Mexico - Current economic position and prospects (Vol. 3 of 5) : Transport

| RETURN iro | RESTR jIEPORTS DESKf Report No. WH-164b This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIArION CURRENT ECONOMIC POSITION AND PROSPECTS OF MEXICO (in five volumesl VOLUM1!E III - ANNEX VI - TRANSPORT October 26, 1966 Western Hemisphere Department  C'u'RRENCY EQUiVALENTS U. S. $1 = 12. 50 pesos I peso (Mex$) = U.S. $0.08 l millioil --sos TT CZ S. $80A00  ANNEX VI TRANSPORT TABLE OF CONTENTS Page No. I. Railways 2 A. Background 2 B. Past Investment 3 C. Traffic 5 D. Revenues and EXpenses 8 E. New RailwTay Construction 14 F. Cash Flow Analysis (Statements 7, 8 and 9) 16 G. Programming 1966-1970 17 H. Government Equity and Lack of Return 18 II. Roads 20 A. General 20 B. Planning and Programming 22 C. Future Investment 24 III. Civil Aviation 27 IV. Ports 30 Statistical Tabies This annex was prepared by Mr VicentW. Hogg  INTRODUCTION 1. Mexico has a transportation system which, by and large, has been able to provide a rapidly expanding economy with the services it required. While undoubtedly it is possible to point to some investments that may have been redundant or, at least, premature, and to others that may have been unduly delayed, these seem to be special and atypical cases. The transport infrastructure of the economy, in general, does not seem to have constituted either a bottleneck for overall growth or an impediment to the development of a sound balance in the growth of the other sectors. To the extent that there are important doubts about the sector's economic performance,in the main they are rather whether its potential is fully utilized and whether the benefits it generates are distributed according to priorities needs that are compatible with the country's overall objectives. Thus the financial defi- cits of the railways do not in themselves indicate a lack of economic ben- efits, but suggest that the benefits are concentrated among small groups of wage earners and users, vwhere the former receive remunerations in excess of the going wage rates and the latter pay less than the full cost of the ser- vice. Similarly, while there is doubt regarding the amount and the trend of users' contributions to the costs of the highway system, this may imply that the users garner a larger than necessary share of the benefits of the ser- vice and that the economy's savings Dotential may be underexploited. Given an overall shortage of investible funds and the need to provide transporta- tion to the economy at the lowest possible cost.. these are serious issues but they should not obscure the undoubted benefits which the economy has re.-eived from it.s past large inv.estments in transport. facilitles laWhqt seems urgent now is the evolution of an overall transportation policy, i.e. one~ that would r hboth vie t-he~ ra_ln- y asn~c a na+iornal syste+m andr als _onsi1der investments in railroads, roads and airports in the light of the overall demand for transportation ar.d t1he rosteo mc meanS of -roviding the services necessary to meet this demand. To guide investment decisions among Comn,nt.ina transcznt-r+. rves an irdlntifi atfion of.lf t prreise subhsi dV element inherent in present rates, taxes and prices will be needed. A se- ries of studies recently in.itiated wi+h- +he f+ of Mexico are an indication that it is intended to move in this direction. 2. As in other sectors, the mission did not attempt to repeat the au,_sti-ve ar.alysis of the transport sec4tor -ade Iby a previous Bank .iso V~