Productivity Growth and Infrastructure-Related Sectors: The Case of Mexico

Abstract

This technical note examines the interactions between infrastructure and productivity growth in Mexico. To address this relation, we follow an approach that seek to tie down infrastructure productivity improvements in terms of the impact of particular types of infrastructure on particular sectors, thus providing the basis for informed decisions on investment priorities for economic growth. We have been able to identify significant relations between labor and capital productivity improvements, or capital deepening (i.e., investment) in infrastructure-related sectors and labor productivity improvements in other sectors. Sectoral infrastructure priorities can be found in the transport and energy sectors, broadly defined, with effects that have regional differences. The nature of our results points to complementary policies and the need to improve the regulatory compact for infrastructure in Mexico. Our results recommend special attention to the regulatory/competition policy approach in transport, and the electricity wholesale market.

2024 Latin American and Caribbean Macroeconomic Report: Ready for Take-Off? Building on Macroeconomic Stability for Growth

“…16 Such effects also play a role in the region. Ahumada et al (2021) argue that infrastructure policy must be supported by regulatory and competition policies to promote productivity improvements in the sector. Moreover, when Benavente and Zuñiga (2022) study the impact of market competition on firm innovation in Chile and Colombia, they stress the importance of competition regulations and policy to support firm innovation.…”