Defining Environmental Goods and Services: A Case Study of Mexico E-mail
Saturday, July 18, 2009

Like other rapidly industrializing countries, Mexico is undergoing a transition driven by demographic, social, economic and political dynamics with direct and indirect effects on the scale and structure of Mexican industries, including the environmental goods and services sector. Over the last 15 years, Mexico has undertaken a series of structural reforms to adapt its economic model to the current world situation. Reforms are based mainly on market mechanisms, including the reduction of government intervention in the goods and services markets, as well as participation in international markets. The impacts of this new economic model vary from sector to sector. Mexico’s integration into the global economy through trade and investment agreements has fostered productivity and competitiveness in certain export industries and generated unprecedented gains in international markets. However, other sectors – mainly small and medium sized enterprises – have not been able to bring their structures, strategies and production processes up-to-date.

 

Defining Environmental Goods and Services: A Case Study of Mexico. By Enrique Lendo, Consultants in Environmental Strategy and Negotiations (COESNA).

The weak domestic market demand limits the stock and distribution of goods and services, as well as the consolidation of production chains to support export industries. This represents one of the major constraints to fostering regional development and alleviating poverty. In general, the economic growth strategy has excluded small entrepreneurs that usually capture these alternative/niche market opportunities, and isolated low-income populations and indigenous people.

According to economic theory, the liberalisation process that Mexico undertook in the second half of the 1980s should have increased the mobility of factors of production, changing income disparity trends between regions, states and income groups. However, this has not taken place at the pace expected due to institutional, economic and capacity constraints, including inequalities in infrastructure, access to public goods and inefficient market development. In addition, the southern states lack sound trade facilitation policies necessary for expanding their export production (including in environmentally preferable products) (Hernandez, et. al., 2003).

Today, Mexico is the 12th largest economy in the world (World Bank, 2005). Nevertheless, social and environmental problems pose major challenges for the full implementation of sustainable development goals. Yet, the United Nations Development Programme (UNDP) ranks the country 55th in the Human Development Index. This is explained by poverty and income inequality factors. Poverty remains widespread. Some indicators show that over half of the population lives in impoverished conditions, with one third in extreme poverty (INEGI, 2002a). Moreover, 28 percent of the population older than 15 years has not completed elementary school. One tenth lacks access to basic water services (Presidencia de la República, 2001). Economic liberalisation has not reduced these inequalities. Between 1992 and 2002, ten percent of the poorest Mexican families captured only 1.6 percent of the national income, while ten percent of the wealthiest families captured 35 percent (Hernandez, et. al., 2003). Indigenous people are among the most vulnerable groups within lowincome populations and deserve special attention.

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