Once An Economic Afterthought, Oaxaca Now Leads The Country In Industrial Growth

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The Interoceanic Train and associated CIIT project have been credited for Oaxaca’s recent boom in industrial growth. (Gobierno del Estado de Oaxaca)

Oaxaca led the country for industrial growth in December 2024, marking the second consecutive month the historically underdeveloped southern state topped the list, according to a national survey.

The national statistics agency INEGI industrial development survey measures growth by state on a monthly and annualized basis. A recent survey found that Oaxaca topped the list of 19 Mexican states that experienced industrial growth in the last month of 2024.

Rural, mountainous Oaxaca has historically received little industrial investment, sometimes due to opposition from local Indigenous communities. (Lon&Queta CC BY-NC-SA 2.0)

The data for December, released on Wednesday, indicates Oaxaca saw 18.8% growth compared to December 2023. Only one other state — Colima, at 10.8% — hit double figures. Baja California Sur was third with 9.8% growth.

Oaxaca was No. 1 in November as well, recording 15.9% growth, just above Guerrero (15.1%) and Baja California Sur (14.4%).

Manufacturing and construction drove Oaxaca’s December performance. The former climbed 19.9% compared to December 2023 while the latter rose 19.5%. The surge in these sectors offset negative numbers in mining (down 9.4%) and minimal energy sector growth (4.2%).

Oaxaca has benefited from the US $2.8-billion Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) project — featuring near-complete cargo and passenger rail lines connecting the Pacific Ocean with the Gulf of Mexico. A trunk line from Coatzacoalcos, Veracruz, to Ciudad Hidalgo, Chiapas, will be completed later this year.

The CIIT project also includes 10 industrial development poles, as well as the expansion of “intermodal” infrastructure at the ports of Salina Cruz, Oaxaca, and Coatzacoalcos.

The development poles — six of which are located in Oaxaca — consist of from 80 to 500 hectares of property used primarily to house industrial parks.

Oaxaca’s Minister of Economic Development Raúl Ruiz Robles told El Economista that he anticipates the development poles in his state will attract more than 720 billion pesos (US $35.3 billion) in investment over the next six years.

The state is also investing in highway upgrades with two projects in particular paving the way: improvements to the Mitla-Tehuantepec section of Highway 190 that connects the eastern end of the central valley with Tehuantepec, the second largest city in the Isthmus; and the Barranca Larga-Ventanilla section of Highway 175 that connects central Oaxaca with the Pacific Coast near Salina Cruz.

The US $2.8-billion Interoceanic Corridor project (CIIT) has brought infrastructure development to the Oaxacan countryside. (Presidencia/Cuartocuro)

The government is also building a gas line that would serve both residential and industrial needs.

There is still plenty of room for growth, said José María Villalobos, a consultant and former president of Oaxaca’s College of Economics.

He noted that despite the surge in investments — especially in housing, tourism and infrastructure — the CIIT project has not translated into job growth. Perhaps of more concern, according to Villalobos, is the notable lack of interest in developing alternative sources of energy, such as wind farms.

In some instances, Indigenous communities have fought against the installation of wind farms, and the lack of new energy sources, Villalobos says, has limited the arrival of new manufacturing enterprises.

With reports from El Economista and Revista Transportes y Turismo