Competition and GDP Growth: The Mexican Solution

摘要

The relationship between competition and Gross Domestic Product (GDP) influences the health of an economy. Understanding how GDP growth can be utilized to determine a country's economic health is important because it allows a government to make fiscal adjustments when necessary. When those adjustments are made, sufficient regulation must follow to ensure a competitive environment is maintained in the respective market sector. This paper argues that Mexico is not reaching its GDP growth potential because of noncompetitive practices in private industry due to ineffective policies and regulations. Examples are given to illustrate Mexico's loss of private sector GDP growth potential. To reach its GDP growth potential, Mexico must introduce greater competition into its state-owned industry by privatizing the energy sector. Examples of Latin American countries that have successfully accomplished the transition to privatization provide a basis for this conclusion.