: quot;In Mexico, public spending on infrastructureelectricity generation, roads, railways, water plants and the likewas a third lower in 2004 than

: “In Mexico, public spending on infrastructure—electricity generation, roads, railways, water plants and the like—was a third lower in 2004 than a decade earlier, according to a report by Merrill Lynch, an investment bank. The World Bank describes two-fifths of the country’s motorways as ‘pre-modern’. Nevertheless, the government has found the money to spend 0.7 percent of GDP on subsidizing the electricity that is consumed—which does nothing for the poorest, who live in the dark in rural areas.” (“Slow! Government obstacles ahead,” The Economist, Jun. 15, 2006.) the situation described represents a misallocation of resources that will inhibit economic growth in Mexico. What ingredients are missing from the “recipe” for growth in this case?