2013 August 16
Re: Pemex Plan Spreads An Oily Sheen Over Mexico’s History
Amelia Kiddle rejects the idea of privatizing Mexico’s national oil company, Pemex, arguing that social programs are dependent on Pemex revenue. Ms. Kiddle acknowledges that Pemex is grossly inefficient, but doesn’t explain why.
The distribution of political favours at state-owned enterprises drives them toward overemployment, while excessive revenue diversion to support government pork-barrelling depresses the company’s incentive to invest, reducing future returns. This is a losing proposition for social welfare.
Ms. Kiddle makes the observation that Mexico’s economy, like Canada’s, is inextricably linked to the energy sector. Yes, and we privatized Petro Canada – for the reasons above.
Victoria L. Henderson
PhD Candidate and IHS Bernard Marcus Fellow
(Link to the article that prompted this letter)
Henderson, Victoria L. (2013) Privatizing Pemex. Globe and Mail. 16 August, A10.