Mexico’s Special Economic Zones: Regional development or more neoliberal reform?

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This graphic, prepared by the Mexican government, shows the first three Special Economic Zones to become reality in the south and southeast of the country.

by Ángel Álvarez Martínez and Marx Aguirre Ochoa
Translated from the original Spanish by Tim Shenk, CUSLAR

What is a Special Economic Zone, or SEZ? It’s considered a geographical area that offers an exceptional climate for business for the companies that invest there. SEZs are highly competitive and are located in strategic spots to take advantage of productive and logistical potential.

SEZs are meant to be an instrument that encourages development in southern and southeastern Mexico. They mean to improve regional competitiveness, attract productive national and international investment, generate direct and indirect employment, facilitate infrastructure development, diversify production, increase exports and contribute to raising regional education levels.

These zones are being planned for 10 Mexican states with high marginality that have potentially competitive productive infrastructure. The Federal government has promised to invest $115 billion pesos, or US$5.3 billion, in these projects.

The first three SEZs already underway are:

  1. Lázaro Cárdenas Port, between the states of Michoacán and Guerrero, on the Pacific coast;
  2. Trans-isthmus Corridor, in the Tehuantepec Isthmus, for improving communication and railroads between the port at Coatzacoalcos, Veracruz in the Gulf of Mexico and the port of Salina Cruz, Oaxaca in the Pacific;
  3. Chiapas Port, in the region of Soconusco, Chiapas, on the Pacific coast.

In 2017, SEZs will begin construction in Campeche and Tabasco, and later in the states of Hidalgo, Yucatán and Puebla. These last three zones have been included because of their potential for oil production and the difficulties that have arisen in recent years because of the oil crisis.

The geographic areas considered for the establishment and operations of a SEZ are favorable for the companies and industries that invest there, not only for its strategic location, but also because of the natural wealth that can be found in the surrounding region: oil, natural gas, minerals, forests and productive potential. In addition, these regions have incipient development in public policies that have generated situations of insecurity, marginalization and exploitation of resources and labor.

Economic doldrums have plagued the south and southeast of Mexico for decades. We see the difference when we compare the region with the north of the country, even as a large part of the country’s wealth is produced through exploitation of the resources of the south.

Today’s context

SEZs were approved by the Mexican Congress in September 2015.

Each state has made progress in implementing the SEZs at different rates, according to internal situations. Will the agreements be possible to carry out, accounting for the interests of unions, social and political organizations, the teachers’ union, local power groups, agricultural producers, ejidos and community groups?

It’s important to learn from past experiences. At first, the economic and social development poles now considered as part of the SEZs were created to encourage the regional economy the south-southeast. Objectives weren’t met, and they provoked increased inequality.

Let’s consider the case of the port at Madero, in Chiapas, whose objective was to generate conditions to export agricultural products such as coffee, cacao, beef and honey. However, this only benefited a tiny percentage of local producers. Something similar happened at the Lázaro Cárdenas Port in Michoacán, in which its prosperity was not shared. The port area became an “enclave” separate from the state’s other 112 municipalities.

In the new round of investment, Lázaro Cárdenas will see investments of approximately $38 billion pesos, or US$1.7 billion, in infrastructure and the urbanization of at least 1200 acres. They are estimating the creation of 50,000 new jobs. In addition, $11 billion pesos are earmarked for building new port terminals as part of the SEZ.

In the Tehuantepec Isthmus in Oaxaca, only colonial-era industry exists. The challenge is, through the SEZ, for high value-added industrial development to be achieved. It will be necessary to holistically analyze the aspects that directly affect the local population and their resources.

Our questions are:

  • How will the workers required by the companies be trained?
  • How will community organization be strengthened?
  • How will the environmental impacts of industry be managed?
  • Will there be encouragement of concurrent economic activity, such as services?
  • Who will benefit?
  • Will the new jobs pay better?

 

The Lázaro Cárdenas Port is an example of a cosmopolitan experience derived from accelerated economic and demographic growth spurred by a project of great magnitude.

We must look ahead and attend to phenomena such as population growth, migration toward work areas, cultural synergies and other social factors. If these things are not taken into account, projects like these will provoke insufficient social integration and a propensity to increase conflict and violence.

Ángel Álvarez Martínez is an agricultural engineer and a local development leader in Oaxaca y Chiapas.

Marx Aguirre Ochoa is a doctoral student in public policy at the Consejo Nacional de Ciencia y Tecnología, México.

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