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surplus cash flow in European and North American
banks in the sixties and seventies of the twentieth
century. But that change in monetary standard
and flows, allowed developing countries to receive
financial support to expand their infrastructure and
continue institutionalizing their countries in those
years.
Related to these changing times, we find the first
phase within The Competitiveness Index called
Basic requirements subindex (71) that shows four
pillars such as: Pillar 1. Institutions (116); Pillar
2. Infrastructure (57); Pillar 3. Macroeconomic
environment (51); Pillar 4. Health and primary
education (74). Inside parentheses appears México´s
place among 138 countries rated in the 2016-2017
WEF Global Competitiveness Index.
In the seventies, while oil prices rose, the surge of
inflation was not quite understood because as the
fixed currency standard was overturned, developed
countries knew that monetary growth could be
issued at a similar rate as the economy grew without
causing inflation. Meanwhile, developing countries
felt the need to grow at a higher pace in order
to overcome poverty, so they urged their state
controlled Central Banks to issue money at a higher
pace and income served as source of credit, to
finance not only national infrastructure but current
expenditure. Not science, not machine building, but
construction, which indeed was widely needed.
Government Institutions until now still indulge in
reminiscence from those times gone. Excessive
spending and indebtedness sent inflation up to an
annual 157% in 1985, thus government was unable
to maintain that level of spending when oil prices
fell, a situation that led to the nationalization of
the banking system. That in turn, worsened growth
and exacerbated the poverty problem. Nevertheless
Mexican society found a way out of that crisis.
That decade missed an opportunity to raise
educational levels and business entrepreneurship.
Maintaining a huge bureaucratic apparatus with
exceptional retirement benefits for their own.
That might explain that our institutions as a whole
still qualify as 116 among 138. Taking this gap into
account, IMEF´s interest in accelerating progress is
reflected in its 18 National Technical Committees
being the Anticorruption committee a specific
effort to contribute to this task. That takes us
into Competitiveness second phase called Efficiency
enhancers subindex (45) composed by another four
pillars: Pillar 5. Higher education and training (80); Pillar
6. Goods market efficiency (70); Pillar 7. Labor market
efficiency (105); Pillar 8. Financial market development
(35); Pillar 9. Technological readiness and Pillar 10.
Market size (11).
WEF states that countries convey from factor driven
stages in which economic development depends on
selling raw materials, towards a second stage which
is efficiency driven and then a third stage. In this
sense, Mexico is ranked in 35th place in Financial
market development and 51 in Macroeconomic
environment, while Market Size is in 11 and Labor
market efficiency in 105.
After a massive downsizing of government
investments in business enterprises that turned
inefficient due to economic instability and lack
of management capabilities, its participation in
national gross domestic product returned to 20%-
22% rather than its top share which surpassed
50%. It certainly involved risks, it required a heavy
investment in banks, in order to capitalize the
financial system, but in turn government opted out
from being entrepreneur. That was a first decade of
success, the nineties.
Now at different scenarios, IMEF members as well
as the institution have contributed with government
authorities to understand the importance of
advancing in such matters as Investing, Labor
Productivity and Innovation.
Our market by size could be classified in stage three
where 34 Innovation Driven economies compete,
but market size like other global variables need
closer analysis with specific countries appraisals.
The Organization for Economic Cooperation and
Development (OECD) had an initiative to compare
country productivity evolution. Dale Jorgensen
contributed by restating Productivity formula, as
KLEMS, which compares real output growth with
increases in real cost growth in capital cost (K), labor
(L), energy (E) and materials consumption (M) and
services cost growth (S), if the difference between
Output growth minus KLEMS factors consumption
increase is positive, it means that productivity grew.
Numeric results explain several evolutions during a
period of 25 years, which involve the second and third
success decades. First of all, our statistical institute
INEGI, was congratulated for its management of
the project, that is, because the results exposed
evolution of productivity in 67 different economic
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