THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Mexico

Ranked 65th of 149

At a glance

Ranks

65 th on the Legatum
Prosperity Index™

81st
31st
77th
64th
64th
133rd
55th
126th
53rd

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Mexico performs best on Business Environment and Natural Environment and scores lowest on the Safety & Security sub-index.

Visit our Rankings table to see how Mexico compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Mexico has nearly doubled the size of its prosperity deficit over the past decade. This is the result of widening deficits in Governance, Safety & Security, and Social Capital. Mexico now has the second largest prosperity deficit in Latin America.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Economic Quality in Mexico has suffered despite a healthier Business Environment, although even the latter has only improved by three ranks since 2007. Even improvements within Economic Quality have meant little, with reductions in poverty being so minimal to the extent where Mexico’s global rank in this variable has worsened because of it. More troubling figures include a fall in satisfaction in standard of living. Mexico’s Business Environment may be improving, with improvements to labour market flexibility and access to credit, but if Economic Quality does not improve too then prosperity will struggle to follow.

The other key area required to underpin a competitive business environment – Governance – is in decline, slipping nearly 22 places to 77th. Education, vital to improve the human capital needed by employers, has also fallen 14 places to 64th and Health six places to 64th. Reasons for the decline in Governance include lower voter turnout, falling from above 60% to below 50%, confidence and trust in both national elections and government declining to almost half the 2007 figure. Education and Health have been affected by falling satisfaction rates with the education system, faltering perceptions of opportunities for children, rising obesity and diabetes prevalence, and falling Immunisation rates.

However, while these are sub-indices are falling to concerning levels, nothing compares to Safety & Security which has now dropped to 133rd, as the drug war continues to envelop Mexican society and make its streets ever-more unsafe on an annual basis. The percentage of people who feel safe walking home at night has dropped to 40%, theft is on the rise, and state violence is nearly at the worst possible classification. Insecurity can lead to a society with a lack of trust and care, but also a society where the government has no choice but to restrict personal freedoms. Mexico has seen rapidly declining social strength, reflected in the Social Capital sub-index, but rising Personal Freedom. Evidence for the effect of Mexico’s drug war on these rankings can be seen in a fall in trust, but falls in Social Capital can also be seen to be due to weakening social networks: fewer can rely on family or friends in times of need, and there are fewer opportunities for people to make friends and meet people.

Before ending on a negative note, it must be worth examining Mexico’s Natural Environment ranking, as it becomes one of the few countries to see a fast rise in rank in this category.

Mexico’s Natural Environment score and Central and Latin America’s average Natural Environment score.
Mexico’s Natural Environment score remains slightly below the average of Central and Latin America, but has made substantial progress over the past decade.

The treatment of wastewater has improved alongside improved access to drinking water. Additionally, while air pollution has increased minutely, Mexico has risen on the global rank for this variable. All of these facets contribute to Mexico as a regional anomaly in improving its ranking for Natural Environment.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.

Special Analysis

Special Analysis

OVERALL

Mexico has struggled over the past ten years in the Prosperity Index, seeing major slippages in rank between 2007 and 2016. While large gains have been made in Personal Freedom and the Business Environment, falling prosperity elsewhere, including Governance, Safety & Security, and Social Capital, has limited Mexico’s overall progress.

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Areas of Success
Areas of Success

Although limited in number, the areas of success are predominantly Mexico’s Business Environment, Natural Environment, and Personal Freedom performances. Business Environment has moved up three ranks since 2007, and has clawed back fourteen ranks since a dive in 2011 thanks to greater labour market flexibility and improved infrastructure. Natural Environment has also been improving, rising seven ranks since 2007, but the 15 rank rise in Personal Freedom is Mexico’s biggest success. This is the result of falling religious restrictions, and the legalisation of gay marriage.

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Areas of Little Change
Areas of Little Change

Health and Education are two areas where Mexico has been relatively static in real terms, with both recording slight declines. However, this real term stagnation is not reflected in the rankings, where sizeable falls in rank have been recorded as Mexico is overtaken by rising prosperity elsewhere in the world. Gains could be made in Education by tackling falling satisfaction, and in Health by tackling falling satisfaction with the healthcare system and rising obesity.

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Areas of Improvement
Areas of Improvement

Safety & Security and weakening Social Capital are two areas where Mexico needs to see rapid improvement if prosperity is to rise strongly. These sub-indices also undermine performance elsewhere. An ever worsening Safety & Security sub-index performance wards off serious foreign investment and skilled workers, affecting Mexico’s Economic Quality performance. Without strong society, economic gains are similarly affected by higher transaction costs.