Competitiveness in Queretaro

Published in Plaza de Armas (www.plazadearmas.com.mx), March 14^th 2011.

During CANACINTRA’s National Convention, developed in Querétaro last week, there were different references about the competitiveness of the State, including a statement of the  organization’s national president during the closing ceremony.

What does being competitive mean? World Economic Forum defines it as the set of institutions, policies and factors that define a country’s productivity level. The Mexican Institute of Competitiveness (IMCO) defines it as the ability to attract and retain investments and talent. These elements create conditions to have a faster growth in a region in the long term, and therefore, it improves income levels and the well-being of a society.

According to World Economic Forum’s Report, that evaluates more than 130 countries, Mexico has kept the same grade since 2006. This stagnation in the grade has caused the loss of 14 places in the ranking, since Mexico has gone from place 52 to 66. It is true that each year, the Report considers more countries, but the reason of the fall is that other countries are having important improvements and increases on their grades, leaving Mexico behind.

The area where Mexico has had its main improvement is in macroeconomic stability (due mainly to a healthy government budget balance, problem that has affected recently different economies), and the area where the country has lost more places is in the financial market development (since it is not easy to raise money by issuing shares on the national stock market and we have a rather ineffective regulation and supervision of securities exchanges).

Now, within the country, two studies were published the last year: one from IMCO and the other from Instituto Tecnológico de Monterrey (ITESM), one of the most important private education systems in Mexico. Both evaluate over 100 variables in different areas: economic, legal, political, infrastructure, environment, education, health, international relations, labor market, etc. In both studies, Querétaro ranks on 3^rd place, behind Distrito Federal and Nuevo León. These are the strengths and weaknesses of this state according to both studies (there are other identified features, but I will only list those that appear on both evaluations):

Strengths	Weaknesses
·         GDP growth, particularly in services ·         Reliability and citizen’s participation in public elections ·         Good debt grade ·         Safety ·         Increase in fixed and mobile telephone lines	·         Unemployment ·         Income inequality ·         Roads ·         Bad use of water ·         Foreign direct investment

The studies were made mainly with information from 2008, but we see that some of the weaknesses persist, like unemployment, since the State is above the national average. The challenge is important, since 2010 Population Census showed that Querétaro is the sixth State with the biggest immigration in the country. Although it may have a positive effect in the potential of economic growth, it also implies the development of infrastructure and the creation of jobs. We will see how this balance is developed in the future, but so far, the State’s good competitiveness condition allows us to foresee positive perspectives.

Evolution of competitiveness for Queretaro:

	2001	2002	2003	2004	2005	2006	2007	2008
IMCO	5	4	4	6	4	3	3	3

Source: 2010 Competitiveness Index, IMCO

	1995	1997	1999	2001	2003	2007	2010
ITESM	8	4	8	8	10	12	3

Source: 2010 Mexican States competitiveness, EGAP, ITESM