Mexico Needs to Get its Cities Right to Recover from COVID-19

Mexico has to improve the planning of cities to foster social inclusion and economic recovery

Mexico is one of the most urbanised countries in Latin America and the OECD. With the urban population doubling over the last three decades, today, four out of five Mexicans live in a city. Urban areas generate nearly 90% of GDP in Mexico and account for 83% of the formal workforce.

Typically, city dwellers have access to better opportunities in terms of incomes, education, and housing but Mexico has not fully captured the “agglomeration benefits” that would normally accompany urban population growth.  In fact, labour productivity has stagnated in urban areas over the last decade. Urban sprawl and, with it, poor connectivity within urban areas, has played a key role.  

Whilst the urban population of Mexico’s cities, especially small and mid-sized ones, has grown significantly, the urban footprint has grown even faster, increasing sevenfold in the last three decades. In the Puebla-Tlaxcala metropolitan area, which has the lowest overall density among Mexico’s metropolitan zones, the urban footprint expanded nearly eight times faster than the population in the last two decades. In Mexico City’s metropolitan area, low-cost housing has expanded to the periphery where land regulations are less restrictive, but jobs are largely concentrated in the centre. Indeed, in 2015, 42% of home buyers using government credits, felt that their homes were too far from schools, public transport and commercial areas. Between 1990 and 2015, the number of cars grew 3.5 times faster than the population in the country.

Combined with a persistently large share of informal labour, institutional barriers to doing business, and lagging levels of education, innovation and public investment, this has exacerbated urban inequalities that were, in turn, further magnified by the COVID-19 pandemic. Although the population living in poor housing decreased from 17% in 2008 to 12% in 2016, 12.6 million people in Mexican urban areas still live in inadequate housing units – i.e. overcrowded, built with poor materials or lacking access to basic services such as transport, water and electricity.

The COVID-19 crisis provides an opportunity for a change of policy direction. A “new normal” is needed for economic, social and environmental sustainability of Mexican cities, in order to be fit for, and resilient to, future health, economic and social crises. Evidence shows that compact, connected, low-carbon (“clean”) and inclusive cities (3C+I) can boost long-term productivity, environmental sustainability and social equity. The government has recently adopted a social production of the habitat approach, which recognises that communities know best what they need to live well. This new approach, together with finance reforms that provide funding for low-income families to self-build and upgrade their homes, has enormous potential to improve housing and urbanisation. The challenge for Mexico is to deliver on this new housing agenda.

How can Mexico use its cities to promote growth, inclusion and sustainability?  

To prevent further urban sprawl, reduce pollutant emissions and tackle urban inequality, Mexico needs to put urban accessibility at the centre of its housing, transport and land use policies. This means developing cities where people can connect easily with jobs, services, knowledge and other people.

Building accessible cities in Mexico requires:

  • Aligning and integrating sectoral policies to promote 3C+I cities, particularly at the metropolitan level. This requires integrating transport, housing and land use into a clear vision of the cities Mexico needs and wants. Failing to ensure coordination across policy sectors risks reducing economic growth and well-being, and increasing environmental stresses and climate-related risks.
  • Funding urban development and accessibility actions. Reduced density may be contributing to an increase in traffic emissions and air pollutants, while making transport infrastructure such as metro and BRT systems prohibitively expensive to build and operate. Mexico should ensure that the percentage of the budget allocated to walking, cycling and public transport infrastructure  is aligned to these broader goals through prioritising investment in sustainable metropolitan mobility projects and through  incentives (e.g. tax exemptions and government-guaranteed bonds) to make better connected social housing attractive to private developers.
  • Supporting integrated urban planning. The national government should encourage more mixed land uses, minimum density standards, and urban regeneration as key elements of national urban and affordable housing policies. In particular, Mexico should link urban development policies explicitly to climate and environmental policy.
  • Fostering metropolitan governance. Metropolitan areas present high levels of administrative fragmentation that limits a co-ordinated response to accessibility challenges. Improved metropolitan governance and planning could foster economic efficiency, affordability and expanded opportunities for all.

Building accessible cities is a critical requirement if Mexico is to reach its full economic, social and environmental potential. Cities, local and national governments, need to work together to ensure that decisions on the management and planning of cities are evidence-based and target inclusive growth to realise agglomeration benefits. The recently approved National Land Policy will be an important instrument in the urban development policy tool-kit. Local innovations in relation to urban planning, land use, and housing in Guadalajara for instance could inspire other cities. With a strong national urban policy shaping a future-proof vision, Mexico can get cities right, shaping sustainable recovery from the COVID-19 crisis, and ensuring societal resilience and more inclusive growth for all. 

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Oscar Huerta Melchor is a project manager and policy analyst on public governance and urban development at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE). Oscar has led and participated in several urban and metropolitan policy reviews and thematic projects on topics such as accessibility, housing, the governance of land use, innovation in cities, smart mobility. Oscar joined OECD in 2007 as a policy analyst on public employment and management at the Public Governance Directorate (GOV). He holds a Masters and a PhD in comparative public policy from the University of York, United Kingdom.