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

Education as a competitiveness factor for Mexico

Education is definitely a strategic matter for every nation. One of its multiple impacts is on labor competitiveness, since a good educational system gives the skills, flexibility and adaptation capabilities to the working force for more complex or sophisticated processes. This analysis will be about 3 relevant aspects of education in Mexico:

Aspect 1: There are progresses, but slower than other countries

According to the Global Competitiveness Report 2010-2011, World Economic Forum, Mexico kept or improved its grade on all the education related elements, but lost positions on the ranking.

On primary education, the Report evaluates quality and enrollment rate. Mexico kept its score on the first one, and improved it on the second one; however lost 5 and 2 places respectively.

	2009-2010		2010-2011
	Score	Place	Score	Place
Quality of primary education (1=poor, 7=excellent)	2.6	115	2.6	120
Primary education enrollment rate	97.6%	27	98.1%	29

Referring to higher education, the Report evaluates enrollment rate, quality, access to internet and staff training infrastructure. Mexico again improved its grade, but lost 5 places, moving from 74 to 79.

	2009-2010		2010-2011
	Score	Place	Score	Place
Higher education and training	3.86	74	3.94	79

The detail of this category is the following:

	2009-2010		2010-2011
	Score	Place	Score	Place
Secondary education enrollment rate	88.7%	64	89.9%	61
Tertiary education enrollment rate	26.9%	75	27.2%	80
Quality of the educational system (score from 1=poor to 7=excellent)	2.8	115	2.9	120
Quality of math and science education (score from 1=poor to 7=excellent)	2.6	127	2.6	128
Quality of management schools (score from 1=poor to 7=excellent)	4.4	49	4.5	52
Internet access in schools (score from 1=poor to 7=excellent)	3.4	77	3.5	89
Local availability of specialized research and training services (score from 1=poor to 7=excellent)	4.2	53	4.3	55
Extent of staff training (score from 1=poor to 7=excellent)	3.8	78	3.8	84

As another reference, OECD applies every 3 years an evaluation to 15 year-old students on OECD’s 34 countries and 31 partner countries, called the PISA Program, to evaluate skills on reading, math and science, as elements that help to understand the performance skills required for the working life. Although Mexico has had improvements in the last 6 years, it is still the last place between OECD countries and ranks between places 48 to 51 on the total ranking.

Scores	Reading	Math	Science
2003	400	386	405
2006	410	406	410
2009	425	419	416

Aspect 2: there are mix results within Latinamerica

The World Economic Forum Report includes 23 Latinamerican countries. Among them, Mexico is on the half of the ranking.

	Place
Quality of primary education	14
Primary education enrollment rate	5
Higher education and training	12

However, according to PISA, out of 9 Latinamerican countries Mexico is on 3^rd place (behind Chile and Uruguay).

Aspect 3: there are important polarizations in the country.

There is in Mexico a national evaluation made by the Ministry of Education, applied to almost 85,000 elementary schools, about 30,000 junior high-schools, and a little more than 10,000 high-schools. On its most recent evaluation, there are big differences under 2 variables:

1.       Marginalization level of the community where the school is. The evaluation distinguishes between low or extremely low marginalization, and high or extremely high. The results are better for schools located on low or extremely low marginalization. About 74% of the enrollment lives on this kind of communities.

2.       Type of school: the difference between private and public schools is a lot more important than the influence of marginalization level. Certainly there is a correlation between these two variables (there are no private schools in high or extremely high marginalization areas); however, there are important differences between private and public schools in the same kind of area. Approximately the 8% of the total enrollment goes to private schools.

	Percentage of students with “Excellent” level, last year of elementary school.
	Spanish	Math	History
Total	2.4%	3.8%	1.8%
Low/Extremely low marginality	4.4%	5.9%	2.8%
High/Extremely high marginality	0.6%	1.8%	0.8%
Private schools	12.2%	10.5%	6.1%
Public schools	1.5%	3.2%	1.4%

	Percentage of students with “Excellent” level, last year of junio high-school.
	Spanish	Math	History
Total	0.5%	2.3%	5.5%
Low/Extremely low marginality	0.9%	2.4%	6.5%
High/Extremely high marginality	0.1%	2.1%	4.4%
Private schools	2.8%	5.1%	14.3%
Public schools	0.2%	1.9%	4.3%

It is important to have national and international evaluations that allow the identification of improvements and opportunities. Undoubtedly, Mexico requires of bigger and faster improvements to be more competitive in the world scenario.