away from value building

The Federation Expenditure Budget Project (PPEF2023), stands out for its 10% increase in real terms, compared to that exercised in 2022, estimating a net expenditure of 8.3 billion pesos whose assumptions are so optimistic that, facing the In reality, they will force budget cuts next year that will have a negative impact on the economy. Despite its magnitude, it seems that the proposed resources will do little to generate multiplier effects that boost our competitiveness. Mariana Mazzucato, founder of the Institute for Innovation and Public Purpose in the United Kingdom, has pointed to the need to rethink the value and purpose of bureaucracies so that they are creative instruments to incentivize the transformation of systems in favor of long-term economic development.

The foregoing comes to mind after the disastrous places that Mexico has occupied in the World Competitiveness Index of the Institute for Management Development in Lausanne, Switzerland. Currently, our country occupies the disgraceful 55th place out of 63 analyzed, only above countries like Jordan or Mongolia. The subcomponents of the index account for the state of the engines that drive Mexico’s conditions to attract and retain investment and talent. For example: in the subcomponent of economic performance we are in 27th place –perhaps not so embarrassing–, but in terms of government performance our country is in 60th place, while in infrastructure we are in 59th place, only above Botswana or Venezuela. In business efficiency, it must be said that we are in 47th place, perhaps the engine that works best. Of these four components, in at least three the exercise of government has a primary function. For this reason, it is pertinent to evaluate whether the PPEF2023 items will support the country to correct its course, because as the saying goes: a budget is a numerical sample of the priorities of a government and its ideology.

In 2021, the National Council for the Evaluation of Social Policy estimated that between 2018 and 2020, the percentage of the population living in poverty increased from 41.9% to 43.9%, and the number of people in this situation increased from 51.9 to 55.7 million . In terms of social deprivation, it found that the greatest increases were in access to health services and educational gaps. From the foregoing, it is understood, then, that the PPEF2023 wisely proposes increases in relation to 2022 of 14.4% and 6.5% in said items, respectively and in real terms. However, although it seems positive, this is insufficient because it does not compensate for the lag that has occurred in this six-year term. Only in educational infrastructure between 2018 and 2022 the assigned budget decreased 14.6% in real terms, while Insabi spending has not recovered its levels prior to 2018, when it was Seguro Popular. In addition, the efforts to supply the Insabi with IMSS-Well-being are not enough to recover the cost of care for people without social security, as the think tank, México Evalúa points out.

On the other hand, the budget for the Ministry of Economy proposes to leave the budget equal in real terms to 2022, which pales in comparison to the resource that is proposed to be allocated to the emblematic works of this six-year term that do not predict future profitability, such as the Mayan Train, to which it is planned to provide 143 million pesos, a growth of 126% compared to 2022. It is clear that the Federal Executive urgently needs to inaugurate its project, whatever it takes. On the other hand, in science and technology, it is proposed to allocate 31.6 billion pesos, which although it implies a real increase of 13.6% compared to 2022, these resources are far from having a positive impact on innovation and productivity in the country. According to the Organization for Economic Cooperation and Development, in 2019 the budget executed in research and development by the three levels of government in Mexico amounted to 0.22% of the Gross Domestic Product, which places us very far from leaders, such as South Korea. whose government spends approximately 1% of GDP. Even Argentina invests twice as much as Mexico in this area. Mexico has approximately 4.7 researchers for every 100,000 inhabitants, a very small proportion; Chile, for example, registers 8.6 per 100 thousand inhabitants. Even more serious, during this administration, and as at no other moment in history, the political and economic incentives to invest in this area are seriously diminished, which will have a negative impact in the long term; Mexico appears stagnant in the development of its innovation systems for more than ten years, as indicated by the Global Innovation Index 2021.

And, as if the above were not enough, the priority that the federal government has given to fossil fuels and productive state companies – to the detriment of private companies and investment in more renewable energies, which should be the pivot to prop up the growth – delays the path towards an effective and fair energy transition that provides conditions for access to clean, cheap and continuous energy. Paraphrasing Mazzucato, it is not correct to throw money at problems, public funds must be redesigned not only to solve but to build systems that generate value for future generations. How far is the PPEF2023 from that paradigm!