Summary
What this article painfully -- but unsurprisingly -- shows is that the wrong domestic policies, regulations and a deficit in telecommunications infrastructure, and the efficient use of information technologies among others, have prevented Mexico from benefiting from its twelve binding Free Trade Agreements.
Analysis
Twelve years after NAFTA first came into effect, experts agree that issues like telecom infrastructure, smart policies and regulation, cheaper capital costs, and focusing on productivity were a must to succeed in the global economy. However, Mexico decided to go for the cherry before baking the cake. Now we face the consequences.
Let's just focus on the telecom industry. Although liberalization started in the 90's, poor antitrust legislation, a powerful private monopoly and a toothless regulator not duly empowered to enforce the law and successfully regulate the incumbents have now resulted in very low penetration of broadband services, which are essential for a competitive economy.
Today, new regulations governing the Federal Telecommunications Commission have been approved by several federal ministries to enable it regulate radio and television industry. In essence, they replicate same inefficient structure of an ill conceived regulatory agency which at the very least should be protecting consumers through strong supervision of quality and pricing, leveling playing field for all players and fostering deployment of broadband infrasturcture by smaller entrepreneurs in niches where telephone companies have no interest to invest.
This is an example together with the Convergence rules (triple play) of how a wrong regulatory move can discourage investment, economic growth and a more productive economy only benefiting incumbent and its its every day growing horizontal and vertical integration. The new federal administration has this immense challenge of focusing more on the cake, its ingredients the recipe and the bakers.
