Overview. The great majority of companies in Mexico 96.1% are micro-enterprises

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1 Overview Mexico s per capita income is one of the highest in Latin America, and it is a member of the OECD and G20. During the last two decades the government has maintained macroeconomic stability and a sound financial sector. However, despite significant improvements in economic and social policy, poverty, inequality, and regional disparity still persist. Productivity has been one of the main causes, steadily declining at a rate of 0.7% per year over the past three decades 1 and slowing down progress towards sustained and inclusive growth. The literature suggests several explanations for low productivity within the Mexican context: inequality, a not fully developed financial system, lack of competitive markets, lack of innovation, and a relatively unfavorable business climate. The Mexican Central Bank estimates that the lack of competitiveness has had a cost of 1 percentage point of GDP growth each year. 2 The National Development Plan has identified productivity improvement as a high priority challenge. Consequently, it has included productivity democratization as one of its three cross-cutting strategies, 3 so that each region, industry, and population sector may have access to the necessary opportunities to reach their full potential. Strengthening the business climate and promoting regulatory cooperation among the three government levels national, state, and municipal are key actions within this strategy. The purpose is to arrive at a shared reform agenda based on the revision of regulation, streamlining and standardization of procedures, and encouraging a more widespread use of technological platforms. 4 The great majority of companies in Mexico 96.1% are micro-enterprises employing a maximum of 9 persons, and many of these companies operate in the informal sector, with limited access to credit, a lack of qualified labor, and inadequate legal protection. These are some of the reasons that explain why, despite being the most numerous, they only contribute 18% of domestic production. The same factors that prevent these small companies from being more productive create obstacles for them to become medium-size or large companies. 5 Since 2005, Doing Business in Mexico has been documenting efforts to make it easier for small and medium-size entrepreneurs to start and operate a business in Mexican states. The idea is a simple one: if entrepreneurs spend less resources on regulatory burdens, they will have more time to devote to productive activities. If laws and regulations are clear, accessible and transparent, and at the same time enforceable before the courts, entrepreneurs will feel more confident to risk doing business with people they don t know, expanding their client and supplier network. The reforms documented in the first reports of the Doing Business in Mexico series were mainly driven by state and municipal governments. Reforms during that period were focused on streamlining the procedures required for construction and property transfers, the improvements in internal procedures in the agencies in charge of urban development, and in many cases, unification of property registries and cadastres. Since 2009, the federal government has taken a more visible role in guiding national and local efforts towards a common goal and has even directly participated in regulatory streamlining, by reducing the procedures and costs required to start a business. In 2014, the judiciary, both at a federal and state level, has begun to participate even This fifth edition of Doing Business in Mexico updates the data presented in Doing Business in Mexico 2012 for 31 states and Mexico City across 4 areas of regulation: starting a business, dealing with construction permits, registering property and enforcing contracts. For a second time it is easiest to do business in Colima, followed by Aguascalientes and Guanajuato. The pace of regulatory reform has improved by 27% since Doing Business in Mexico 2012, with a total of 81 reforms registered against 64 in the last report. The State of Mexico and Puebla were the states that improved the most in the ease of doing business since the last measurement. States are introducing regulatory reforms in a larger amount of areas. Twelve states reformed in 2 areas, 14 in 3 areas and Colima, Puebla and San Luis Potosí did so in all 4 benchmarked areas. States that make the most efforts to reach out to peers for knowledge sharing are also the ones with better performance. The regulatory business environment in Mexico is converging towards the average performance of high income OECD economies, but there is still a wide performance gap between Mexican states.

2 2 DOING BUSINESS IN MEXICO 2014 more actively and is in charge of the implementation of ambitious reforms in the commercial, adolescent, and criminal justice systems. WHAT DOES DOING BUSINESS IN MEXICO 2014 MEASURE? Doing Business measures business regulations that affect small and medium-size domestic companies. Mexico City represents Mexico in the annual Doing Business publication, which compares 189 economies worldwide. But entrepreneurs in Mexico face different local practices and regulations depending on where they establish their businesses. This fifth edition of Doing Business in Mexico updates the data presented in Doing Business in Mexico 2012 in the 32 states and across 4 regulatory areas: Starting a business, Dealing with construction permits, Registering property, and Enforcing contracts. The results of this new comparison are presented here (table 1.1). For the second time in a row, it is easiest to do business in Colima, followed by Aguascalientes and Guanajuato. WHAT HAS IMPROVED SINCE 2012? Thanks to local efforts as well as local implementation of federal reforms, the pace of reform accelerated by 27% from the period to , with a total of 81 improvements compared with 64 in the previous period. For example, all the states have implemented oral proceedings in order to improve the efficiency of commercial dispute resolution of claims not exceeding MXN 539,756 (US$ 41,096). The reform allows motions presented by the parties orally to be resolved immediately during the hearing, while the limit on appeals allows claims to be resolved definitively in the first instance, without having to await proceedings at a court of appeals level. 6 A mediation stage is also introduced, where parties may reach an agreement that will end the lawsuit during the first hearing. Starting a business improved as a result of the elimination of the minimum capital requirement 7 and of the fee required to obtain the company name authorization. 8 In addition, since 2000, the federal government has introduced, with varied success, electronic platforms and systems aimed at simplifying the federal procedures required to start a business: SIGER, RIE, tuempresa.gob.mx, among others. None of these systems has managed to unify in an optimal manner all the interactions required to start a business, but they have managed to reduce the number of procedures and delays. In Guerrero and Tlaxcala, where the registration of a company in the Public Registry of Commerce used to take 15 and 10 days, the portal tuempresa.gob.mx has had the greatest impact. In Guerrero, the sole use of this platform reduces the time required to incorporate a company by almost two thirds. To promote widespread use of the technological advantages in a larger number of areas relevant for private sector development, the National Digital Strategy Coordination Office (Coordinación de Estrategia Digital Nacional), reporting to the Office of the President of the Republic, is designing an electronic National One-Stop Shop, with the purpose of consolidating more than 5,000 federal government websites providing online services. This system also aims to consolidate procedures through system interoperability among federal, state and municipal agencies and implement online fee payments through secure digital authentication of real estate, citizens and officers, thereby promoting higher participation of all agencies through a federal electronic system. States and municipalities are also expanding their reform efforts to a larger number of areas, which means increased collaboration among the different government levels and institutionalization of reform efforts. While in Doing Business in Mexico 2012 only 18 states improved in more than one measured area, in 2014, 29 states did so, of which 14 improved in at least 3 measured areas, and 3 states Colima, Puebla and San Luis Potosí improved in all the areas (table 1.2). As a result of this dynamism, all states have improved their business environment as compared to themselves over time. The distance to the frontier measure shows the individual progress of each state towards the best practice existing in Mexico TABLE 1.1 Where is it easier to do business in México? State Overall ranking Doing Business in México 2014 Overall ranking Doing Business in México 2012* Colima 1 1 Aguascalientes 2 2 Guanajuato 3 5 San Luis Potosí 4 4 Chiapas 5 3 Campeche 6 8 Zacatecas 7 10 Sinaloa 8 6 State of Mexico 9 19 Sonora 10 9 Puebla Michoacán 12 7 Veracruz Hidalgo Tabasco Nuevo León Querétaro Yucatán Tamaulipas Durango Coahuila Nayarit Tlaxcala Oaxaca Quintana Roo Jalisco Chihuahua Baja California Sur Guerrero Baja California Morelos Mexico City Note: Rankings for all states are current as of October *The overall rankings for Doing Business in Mexico 2012 are based on 4 indicators and reflect data corrections. in each one of the 4 measured indicators. 9 The State of Mexico, Puebla and Quintana Roo made the most progress towards best practices. Colima and Aguascalientes followed the lead of consistent reformers at a global level such as Singapore, the topranked economy in the ease of doing business at a global level since Doing Business

3 OVERVIEW 3 TABLE 1.2 Fourteen states introduced improvements in 3 of the measured areas State Starting a business Dealing with construction permits Registering property Enforcing Contracts Aguascalientes Baja California 4 Baja California Sur Campeche Chiapas 8 4 Chihuahua 4 4 Coahuila Colima Mexico City 4 4 Durango State of Mexico 4 4 Guanajuato Guerrero Hidalgo Jalisco 4 4 Michoacán 4 4 Morelos Nayarit Nuevo León 4 Oaxaca 4 4 Puebla Querétaro Quintana Roo San Luis Potosí Sinaloa 4 4 Sonora Tabasco 4 4 Tamaulipas 4 4 Tlaxcala 4 4 Veracruz 4 4 Yucatán Zacatecas Reform making it easier to do business. Reform making it more difficult to do business. Notes: Reforms took place between November 2011 and October , implementing reforms on a regular basis, maintaining the lead (figure 1.1). As a result of these reforms, the average business climate for the measured areas at the subnational level has been progressively converging with the average of high-income OECD economies. Fourteen states outpacing the average of high-income OECD economies, and all the states outpace by far the average performance of Latin American economies (figure 1.2). However, there is still a long way to go in order to attain convergence between the lowest-performing states and those with the best performance. The State of Mexico was the state that made most progress towards the frontier of best regulatory practice since the last measurement. 10 Dealing with construction permits in Tlalnepantla de Baz is more efficient as result of a streamlining of procedures and a modification of risk requirements. First, the urban development office implemented a unified form

4 4 DOING BUSINESS IN MEXICO 2014 enabling a builder to file for an alignment certificate (constancia de alineamiento) and official number in a single application, together with the request for a land use certificate and construction license. Second, low-impact buildings no longer require a regional impact approval nor any associated procedures such as a zoning certificate, the civil protection approval or the environmental road system impact approval. As a consequence, entrepreneurs no longer have to carry out 8 procedures that were previously necessary to obtain a construction permit or the 9 required if one considers that entrepreneurs are no longer required to update the value of the property in the cadastre after construction. In contract enforcement, the State of Mexico is beginning to observe a reduction in the time required for notification of the claim thanks to the implementation of a new electronic notification system and the creation of a new notifications central office (central de actuarios). Puebla was the second state that made most progress towards the frontier of best national practices. Starting a business is faster in Puebla thanks to the modernization of the Pubic Registry of Property and Commerce and 18% less expensive mainly as a result of a 26% reduction in registration fees. Dealing with construction permits or transferring property takes half of the time it took 2 years ago thanks to the implementation of digital mapping at municipalities, which also makes obtaining the cadastral assessment certificate for land transfers faster. A change in the way fees for obtaining water and sewage services are calculated from one based on the building surface area to another based on future estimated consumption reduced costs by 20%. Updating procedure manuals at the operating agency together with a reclassification of environmental risks also contributed to a reduction in the time required for dealing with construction permits. As a result of field surveying the land within the state, the mapping improvement made obtaining the cadastral assessment certificate faster. A program focusing on professionalization of the registration function improved the time required to register a property at the Public Registry of Property, and efficiency gains at FIGURE 1.1 State of Mexico, Puebla and Quintana Roo are the states that most advanced towards the frontier of best regulatory practices in the last 2 years Distance to the Mexican frontier, average in the four measured areas by city (percentage points) Note: The "distance to the Mexican frontier" measure shows how far on average a state is at a point in time from the best performance achieved by any state on each of the 4 Mexican Doing Business indicators (Starting a business, Dealing with construction permits, Registering property and Enforcing contracts). For example, the Mexican frontier for the Starting a business indicator is determined by Guanajuato on time (5.5 days), 13 states on the number of procedures (6) and Campeche on cost (5.6% of income per capita), and so on for the other indicators.

5 OVERVIEW 5 the water and sanitation company allowed the water certificate to be issued fully online. In addition, 7 civil courts in the Judicial District of Puebla were converted into 5 courts specializing in commercial matters and 2 in financial matters. In Quintana Roo, property transfer costs decreased as a result of the replacement of variable fees calculated based on the property value with other lower fixed fees, not linked to the property value. Another important improvement is increasing the speed of commercial dispute resolution. The Judicial Authority carried out an analysis of the civil cases presented per year and noted that almost half of them were of a commercial nature. In 2012 it transformed a civil court into a commercial one, created two additional commercial courts, and trained officers in this specialized area. It also implemented a new geographic notification system (SIGNO) for the management and tracking of notification processes. This enabled more efficient work by notification officers, improving the efficiency of their routes. In addition, an electronic notification program was launched for certain motions, which will imply that the party has been notified as soon the notifications are forwarded. As a result of court specialization and the use of modern technology, the time required to enforce a contract was reduced by more than 6 months. COMPARING BUSINESS REGULATIONS AND THEIR APPLICATION AMONG MEXICAN STATES Starting a business While in Guanajuato an entrepreneur takes only 5 and a half days to start a business, in Quintana Roo, the entrepreneur takes 7 weeks only the registration with the Public Registry of Commerce takes 1 month. Depending on the level of coordination of the different agencies and the use of online platforms, the number of procedures ranges between 6, in 13 cities, 11 and 8 in Campeche, Durango and Quintana Roo. In Nuevo León, Sinaloa, and Tamaulipas no municipal operation license is required for low-impact activities, while in Campeche and FIGURE 1.2 As Mexico s average performance converges towards the average in highincome OECD countries, convergence among Mexican states is still lacking Distance to the global frontier, average in the four measured areas by city (percentage points) Quintana Roo the municipality requires 2 procedures for the same type of company. On average, more than half of the cost is accounted for by notary fees; however, while in Campeche, Colima, Guanajuato, Jalisco, Michoacán and Tlaxcala the total cost does not exceed 6% of income per capita, in Baja California, Chihuahua and Coahuila, it is more than 20%. In Baja California, notary fees are MXN 22,000 (US$ 1,675). In the 13 states 12 where the fee for registration with the Public Registry of Commerce is calculated based on the share capital amount, this fee tends to be higher, exceeding MXN 11,000 (US$ 838) in Baja California and Nayarit. In 14 of the remaining 19 states, 13 there is a lower, fixed fee, not exceeding MXN 2,000 (US$ 152). Dealing with construction permits Best performance in Mexico In Culiacán (Sinaloa), builders must carry out 7 procedures for dealing with a construction permit, while 17 procedures are required in Ciudad Juárez (Chihuahua). Culiacán has managed to consolidate procedures thanks to a one-stop shop and the creation of a single form for requesting information associated with several procedures. The time required for Worst performance in Mexico High income OECD average Doing Business in Mexico report year Mexican average Latin American average Note: The "distance to the global frontier" measure shows how far on average an economy is at a point in time from the best performance achieved by any economy on each of the 4 Mexican Doing Business indicators (Starting a business, Dealing with construction permits, Registering property and Enforcing contracts). For example, the global frontier for the Starting a business indicator is determined by New Zealand on time (0.5 days), Canada and New Zealand on the number of procedures (1) and Denmark and Slovenia on cost (0% of income per capita), and so on for the other indicators. dealing with construction permits ranges from 9 and a half days in Colima (Colima) to 4 and a half months in Monterrey (Nuevo León). Times are shorter in Colima (Colima), Durango (Durango), Puebla (Puebla), and San Luis Potosí (San Luis Potosí), because they have information on updated physical or digital maps, which eliminates the need for field visits. While in Aguascalientes (Aguascalientes) entrepreneurs pay 17.9% of income per capita, in Mexico City (Federal District), entrepreneurs must pay 20 times this amount (353.1% of income per capita). In Mexico City, the major part of costs is associated with obtaining the construction permits and water and sewage services. In Villahermosa (Tabasco), the cost of a construction license is approximately MXN 8,000 (US$ 609), while in Ciudad Juárez (Chihuahua), the cost is more than MXN 138,000 (US$ 10,507). This is due to the fact that in Villahermosa the calculation factor is 0.1 SMV (minimum living wage) per square meter, while in Ciudad Juárez, it is 15 times higher. To obtain water and sewage feasibility, Campeche (Campeche) charges a low, fixed fee of MXN 60 (US$ 5), while Oaxaca (Oaxaca) charges MXN 150,000 (US$ 11,421) because the fee is calculated based on the construction value of the warehouse.

6 6 DOING BUSINESS IN MEXICO 2014 Registering property Only 3 procedures are required to register a property in Colima, but in Guerrero and Yucatán 10 procedures are required. Thanks to the digitalization of maps and the Public Registry of Property in Colima, an online portal can be used to carry out procedures. The property transfer can be carried out in 2 days, while 74 days are required in Mexico City. The main costs involved are the municipal title transfer tax (up to 2% of the property value), the registration fee (up to 2% of property value in Durango), notary fees and assessment fees. In Aguascalientes, all these components add up to a total of 1.7% of the property value, while in Morelos, they reach 6.2%, because the sole registration of the title deed in the registry costs 1.2% of the property value, plus an additional 25% for taxes. Enforcing contracts It is faster to solve a commercial dispute in Durango and Nuevo León, where courts take 8 months, while in Baja California Sur, the same dispute may take 20 months due to an excess workload and a lack of efficiency in the procedures for admitting claims for processing. Attorney and expert fees and court clerk costs may require the plaintiff to pay from 20.6% of the claim value in Aguascalientes to 36.3% in Oaxaca. The main difference is that in Oaxaca attorney fees are freely agreed upon, while in Aguascalientes, Colima and Zacatecas, attorneys prefer to abide by the state guidelines on fees. PROMOTING AN INCREASED PACE OF REFORM USING PEER-LEARNING AT BOTH LOCAL AND GLOBAL LEVELS In November 2013, a consultation carried out by C-Estrategia and the World Bank Group of public officials from 31 states 14 showed that peer-learning continues to be a significant tool for states that want to improve their business environment. The indicators where most peer learning interactions were detected were Starting a business (34%), followed by Enforcing contracts and Registering property (24% each one), and finally Dealing with construction permits (18%). The Doing Business in Mexico series and the bi-annual meetings organized by COFEMER were FIGURE 1.3 The states that make most efforts to maintain an active dialogue with their peers have a better business regulatory environment Distance to the Mexican frontier, average in the four measured areas by city (percentage points) Number of states contacted State of Mexico Note: The correlation between the distance to frontier and the number of states that were contacted by each state is The relationship is significant at the 1% level. Source: A consultation carried out in November 2013 with state and municipal authorities invited to right of reply meetings in November identified 25% and 18% of the times respectively by the states and municipalities as the instruments to locate best practices. Not surprisingly, the states receiving the largest number of inquiries were those that consistently maintain and develop good practices, such as Colima (with inquiries from 13 states) and Aguascalientes, as well as the State of Mexico (with inquiries from 12 and 9 states, respectively). The capital and the federal government also receive frequent inquiries: 16 states reported having contacted Mexico City and 8 having contacted the federal government. It is also observed that better-performing states are those that make the most efforts to contact others (figure 1.3). The states that made the most efforts to contact other local governments were Guanajuato, which made inquiries to 8 states, and Chiapas, Durango, State of Mexico, and Puebla, consulting 7 states. Mexico is a country characterized by large regional variety and contrasts. The Asociación Mexicana de Secretarios de Desarrollo Económico (AMSDE) the institution that coordinates the Economic Development Secretaries or the equivalent in the states divides the country into 5 regions that share similarities in terms of development, geography, and industries. For example, the South-Southeastern region is rich in natural resources and accounts for a significant percentage of national foreign currency inflows from tourism and petroleum, but also includes the poorest states: poverty rates in Chiapas (32.2%), Guerrero (31.7%), and Oaxaca (23.4%), are 10 times higher than those for the richest states, such as Nuevo León (2.4%), Mexico City (2.5%) or Baja California (2.7%). 15 A comparison of the aggregate rankings of the states in each region shows that each region has states with a good performance even when compared with the others at a national level and others where there is large room for improvement (figure 1.4). From a public policy point of view, these differences reveal opportunities to share successful practices already existing in the region among states displaying similar conditions. However, this collaboration tool is not sufficiently used: the survey carried out shows that only 1 out of 3 states has contacted or has been contacted by another state in the same region.

7 OVERVIEW 7 FIGURE 1.4 Uneven performance among states in the same region reveals opportunities for reform Ranking In the South-Southeast region, Chiapas has the best overall ranking (5) State of Mexico Average regional ranking Guerrero has the worst (29) Mexico City Center West South Southeast Northwest Northeast Center BETTER REGULATORY ENVIRON- MENT IN FOUR AREAS Efficient regulations could also protect states and cities from the negative effects of potential economic crises. A new study indicates that, during the 2008 crisis, the states with better regulations underwent employment losses 2.7% lower than those having less efficient regulations and also showed a 3.1% higher employment level recovery. 16 As a country, Mexico could take advantage not only of internal peer-learning opportunities, but also of international dialogue opportunities with world economies sharing some similar conditions. One opportunity to discuss business regulatory reform is the Ease of Doing Business Action Plan, launched in 2009 by the Asia-Pacific Economic Cooperation Forum (APEC). This action plan established ambitious collective improvement goals and promotes exchange between member countries by means of annual meetings organized by the countries that are designated as champions due to their good practices in each one of the focus areas. Between 2009 and 2012, APEC member countries improved their performance in the 5 indicators by an average 11.5%, but there are still many opportunities for improvement. 17 Learning from the economies that have implemented the best regulatory practices at a global level could motivate the three levels of the Mexican government to be more ambitious in modernizing the regulatory framework in certain areas not just incrementally, but also implementing bold comprehensive measures. This could accelerate the strengthening of the business environment and promote higher productivity, which in turn, would help meet the big challenges posed by poverty, inequality, and regional disparity. NOTES National Development Plan, Government of the Republic, available at 2. See World Bank Fostering sound financial sector development. Mexico policy note; no. 1. Washington D.C.: World Bank, available at org/curated/en/2013/04/ / fostering-sound-financial-sector-development; Toward a more competitive business environment. Mexico policy note; no. 2. Washington D.C.: World Bank, available at en/2013/04/ /toward-more-competitive-business-environment; and Fostering innovation for productivity and competitiveness. Mexico policy note; no. 3. Washington D.C.: World Bank, available at org/curated/en/2013/04/ / fostering-innovation-productivity-competitiveness 3. The two other cross-cutting strategies are a close and modern government and an emphasis on women s rights National Development Plan, Government of the Republic, available at 5. OECD (2012), Getting It Right. A strategic reform agenda for reforms in Mexico, OECD Publishing. 6. The protection of litigant rights is safeguarded by the right to file an action for the protection of constitutional rights (acción de amparo) before the Judicial Power of the Federation. 7. In December 2011, amendments to the Company Law (Ley General de Sociedades Mercantiles) eliminated the minimum capital requirement for limited liability companies and corporations, amounting to MXN 50,000, enabling partners to freely agree upon the share capital. 8. Federal Rights Law (Ley Federal de Derechos) (2012). 9. Today, the national frontier of good practices for starting a business is defined by Guanajuato (5.5 days), 13 states (6 procedures) and Campeche (5.6% of the cost); for construction permits, by Colima (9.5 days), Sinaloa (7 procedures) and Aguascalientes (17.9% of the cost); for registering property, by Colima (2 days), Colima (3 procedures) and Aguascalientes (1.7% of the cost); for enforcing contracts, by Durango (228 days), 18 states (37 procedures) and Aguascalientes (20.6% of the cost).

8 8 DOING BUSINESS IN MEXICO This year, a second measure has been introduced to aggregate the results. In addition to the Mexican overall ease of doing business ranking, the distance to the frontier measure is used (see Data Notes). The ranking compares states with one another, while the distance to frontier measures each state s distance to the best Mexican regulatory practices. Both measures may be used to compare performance over time. When the distance to frontier is used, the extent to which the regulatory environment for doing business has changed in the state is shown in absolute terms, while the ranking only shows improvement in relative terms, i.e., compared to the other measured states. This year, Puebla was the state that made the most progress with respect to the other states (relative terms), but the State of Mexico was the one that most improved its investment climate in absolute terms, as measured by Doing Business in Mexico. 11. Aguascalientes, Colima, Mexico City, State of Mexico, Guanajuato, Guerrero, Nuevo León, Oaxaca, San Luis Potosí, Sinaloa, Tamaulipas, Tlaxcala, and Yucatán. 12. Baja California, Coahuila, Mexico City, Durango, Guerrero, Hidalgo, Nayarit, Nuevo León, San Luis Potosí, Sinaloa, Sonora, Tamaulipas, and Zacatecas. 13. Aguascalientes, Baja California Sur, Campeche, Chihuahua, Colima, Chiapas, State of Mexico, Guanajuato, Jalisco, Michoacán, Morelos, Oaxaca, Puebla, Querétaro, Quintana Roo, Tabasco, Tlaxcala, Veracruz, and Yucatán. 14. The consultation was carried out as part of right to reply meetings held in November 2013 in Mexico City. After the meetings, the 31 states received a form through which they were asked about peer-learning. 15. World Bank Mexico - Country partnership strategy for the period FY Washington D.C.; World Bank, available at org/curated/en/2013/10/ / mexico-country-partnership-strategy-period-fy Iacovone, Leonardo, Felipe Jiménez, and Pilar Sánchez-Bella "Building shock absorbers: The role of better local business regulations in response to a large external shock", Mimeo, Washington D.C.; World Bank. The analysis ranks states in 2 groups, one including states with efficient regulations and the other those having fairly inefficient regulations, using the aggregate ranking published by Doing Business in Mexico Employment data corresponds to formal employment rates by state provided by the Mexican Institute of Social Security (Instituto Mexicano del Seguro Social - IMSS). The results are maintained after controlling for distance to frontier with the United States, the state s per capita GDP level and financial penetration level. 17. There are many other opportunities, such as, for example, the Pacific Alliance, created in 2011 with the aim of promoting regional integration, growth, development, and competitiveness among member countries, which, together, comprise the sixth world economy: Chile, Colombia, Mexico, and Peru or the OECD.