As the budget for 2012 is contemplated in Congress, one slightly underreported fact is worrying. As Letras Libres reported this week, the federal budget would allocate some 21,25 billion pesos to CONACyT, the National Council of Science and Technology. The CONACyT aims to foment innovation in Mexico and develop science and 'Mexico created' technology.
21 billion pesos to stimulate innovation is not a lot of money for a country with 112 million people, especially not if that country (at least nominally) aspires to be one of the leading powers in the region. And even less so if we consider the fact that federal deputies in the same budget are demanding a 5% salary increase. This increase would be warranted to 'compensate for loss of purchasing power' of the country's legislators, apparently because inflation has made life quite difficult for them. To give you an idea of the hardships federal deputies in Mexico face: they make a total of 150.139 pesos per month and would like to raise their pay with some 6000 pesos more (the amount of money, if we recall, finance secretary Ernesto Cordero claimed is sufficient to maintain a household in Mexico).
Well, there are two problems here. First of all: the inflation rate in Mexico was reported at 3,42% in August, and it is unlikely that 5% will be reached at any point this year. It seems the deputies are overcompensating themselves just a tad. Second: according to federal law, the CONACyT is supposed to get at least 1% of the federal budget. In reality, the 21 billion pesos are just about 0,2%.
'Oh well, that's life', Letras Libres sighs.
Mexican voters often complain in general terms about corrupt politicians who do nothing but steal and take care of themselves. Such generalized accusations may sound tired after a while, but the above is a very real example of one of the fundamental problems Mexico faces today. Apart from corruption, legislators seem utterly uninterested in solving the greatest problem the economy of Mexico faces: the combined effects of bad education, lack of innovation, the relatively low amount of added value of exported products and a low wage labor market.
As a member of the OECD, Mexico consistently finds itself amongst the organization's worst achievers in terms of innovation, science, technology and education. A 2009 OECD report on innovation in 15 Mexican states indicated that:
"Although Mexico is one of the leading exporters of Information and Communication Technology equipment in the OECD, it ranks at the bottom of most indicators used to measure science, technology and innovation performance. For example, it has the smallest number of researchers per thousand people employed and the lowest number of Triadic Patent Families among OECD countries. In the knowledge economy, this bottom-of-the-list ranking on innovation performance is a serious problem for the country’s long-term competitiveness."
Innovation in Mexico suffers from a number of fundamental problems. Education is severely underperforming – according to the OECD’s Programme for International Student Assessment, less than 1% of Mexican 15-year olds are considered “capable of sophisticated, critical thinking”, whereas more than half are deemed incapable of doing basic arithmetic. The Mexican government has tried to address the problems since 1992, but any progress is consistently strained by the powerful teachers’ union SNTE, led by Elba Esther Gordillo.
Mrs. Gordillo is considered above all a power broker who strikes deals with politicians, in which she mobilizes support from the 1,2 million members of the union to make and break political candidates. The vast power that comes with running such a large union has unfortunately placed the quality of education fairly low on Gordillo’s list of priorities.
And whereas mrs. Gordillo’s SNTE has a deciding influence over the quality of primary and secondary education, Mexico’s university aren’t in very good shape either. Only two Mexican universities, the UNAM and ITESM, are ranked in the Quacquarelli Symonds World University Ranking 2011/2012, with the UNAM reaching a meager 169th place (though, to be fair, Brazil’s best university shares this spot with the UNAM).
Another problem is the brain drain of highly educated Mexicans leaving the country, especially to the United States. Mexico is a country of relatively low paid manufacturing jobs. Unemployment is low at 4%, but with a large informal sector and a high percentage of underemployment (jobs that do not pay enough to support basic needs), highly educated Mexicans have difficulties finding a job that pays according to their qualifications.
All these and many other factors cause the country’s economy to lag behind in terms of innovation in comparison to countries such as Brazil. Mexico has a large industrial and mining sector, but with relatively low returns to its production. It is one of the biggest manufacturers of foreign brand cars and car parts in the world, yet has no real national car industry of its own. Recently Mexico became the biggest silver mining nation in the world, but the mining industry in general is largely owned by foreign corporations. National oil company Pemex is the largest nationalized oil producer in the world, but is so inefficient that Mexico actually has to import gasoline to satisfy its internal consumption. There are very few high end technological corporations, even though recently the Guadalajara region has seen a modest boom in software industry.
The lack of interest in innovation is real missed opportunity, especially considering the fact that there have always been plenty of talented people with innovative ideas around. Let's not forget that birth control pills, the color television, the rocket belt and a type of glove that can actually translate sign language into speech were all Mexican inventions. And more recently, a device to determine tequila authenticity and a border tunnel detector were invented.
As the proposed meager 21 billion pesos for the CONACyT shows, Mexico’s legislators have not the least intention to invest in innovation. PRI leader Humberto Moreira recently announced that the PRI will not support any reforms unless the federal government allocates more funds to the states, meaning that any educational reform is very unlikely to take place during president Calderón’s term. The PRI currently controls the chamber of deputies, while likely presidential candidate Enrique Peña Nieto, who leads the polls by a wide margin, has been openly flirting with Elba Esther Gordillo.
If Mexico wants to evolve from a low wage country producing industrial goods with little added value, a large informal sector, mediocre universities, an inefficient oil company and highly educated citizens leaving the country en masse, it will need to seriously address the innovation issue. But as long as legislators feel an inflation correction on their salaries is a more important issue, CONACyT will have to wait.