Many wish Mexico's infrastructure and regulatory mechanisms could catch up with its productivity.
      As The Wall Street Journal reported in November 2004, over the past four years, the Mexican Congress "has blocked or shelved plans to allow more foreign investment in the energy sector, overhaul labor laws, strengthen courts and increase tax collection." And politics still threaten to stall such efforts today.
      An August 2004 research paper by economists with the Inter-American Development Bank pegged

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a 24-percent performance improvement among Mexican firms that moved from state ownership to private ownership over the past 20 years, with 64 percent of that spike attributable to productivity gains. That same paper described the advantages of transparency, another goal the country has been slowly approaching. Privatization has been especially slow to transpire in the energy sector, where it may have the most to contribute.
      Meanwhile, infrastructure continues to lag.
      "Water is the number one issue," says Riley, with electricity a concern that's being addressed with various projects. According to Bloomberg News, electricity prices for Mexican companies had risen 19 percent for the year 2004 through November because of higher natural gas costs.
      Riley says the Port of Ensenada has an opportunity to pick up shipping business from the congestion problem at California ports. But the need behind all of these challenges is a need for more focused and long-range central planning. That's also come to the fore with recent turmoil over proposed LNG terminals along the Baja coast, as land grant issues have come into play."Trying to get titles and find out who owns what is very difficult for these types of projects," says Riley. And the bigger issue behind the property system is the legal system.
      "The leading issue for me is certainty of law," says Riley, so that things can happen according to validated legislation, as opposed to decrees or other transitory measures. It applies to a whole range of issues, from intellectual property to taxation to property rights. When such rules are firmly in place, he says, "If you make a big commitment in Mexico, you can depend on [the law] to see you through."