Fund crunch, rigid bureaucracy and a lack of interest in entrepreneurship are hindering business growth across Mexico, a survey by Mexican competitiveness institute (IMCO) has found.
According to BNAmericas, which published the report, the survey found that 58% of ICT entrepreneurs used their own cash to finance their businesses, while 42% received government support and 3% used bank loans. Investors in Mexico have always shown little interest in risking their money in new ventures in new sectors, with a majority of investors clinging to traditional sectors.
The report notes that Mexican businesses are less innovative than many of their Latin American counterparts, while Mexico also fared poorly in terms of entrepreneurial culture. The survey found only 58% of residents say they would prefer to start their own business, compared to 80% in both Brazil and Colombia.
Mexicans in general spend more time working on academic research projects rather than researching new technology. Mexico’s economy grew a paltry 1.1% last year, despite a wave of investor enthusiasm generated by a series of initiatives that included opening the country’s closed oil-and-gas market to private companies.
Meanwhile, corruption continues to undermine the national economy, with red tape and the slow pace of bureaucracy having given way to endemic official corruption.
Mexican firms spend an average 347 hours annually paying taxes, while their counterparts in Norway spend only 87 hours, the report noted.
To improve the business climate, Mexico needs to reform its tax collection system, promote a culture of entrepreneurship and simplify the bureaucratic process, the report suggested. The institute also recommended that the government set up special courts for trying cases related to intellectual property and e-commerce.