Jesús Garza: The Knowledge Economy

Jesus GarzaJesús Garza Source: Courtesy

The pandemic we are experiencing is modifying our lives and the way of doing business. Economies are changing rapidly and the new normal It implies that the production processes will be very different from the traditional ones. The common denominator of these changes is technology. It is very clear that countries that invested early in technological processes suffered less. For example, European countries they were more prepared to work from home than in Latin America. Thus, we are in a stage of a technological transformation that will dictate the course of the economic growth of nations.

Countries that invest in two essential areas, science and technology, and education, they will tend to be more productive and grow at higher rates in the future. These two factors not only contribute to the potential (long-term) economic development of a country, but are responsible for higher remunerations given that the added value to production is much older. It is not surprising that the most successful countries are those that have invested large resources in these areas. The classic example is South Korea, which without natural resources and from being an economy with lower middle income 40 years ago (even poorer than Mexico), now claims to be a developed economy.

The call “reset”Economic will bring with it advantages and disadvantages for Mexico. On the positive side, we are seeing a realignment of global to regional suppliers. The pandemic caused a disruption in supply chains global that affected production in many countries. Thus, many companies that were in Asia are repositioning themselves to North America. Mexico’s proximity to the US, coupled with the implementation of the TMEC, give the country a competitive advantage.

In contrast, the dependence of Manufacturing sector As an axis of economic development, it presents risk factors in the medium term. First, because a large part of the manufacturing processes will soon be automated generating a significant structural unemployment. Second, because the added value of the digital and knowledge economy will be much higher.

Thus, it is important to start allocate more resources and investment in science and technology, and the education of the population to take advantage of the situation of the new economy. The growth potential and higher remuneration will be linked to investment in these areas. Countries that act soon will benefit from the new knowledge economy.

The author is CEO of GAMMA Financial Solutions and professor of Economics and Finance at EGADE Business School. He has a Ph.D. in Finance and an MA in Financial Economics, both from the University of Essex in the UK. He was the chief economist for Mexico at Itau BBA, deputy general director of International Financial Organizations at SHCP and researcher at Banco de México.

This is an opinion column. The expressions used here are the sole responsibility of the person signing them and do not necessarily reflect the editorial position of El Financiero.