Shannon K. O'Neil

Latin America's Moment

O'Neil analyzes developments in Latin America and U.S. relations in the region.

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Mexico’s Road to Economic Sanity

by Shannon K. O'Neil
March 15, 2013

View of the headquarters of Mexican telephone company Telmex in Mexico City January 7, 2010. View of the headquarters of Mexican telephone company Telmex in Mexico City January 7, 2010.

President Enrique Peña Nieto and his administration presented a telecommunications bill earlier this week that would, if fully implemented, make sweeping changes throughout the sector. In this op-ed that I published for Fortune, I look at what the bill may mean for Carlos Slim and Mexico’s other moguls, as well as for the country’s overall development.

With a bill introduced by the president and backed by all three political parties, Mexico is poised to take on a few of the country’s biggest monopolies and moguls. But for Mexico to truly engage in economic competition, it needs to do much more.

A lack of competition pervades the Mexican economy, as one or a few companies dominate sectors as diverse as glass, cement, flour, soft drinks, sugar, and tortilla flour, not to mention the state’s control of energy and electricity. This hits consumers’ bottom lines—an OECD study estimates that it increases the costs of basic goods for households by some 40 percent. It hurts Mexico’s working and middle classes the most, as they must spend a larger proportion of what they earn on these goods and services. It also hits the burgeoning manufacturing sector, which has to pay more for raw materials and basic inputs.

To read the entire article, click here.

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