Mr. Carlos Slim Helú’s speech.
Forum: Mexico Business Summit, Monterrey, Mexico, November 8-10, 2009.
November 8th, 2009, Monterrey, Nuevo Leon, Mexico.
 back |
Page 2/ 2 |
As I have already said, this is not entirely new for Mexico. What is to be done? Besides what I will say further, we have to get fully incorporated to this new order, the knowledge-based, digital, tertiary, service-based, information, you-name-it civilization. And we should do it in the most intelligent way, that is, by knowing and adapting its paradigms. One thing is clear: this new civilization rests upon our own well-being by incorporating the poor into the market. There is no other way to get sustainable economic growth.
Social assistance and charity are valuable activities in alleviating poverty, yet also to preserve it. So, what is to be done is getting people out of poverty and incorporating it into modernity in order to create a growing middle class being able to improving itself by means of its own efforts. I would like to repeat that Mexico has successfully moved on this way by offering higher education to many people. Of course, a safety net for both the destitute and those who lose their jobs is indispensable. But the important thing is getting them employed. There is no advanced society without an educated middle class, human capital and serviceable infrastructure. Human capital gets accrued through nutrition, health and education. Although this is part of a long-run process, the crucial point is getting the poor incorporated into modernity as soon as possible, so generating the dynamics for unstoppable social change.
As Governor Medina has stated, Mexico’s per-capita growth has been almost null since the external debt crisis in 1982. Instead of implementing development strategies, we have supported burdensome financial adjustment plans. I say this with due respect to the honorable representative of the World Bank here present. The long-established adjustment plans in order to maintain macroeconomic equilibrium have led us to confound instruments with goals. Adjustment instruments like balanced public finance and low-inflation targets have been converted into national objectives, so fiscal and monetary policies overrule growth and employment. We have lived this process for many years.
As I have said, the only useful instrument to overcome poverty is employment, and jobs are created by employers, especially medium-size and small businessmen, who contribute to create job posts the most. In getting people out of poverty, micro-firm jobs are more effective than the most sophisticated social aid schema. Investment and economic activity are required to create them.
Aside my above description and the effects of the world economic crisis, let me go back to the theme of this summit: what is the long-run vision we need in this bountiful era to swiftly and irreversibly become a developed country with a strong, extended and growing middle class, whose increasing well-being works as the support for our own development?
I am aware that the answers partially lie on my own question. I would like to stress that we need a full, bold and strong vision, and a definite long-run course translating itself into a government policy supporting investment, execution and action plans to be fulfilled in successive three-year periods. In proposing three-year periods, I am trying to transmit the sense of urgency we are called for. The Chinese long-run vision is 50 years, but its goals are subjected to five-year terms, an inheritance of the socialist quinquennial plans pace, I guess.
Three-year periods seem suitable for Mexico. Clean-cut policies are needed to transmit and install a sense of urgency. Individual goals and postures unavoidable will diverge in a free society like ours, but they should not cloud the big picture, and that is to become a developed country in a definite time-period.
Three basic goals are education, health and nutrition. We normally talk about these issues and have specific policies for them. They count for our thriving. What we need is to articulate them from prenatal and early care, early nutrition and education up to higher education, all of them being guided by high-quality standards.
Infrastructure development, housing, investment, public and private financing, and adequate fiscal and monetary policies for economic growth, all of them count for our second set of goals. Like Governor Medina, I would like to have a 7-8 percent annual growth rate, like China’s. Yet, a 5 percent rate would beat the right pace, as long as it is sustainable in the long run. This means growth with employment and income distribution. The most effective income distribution is that that is achieved through employment, but this should be reinforced with social expenditure and public investment.
The domestic economy should be efficaciously furnished by all the financial institutions and instruments, including development banks, commercial credit, national savings, public procurement and steady private investment, all of them under the permanent rule of government.
Let me to open a parenthesis. During the last 30 years, Mexico has had four opportunities to quickly get out of underdevelopment. The first of them occurred during the second half of the 1970’s due to very high prices for our then abundant oil resources and easily accessible foreign credit. This was a big opportunity for Mexico’s growth and development.
The second one came in 1989 and the first years of the 1990’s, when foreign credit for the country amply reopened and huge direct foreign investment saw Mexico as a promissory place to reside in. This opportunity was misused.
The third one came during the last years of the 1990’s, after the financial crisis of 1995-1996, because of a vibrant global growth and oil prices as high as 150 dollars a barrel at a moment. This opportunity was lost.
The fourth opportunity is the current one because of long-term low interest rate for abundant financial resources which make profitable almost every economic project. Rewarding projects depend upon financial choices. With four-percent long-term interest rate in the United States, and even ten-percent interest rate (ten years) in Mexico for the government, many projects can be funded. We should not miss this fourth opportunity.
In traveling from earth to moon a threshold speed-pace is needed (about 40,000 km per hour). So there is an income threshold to break through the underdevelopment barrier, about 10,000-12,000 dollars per capita. Such a percentage heavily depends upon income distribution. A very unequal income distribution will need a biggest per capita income to take off to developed levels. A more evenly income distribution will need a lesser per capita income (about 10,000 dollars). It seems that this is Chile’s case. As a matter of fact, such was the per capita income level of Korea and other Asian and European countries (Spain, by instance) when they began to take off. Nowadays they have about 30,000 dollars per capita income.
We are very near to such a level, hence our sense of urgency. We need to take action and advantage of the opportunity for unraveling development. We don’t need more generational sacrifice. On the contrary, development can come relatively fast, about 20 years. Sacrifice is needless because improvement could starts from the very beginning and from the bottom. With right policies, well-being turns to be a daily experience, as many countries attest for.
Finally, I would to emphasize that fiscal and monetary policies should cease to be considered as objectives to become useful instruments for long-run, swift, sustained, above five-percent-rate economic growth. These instruments should efficaciously serve the domestic economy.
I would also like to underline that a powerful economic dynamics needs to be unraveled. As Mr. Alemán has said, we should overcome fear of ourselves and work hard, as most of the Mexicans do. As it can be seen, hard work stands for Mexican’s daily life both within and outside our country.
There is a big potential energy to be actualized by inspiring hope and pride on the basis of a long-run vision and short-term implementation plans all across the country, without confounding instruments and objectives.
We Mexicans are very proud of our past and culture, and we will remain so for the future by working hard day by day.
Thanks.
| back |
Page 2/ 2 |