Mexico's energy reforms allow foreign investment
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Mexico's Congress approved energy reform legislation last month that allows private firms to invest in the state-owned energy industry for the first time in 75 years. It was lauded as the biggest economic breakthrough in the nation since the North American Free Trade Agreement was signed in 1992.
“The 2013 reform promises to create abundant opportunities for private companies that have the technology and expertise to revive Mexico's hydrocarbons and electricity industries,” BBVA Compass economist Marcial Nava wrote in his report on the reforms.
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While secondary laws are still needed to translate the reforms into a workable framework and legal processes, U.S. oilfield services, shale gas and infrastructure companies, among others, stand to benefit from the reforms, Nava wrote.
He predicts the reforms will pump around $1.2 trillion to the Texas-Northern Mexico region in the next decade. In the U.S., Mexico's reforms will create faster growth, helping to narrow the socio-economic disparities between Texas' border cities and metro areas like Houston, Dallas and Austin.
“If these border towns effectively seize the opportunity,” Nava said, the U.S.-Mexico border “could see one of the most dramatic transformations in its history.”
Led by BBVA Compass Chief Economist Nathaniel Karp, the bank's seven-member research team analyzes the U.S. economy and Federal Reserve monetary policy. For its analyses, the economists create models and forecasts for growth, inflation, monetary policy and industries. The economic research team also follows a variety of issues that affect the Sunbelt states where BBVA Compass operates.
In addition to Karp and Nava, the bank's economic research group includes Kim Fraser, Jason Frederick,Shushanik Papanyan, Boyd Nash-Stacey and Michael Soni.