After 12 years away from Mexico's White House, Los Pinos, the Institutional Revolutionary Party (PRI) is back. Enrique Pena Nieto won the July 1 election by 7 percentage points, and his party substantially increased its power by winning gubernatorial and congressional races. The question now is what the once and future ruling party will do on its return. Mexico stands at the cusp of becoming a leading and globally competitive market-based democracy, but so far it has been held back by strong monopolies, a weak judicial system and, increasingly, basic safety concerns.
To overcome these challenges and move past its current subpar 3 percent gross domestic product (GDP) growth potential, Mexico's new government needs to pass and implement several important economic and political reforms, including opening the energy sector, improving access to financial markets, and undertaking broad fiscal restructuring. Ingrained social and political opposition to these reforms may prove too powerful for President-elect Pena Nieto to overcome fully. However, piecemeal gains that increase productivity and growth are possible, especially in the short term.