High transportation costs, limited connectivity, and lagging infrastructure in ports, roads, and railways continue to hinder productive efficiency in Mexico and the rest of Latin America, warned the report ” Seizing the Moment: Latin America’s Productivity Opportunity ,” prepared by McKinsey & Company .
According to the analysis, Mexico is the best-positioned country in the region thanks to its integration with North America. With 63 data centers and low-latency connections , less than 200 milliseconds (ms) to the United States, it strengthens its role in manufacturing and digital services .
Sectors such as medical devices, with exports exceeding 20.3 billion dollars (USD) in 2023, and participation in semiconductor production, driven by the Kutsari project which seeks to strengthen design capabilities and establish specialized R&D centers, along with the automotive industry, position the country as a strong competitor in the region.
However, its road and rail networks require modernization to reduce costs and travel times , bringing prices closer to the standards of the Organisation for Economic Co-operation and Development (OECD) . The report also noted that the country faces the challenge of strengthening its electrical infrastructure to meet the growing demand from advanced manufacturing.
He emphasized that Mexico has the geographic advantage and industrial capabilities to lead regional expansion . Its challenge will be to guarantee energy reliability, invest in infrastructure, and improve logistical efficiency, especially in underserved regions, to consolidate its position as the engine of Latin American productivity in the coming years.
Latin America, the big bet
The consulting firm detailed several indicators that explain Latin America’s lagging position, such as the lack of infrastructure that restricts intraregional trade. According to the report, intraregional trade represents only 15% of total exports in the region, far below the 60% recorded in the European Union . The situation could improve if countries made joint investments in shared physical and digital infrastructure, including regional ports, highways, and digital traffic management systems, which would be key to ensuring trade flows.
Despite these obstacles, the region has a promising outlook. By 2040, Latin America could transform its next-generation manufacturing sector and generate up to $200 billion in additional annual revenue , provided it manages to mobilize accumulated investments of nearly $230 billion.
The potential lies in industries such as electric vehicles, batteries, semiconductors, and medical devices, which could grow at compound annual growth rates of between 5% and 16%, depending on the scenario. Factors such as the energy transition, supply chain diversification, technological advancements, and the growing demand for healthcare create opportunities. However, the region will need to strengthen its infrastructure and develop its human capital .
Given this, Latin America faces a dilemma: maintain its backwardness or opt for a logistical and energy transformation that allows it to take advantage of its potential ; and Mexico, with its strengths and challenges, is emerging as one of the key players for this change.
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