The Mexico Southern States Deep Dives on agroindustry, forestry, automotive and information and communications technology (ICT) sectors aim to identify opportunities for private sector development and well-paid job creation in selected states of the less developed region of Mexico.
As of 2022, the South-Southeast region concentrates 41.4% of poverty and 62.5% of extreme poverty in the country. Non-oil GDP per capita of the northern border states represents more than three times that of the less developed southern states. This lagged region has barely grown since the ascension to the North American Free Trade Agreement (NAFTA) in 1994, succeeded by the United States-Mexico-Canada Agreement (USMCA) in 2020. NAFTA/USMCA accelerated Mexico’s integration into global value chains of sectors such as automotive, machinery and equipment, electronics, and export-oriented agriculture, but only northern and central states were able to leverage these opportunities while most southern states continue to have a high prevalence of low-productivity activities.
The ongoing reconfiguration of global value chains (GVCs) could further widen the regional gaps if productive development policies are not designed and implemented to integrate southern states into global and regional supply chains of high-productivity sectors.
This study analyzes states in different stages of development within the South-Southeast region: the three poorest in the south — Chiapas, Guerrero, and Oaxaca — and one relatively more developed southeastern state, Yucatán. The analysis concludes that enhancing value addition in the large, yet low-productivity agricultural sector could play a pivotal role for structural transformation and prosperity of these states. Similarly, developing a sustainable forestry industry is another avenue for economic diversification and uplifting local communities. On the other hand, the emerging auto-parts industry in southern states such as Chiapas represents an opportunity for a deeper integration with regional value chains in northern and central Mexico. Finally, consolidating Yucatán as a regional ICT hub stands as a promising strategy to develop a modern and globally integrated sector in this lagged region. Moreover, the relevance of the auto-parts and ICT sectors is expected to grow even further as the former is among the most benefitted sectors from the reconfiguration of GVCs and the latter serves as the foundation of the so-called “Fourth Industrial Revolution”.
The report describes main opportunities for private sector development, constraints and policy recommendations for each sector. This study represents a preparatory work of a forthcoming Country Private Sector Diagnostic (CPSD) that will be elaborated by the International Finance Corporation (IFC) and the International Bank for Reconstruction and Development (IBRD).
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Executive Summary
Full Report (available in English only)
- Part 1: Economic Structure and Sectors Selected for Deep Dives
- Sector Assessment: Agro Industry
- Sector Assessment: Automotive Industry in Chiapas
- Sector Assessment: Forestry
- Sector Assessment: Information and Communication Technology (ICT) in Yucatan
Two pagers
