Since the December 2012 inauguration of President Enrique Peña Nieto, Mexico has implemented a series of reforms that could forever change Mexican governance and its economy’s competitiveness. These include new rules to enhance government transparency, reform primary education, expand access to credit, and encourage market-based competition by promoting investment and strengthening regulatory authorities. But the undisputed centerpiece of the legislation is energy reform.
It is not an exaggeration to call Mexico’s energy reform revolutionary. It will break the monopoly of Pemex, the state-owned petroleum company, and for the first time in over half a century, allow foreign private investment in almost every corner of the Mexican energy market. Such a reform promises to revive the Mexican oil industry, likely leading to lower-cost energy production and significant economic growth. And that is only the beginning. The energy reform package also contains three key elements -- generally overlooked in recent commentary -- that may well signal changes in the Mexican economy every bit as transformative as the Mexican Revolution of almost a century ago.
The restructured energy sector, despite its openness, will still be very much in line with the spirit of the Mexican Revolution: The state will continue to
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