Mexico City 10 February 2021— UN-Habitat and United Nations Industrial Development Organisation (UNIDO) have partnered up with the Government of Mexico (through its Ministry of Foreign Affairs) to jointly formulate a novel approach where urban and regional territorial planning perspectives stand at the forefront of the country’s strategy to attract foreign direct investment. Following ideas put forth by recent debates on new economic geography, Mexico’s territorial and industrial advantages will be now positioned in the global economy through novel concepts on territorial planning.

Mexico’s geographical Atlas on industrial and territorial perspectives for economic development represents the first major output behind such distinctive collaboration. By first determining strategic sectors for the country (i.e., those industries with the highest growth potential to produce for global markets), this Atlas aims to identify regional corridors in the country that could specialize on the economic activity derived from those strategic sectors in order to boost its industrial development. Furthermore, by also stressing on the environmental and social issues observed within those regions, this Atlas calls for a new type of foreign direct investment where sustainable and prosperous development for everyone is prioritized.

This new development has been influenced by the fact that Latin American countries, including Mexico, have been recently experiencing episodes of severe economic slowdown that were further aggravated by the outbreak of COVID-19. According to CEPAL (2020), in the next years the region will face a substantial contraction on total GDP (-9.1%), a drastic reduction on employment (more than 44 million of people losing their jobs), as well as an important increase on the number of people living under poverty (more than 45 million).

Countries within the region are thus urged to devise innovative approaches that not only seek to induce economic recovery (through increasing level of foreign direct investment) but that also allow for a shift to higher value-added activities with higher levels of employment in order to further improve standards of living.

Windows of opportunities for a successful integration into Global Value Chains (GVCs) are here identified through a multi-level global and industrial analysis of strategic sectors that accounts for current trends on firms’ re-localization strategies, sourcing decisions as well as on the expected disruptions on productive stages triggered by COVID-19. Such global analysis is then complemented with local value chain perspectives that take into consideration issues such as regional capabilities, competitive and agglomeration advantages, as well as social and economic indicators built at the municipal level, among others.  

In a nutshell, by merging global and local assessments into a single framework, this initiative aims to kickstart industrial growth in Mexico by means of a territorial approach that has also been shaped to properly achieve and fulfill the UN’s sustainable development goals (SDGs).

UN-Habitat and UNIDO have combined efforts and expertise to fine-tune a methodology that not only explains the industrial performance of strategic sectors but that also thoroughly addresses the various social, economic, environmental and urban dimensions within them. Such methodology also permits the identification of various regions and municipalities in the country that, under certain condition and given their specific features, could join productive stages within international production networks. This entire process also implies the designing of industrial policies that now seek to improve the economic and social conditions of given regions while promoting and enhancing foreign direct investment in the country.

Strategies for economic development are then no longer defined as a standard approach to be homogeneously implemented in every region but now here conceived as being part of path that needs to explicitly acknowledge subregional differences within a given country. It is the emergence of a new economic geography that envisages industrial development as a powerful tool to sustainably reduce and close income and regional gaps.

Five strategic sectors for the future industrial development of Mexico have been identified by this project: wind turbine motors, pharmaceutical products, the aerospace industry, agribusinesses (focused on the production of vanilla and chocolate), as well as the petrochemical sector. Each of these sectors are here analyzed at different territorial scales as well as by a unique territorial-industrial approach that accounts for social inclusion, environmental sustainability and thorough territorial planning. An important policy implication derived from this project is the formulation of regional development strategies (in the form of industrial corridors for economic prosperity) that aim to induce growth at the subnational level by fully utilizing and exploiting the socio-economic potential of the territory thus generating a path towards a more complex and diverse industry.

The severity of the economic crisis triggered by the outbreak of COVID-19 demands a new debate over the general strategy for industrial development in Latin America. This project provides a novel alternative to formulate policy recommendations to successfully cope with the socio-economic and territorial challenges that now emerge in the wake of economic recovery from COVID-19, not only in Mexico but in Latin America as a whole.