Seductive Cities

Mexico is a very competitive place to do business. It has 18.2% lower costs needed to operate compared to the United States, according to the consulting firm KPMG.

Specialists recognize that insecurity limits investment and employment as well as the development of Mexico’s states. This said, Monterrey is still the city with the highest level of competitiveness in Mexico. This city stands above the rest of the country because of its dynamism, the vitality of its economic sector, as well as its quality of infrastructure. In addition, there is the quality of life offered inhabitants.

This is the conclusion of the Urban Competitiveness Index for 2010 issued by the Mexican Competitiveness Institute (IMCO).

The IMCO recently explained that the study reveals the performance of the 86 most important cities of Mexico rated according to 11 variables aggregated in 10 different competitiveness factors. Exhibit 1 shows the Urban Competitiveness Index 2010 from the Mexican Competitiveness Institute. Exhibit 2 shows the variables evaluated by the IMCO.

According to this classification the State Capital of Nuevo Leon is the best city to live in Mexico because it offers conditions that maximize the socio-economic potential of local industry and its people. On the other hand, insecurity in the environment and the incredible violence suffered by this community for many months now, along with the high cost of living, according to Mercer, certainly make the City of Monterrey a bit less attractive.

The journal Excelsior published an interview with Othon Ruiz Montemayor, the Secretary of Economic Development of Nuevo Leon. He explained that Monterrey is always attractive for investment because it has all the services required”.During the last few years, he points out, the State has worked directly to promote economic activity while at the same time facing the many difficult problems of the world economic recession”. The IMCO revealed that among the upper middle most competitive Mexican cities are: Campeche, Cancun, Ciudad del Carmen, Ciudad Obregon, Coatzacoalcos, and Cuernavaca. There are also Culiacan, Durango, Guadalajara, Guaymas, Juarez, La Laguna, plus La Paz and Leon are on the list. Others are Matamoros, Merida, Morelia, Navojoa, Nuevo Laredo, and Puebla- Tlaxcala.

At the opposite end, according to the IMCO, cities classified in the group of low competitiveness are Huimanguillo y Tuxtepec. They are on a slightly inferior level to Acapulco, Cardenas and Chetumal. There were also Poza Rica, Rio Verde-Ciudad Fernandez, plus Salamanca, Tehuantepec-Salina Cruz and Tulancingo here.

The Journal Excelsior published a survey made by Mercer about the cost of living in the nation. The result mentions Monterrey as the most expensive city in Mexico in which to live. This was considered a logical conclusion because of its unique characteristics, for instance, being an avant-garde city, both cosmopolitan and industrial. Cabo and Cancun ranked second and third respectively.

Mercer’s survey was completed in 42 of the Mexican Republics and measures the comparative costs of 122 products and services aggregated in nine categories. These include housing, education, health, personal care, domestic accessories, transport, food, clothing, footwear and entertainment.

The objective of this survey was to provide reliable information for companies interested in transferring their personnel from one site to another. There are additional classifications that identify different cities as the best and others that are more competitive.

But the majority of times cities such as Monterrey, and Chihuahua, among others, are usually present. This is a probability because they are recognized on an international scale.

Monterrey, a city where it is obviously one of the best cities to live, is in danger of losing first place. This is a consequence of the insecurity and violence that has been taking place there for several months now.

It’s important to mention that at times some cities qualify well in competitiveness for the short term by attracting investment but not the talent. Those cities that neither grow nor develop industry, research and development operations, technology or human capital tend to rate lower in the competitiveness ratings.

According to the historical data, cities with a long term vision of business are usually ranked as the most competitive.

Competitiveness has been considered as the capacity of an entity to attract and retain investments and talent. Also the IMCO has published a State of Competitiveness Index 2010 including the 32 States qualified by ten factors of competitiveness and 120 indicators.

According to this Index, the most competitive states are the Federal District, Nuevo Leon, Queretaro, Coahuila and Aguascalientes in that order. The five states concentrate 65% of the total FDI, 53% of the patents, 49% of the investigators, 31% of the biggest companies and more important , over 30% of the National GDP.

IMCO illustrates that the less competitive States of Mexico are the State of Mexico, Tabasco, Chiapas, Guerrero and Oaxaca, last in position #32. In contrast with the more competitive, this latest States concentrate only 4% of the FDI, 9% of the patents, 9% of the investigators, 14% of the biggest companies and only 17% of the National GDP.

Exhibit 3 illustrates the State of Competitiveness Index 2010. Exhibit 4 shows the distribution of the GDP per capita divided in three groups that include the five more competitive, the five less competitive and the rest of the States.

The IMCO explains that the States that rank higher in the dynamic and stable economy is because they have been able to present a less direct debt, constant and accelerated growth of their GDP and a higher development of banking. This advance has been represented during the span of time between the years 2006 -2008 and the States with a higher improvement include Tlaxcala, Tamaulipas, Durango, Sinaloa and Zacatecas.

The IMCO also qualifies the efficiency of the Government. The criteria include the growth of the public investment, fiscal autonomy, less expensive public payroll and the ease of doing business. On this way, the State of Mexico, Morelos, Tlaxcala, Zacatecas and Hidalgo are the ones that have the most growth.