Unlocking Mexico's Economic Potential through Innovation and Entrepreneurship : Transition Policy Note (English)

This policy note posits that Mexico's economic growth can be driven by private sector productivity and leveraging of impactful entrepreneurship and innovation. Mexico's economic growth has been stagnant in recent years, with GDP per capita increasing at an average annual rate of only 2.2 percent between 1991 and 2021. Sluggish productivity growth is the main culprit, as total factor productivity declined by an average of 0.45 percent per year over the same period. The COVID-19 pandemic has exacerbated these challenges, with firms facing lower revenues, employment, and wages. However, the pandemic has also opened up new opportunities for Mexico to attract investment and boost exports, as global companies seek to diversify their supply chains and nearshore production to reduce risks and improve resilience.