OECD territorial reviews. Hidalgo, Mexico.

Foreword
Acknowledgements
Acronyms and Abbreviations
Executive summary
	Hidalgo must better mobilise its assets and overcome some important bottlenecks to accelerate economic growth and fulfil its growth potential
	Sustained growth over the medium term will require improvements in the enabling factors to raise income standards and well-being, notably the state’s level of human capital and capacity to innovate
	To make growth in Hidalgo more inclusive, an integrated territorial approach is required to overcome its north-south divide and spread the benefits to all people throughout the state
	Key recommendations
		Reduce informality, improve skills, link local business with FDI projects and enhance the performance of cities to accelerate economic convergence
		Improve the enabling factors to boost productivity and achieve sustained growth in the medium and long term
		Develop an integrated territorial approach with a stronger public governance and a more efficient fiscal collection and public investment to reinforce efforts for inclusive growth
Assessment and recommendations
	Assessment
		Hidalgo’s economic performance is improving but it needs to accelerate
		Hidalgo should focus on improving the enabling factors to maintain a sustained growth over the long term
		Hidalgo faces challenges on well-being and inequalities powered by a large north-south divide
	Key recommendations
Chapter 1.  Drivers of growth and challenges for regional development
	Introduction
	National economic trends influencing the performance of Hidalgo
		Sluggish economic national growth has set the scene for Hidalgo’s performance
		Resilient policy environment under changing external conditions
	The state of territorial inequalities and population dynamics
		Hidalgo has a relatively large stock of working-age population...
		…that requires upskilling and more female participation
		The rural-to-urban transition is not yet complete
		Under current inequalities in accessibility, opportunities will likely remain concentrated around urban areas
	Unlocking economic development through structural change
		Hidalgo’s full growth potential has yet to be realised
		Tertiarisation will continue shaping a diversified economic structure
		Investment volatility hinders the consolidation of key manufacturing sectors
	Ensuring stable, secure and well-paid jobs
		Formal employment opportunities are concentrated in service sectors in urban areas
		Informality rates diminish slowly due to structural factors
			A highly diverse informal sector calls for a set of complementary policies
	Reducing poverty, ensuring access and improving well-being
		Lifting people out of poverty and deprivation is a pressing need
		Improving well-being and equity requires ensuring proper access to basic services
	Concluding remarks
	Notes
	References
		Annex 1.A. Benchmarking Hidalgo
		Annex 1.B. Assessing accessibility to cities, markets and services
Chapter 2.  Towards a more prosperous and competitive Hidalgo
	Introduction
	Hidalgo’s productive system and the new economic strategy
		Regional productive fabric
			Hidalgo’s FDI has surged in recent years and is becoming more diversified
			Global value chain (GVC)
			Hidalgo’s competitive advantages and endowments
				Safety
				Results driven governance
				Environment
				Connectivity
				Low business cost
		Hidalgo’s economic strategy
			Positive results are being generated
	Enabling factors for Hidalgo’s competitiveness and prosperity
		Access to market: Infrastructure
			Infrastructure has been improving in Hidalgo, albeit skewed towards the south
				Road network
				Rail network and access to ports
				Industrial parks and logistics
				Energy
				ICT infrastructure
			The government is aiming to improve infrastructure, but challenges remain
		Education, human capital and skills
			Hidalgo has strong basic education but weak incentives for students to pursue higher education
			Hidalgo’s policies and actions to face challenges
		Entrepreneurial and SMEs ecosystem
			Hidalgo has a wide range of tools to support entrepreneurship...
				Enhancing the scope of soft assistance measures for entrepreneurs
			…but there is a need to be more strategic and better align the existing elements of the entrepreneurial policy
		Innovation
			Hidalgo’s administration has set innovation as a transversal policy…
			…but Hidalgo’s innovation policy requires a holistic approach with a broader scope
				Improving integration of business and academy
		Mitigating informal business activities
		Establishing the public-private partnerships framework in Hidalgo
			Making the most of the draft law of PPPs
	Implementing policies to support the competitiveness of Hidalgo
		State development planning: Axis 2 - A Prosperous and Dynamic Hidalgo
		An incremental approach to consistency over time
		A smart specialisation approach for Hidalgo
			A smart specialisation approach to the current economic strategy of Hidalgo
				The placed-based approach for the strategy of internationalisation
		Building effective clusters
		Making the most of special economic zones
			The Mexican SEZ
			The Hidalgo state’s SEZ
				Seizing the opportunities from the SEZ
	References
Chapter 3.  Towards a more inclusive Hidalgo: An integrated approach to territorial development
	Introduction
	Hidalgo faces various challenges on quality of life
	Urban development
		Hidalgo is experiencing a rapid expansion of the metropolitan areas, but without proper planning
			Hidalgo’s metropolitan areas are driving population growth
			Young, educated migrants have fuelled urban growth, though ageing is set to become a challenge
			Pachuca is experiencing low-density and sprawl urbanisation, with a high share of fragmentation
			Despite the rapid economic growth, Hidalgo’s metropolitan areas still perform below their potential
		Hidalgo’s urban policy acknowledges most of the challenges in urban areas…
		… but some issues remain
			Mobility requires special attention
			The newly created Secretary of Mobility is a step in the right direction but it must be strengthened
		Land use planning
			A complex institutional environment for land use planning in Hidalgo
			Co-ordination and enforcement are the main challenges in land-use governance
	Rural development
		Although rural areas generate significant wealth, the people living there are generally poor
		The institutional framework of rural policy in Hidalgo
			Shifting from an agrarian-based to a more diversified rural economy
			Adopting a new multidimensional territorial approach for Hidalgo’s rural policy
			Benefiting from rural-urban linkages to close the south-north divide
		Hidalgo can further unlock its tourism potential
			The tourism policy of Hidalgo
			Adopting a territorial approach to tourism policy development
			Developing a brand for the State of Hidalgo
	Natural assets and environmental amenities
	Notes
	References
		Annex 3.A. The 17 operative regions in Hidalgo
Chapter 4.  Strengthening Hidalgo’s governance for an effective policy outcome
	Introduction
	The Mexican decentralisation context
		There is an overlap of responsibilities across levels of government in Mexico
		The imbalance in Mexican fiscal system
			While subnational governments are relevant for spending purposes, their role on fiscal revenues is quite limited
	The Fiscal system in Hidalgo
		Fiscal revenues
			Hidalgo has unexploited potential to increase own revenues
			Improving the management of federal transfers
				Non-earmarked transfers lack clarity and are volatile
				Earmarked transfers can aim for further equalisation and predictability
		Fiscal expenditure in Hidalgo has a limited space for own decisions
	Improving governance in Hidalgo
		Hidalgo’s development plan is comprehensive but has room for improvement
		Implementation of the State Development Plan
		Monitoring and evaluation of the State Development Plan
		Improving governance co-ordination
			Improving vertical co-ordination with federal and municipal governments
			Improving horizontal co-ordination with other states and among municipalities
			Develop the civil service to improve public administration capacity
			Citizen engagement and accountability
	Improving regulatory policy and business environment in Hidalgo
		Policies and institutions for regulatory improvement
			Legal framework and legal instruments
				Executive branch
				Legislative branch
				Judiciary branch
				Co-ordination among branches
		Multi-level regulatory improvement policy
			Administrative simplification
				Administrative simplification strategy
			Formalities and services
			One-stop shops
		Ex ante regulatory impact assessment
		Other regulatory improvement tools
			Public consultation
			Ex post assessment of regulation
			Management of the stock of regulations
		Business environment
	Notes
	References
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