration spending has risen to 4.8% of GDP, well above the 3.3% average of OECD member countries.
“The scale of investment in infrastructure and the results over the course of this administration’s six-year tenure are plain to see,” continued Perez-Jacome. “This is allowing us to increase our competitiveness as a nation while converting Mexico into an international logistics platform.”
In 2008 President Calderon set up the National Infrastructure Fund under the auspices of BANOBRAS, the Mexican National Investment Bank, to drive and direct investment, and to coordinate with commercial banks, private investment funds and the construction sector.
As liquidity began returning to global financial markets in November 2009, the government delivered a masterstroke by holding the Mexico Infrastructure Conference in New York, as US investments were increasingly being directed at emerging markets. Along with President Calderon’s faith in enormous public spending to drive Mexico’s economy through turbulent times, the initiative paid dividends with Mexico’s economy rebounding from a 6.1% contraction of GDP in 2009, to 5.5% growth in 2010, partly thanks to huge job creation. The government’s package of infrastructure investments for 2011 alone created an estimated 156,529 new sources of employment in the sector, according to the Mexican Chamber of Construction Industry (CIMC).
This industry, brought to its knees during the country’s 1995 financial crisis, has been riding high on the back of the sheer volume of projects overseen by the Ministry of Communications and Transport. The creation of the National Infrastructure Fund, as well as the long-awaited signing of 2009’s Public-Private Partnership Law on January 15th this year, has facilitated private participation in the sector. As a result, hundreds of billions of dollars have been pledged in financing over the past few years by the private sector.
“We lived through the 1995 financial crisis in which many construction companies disappeared due to the lack of public funding,” said Alonso Quintana, General Director of ICA, Mexico’s largest construction company. “However the strategy that the government has pursued since then means we now have the tools to defend ourselves.”
With presidential elections to take place in July and President Calderon constitutionally limited to one six-year term, the government is looking to highlight its achievements, and how they will affect Mexico’s future. “Of course I am optimistic; there have been great changes in the sector,” concluded Perez-Jacome, “and I see Mexico playing a much greater role on the world stage in 2030 thanks to what we are achieving now.” |
