Mexicans have been looking jealously across the border at U.S. states like Texas, which have found themselves in the middle of an energy boom as Mexico's oil industry falters. The great irony, of course, is that the Mexican land mass hosts the same geological structures that have made Texas and oil-producing states on the East Coast so prosperous.

But communities on either side of the border inhabit different worlds. The ambitious constitutional reforms won by President Enrique Peña Nieto in December and recently passed by the Mexican Senate are a move to redress the balance.

However, with questions hanging over the state's ability to control lawless regions in the north, it is unlikely that Mexico's weak institutions will be able to see the ambitious reforms through. And despite inevitably high expectations, experience shows that oil revenues are no band-aid for fundamentally unstable nations.

In their book "Why Nations Fail," economists Darren Acemoglu and James Robinson begin with a similar comparison between towns on either side of the U.S.-Mexico border: Nogales (Sonora) and Nogales (Arizona).

The U.S. and Mexico share geographical features like the Eagle Ford formation — known as the Burgos Basin once you cross into Mexican territory — but GDP per capita in the U.S. is more than five times that of Mexico. Given that there is less need for violence when basic needs are met, as a consequence a Mexican citizen is four times more likely to be murdered than a U.S. citizen in Texas.

According to the economists' analysis, these two realities are explained by the gap between the "inclusive" political and economic institutions in the U.S., which provide the right mix of incentives and guarantees to economic actors, and the "extractive" institutions in Mexico, which exclude large parts of the populace from economic activities which advance development.

Avoiding the resource curse

There is no doubt that Mexico needs a boost to its economy. The state depends on national oil company Pemex for a third of its revenues, but in recent years it has seen production and profits nose dive. The extent of its privatization is contested, although it certainly needs an overhaul.

Mexico's car manufacturers are now the second largest exporter to the U.S. market, and the country's growing clusters of industry are hungry for energy sources. Given that Mexico hosts 0.7 percent of global proven oil reserves, 0.3 percent of its natural gas, and reportedly the world's seventh-largest shale reserves, it makes sense to use home-grown sources to satisfy growing demand rather than pay for premium imports.

But just as having the world's most powerful economy (also the world's largest illicit drug consumer) as a neighbor can be as much of a curse as a blessing, so can oil. The "resource curse" is the political and economic phenomenon whereby natural resource wealth paradoxically leads to worsening developmental outcomes rather than greater prosperity in producing nations.

Acemoglu and Robinson argue that state institutions are key to avoiding or succumbing to the resource curse. In countries with bad institutions, such as Nigeria, resource abundance lowers their rate of economic growth. But in countries with good institutions, such as Norway, it increases it.

Unaccountable governments and weak state capacity are both obstacles. Mexico's weak rule of law and the spiraling violence in the country, are the most obvious example of institutional weakness. They are also among the greatest concerns for the investors that Mexico hopes will flood in once the energy reforms are finalized.

Those energy companies that already operate in the country often have to escort workers to and from drilling sites. In fact, employees of Weatherford International in Tamaulipas state faced a barrage of gunfire at their hotel from local traffickers in April.

While larger oil majors are used to putting in place elaborate security measures and protecting their installations with armies of private security guards, the smaller independents that have led the U.S. shale boom are unlikely to take the risk.

The 'Colombianization' of Mexico

Perhaps the comparison to the U.S., one of the richest nations in the world, is an unfair one. It may be more productive to draw comparisons with one of Mexico's southern neighbors, Colombia. During the 1980s and 1990s large swaths of Colombia were turned into a battleground for armed groups, and only the bravest investors ventured into the country.

Since the turnaround in Colombia's security environment from 2000 onward, Colombia's star has risen in the oil and gas world, and $4.9 billion of foreign investment flooded into the sector in 2013.

In the meantime we have seen what has been dubbed the "Colombianization" of parts of Mexico, as the drug trade has been forced out of Colombia by the government, financed by generous funding from the U.S. in the form of multimillion-dollar Plan Colombia. One blogger has even suggested that Mexico is suffering form its own brand of the "resource curse," where instead of oil, the resource is drugs and the market is the U.S.

In both Mexico and Colombia some of the areas richest in hydrocarbons have been some of the most violent — in Colombia's case, the remote parts of the Llanos basin, and in Mexico the Burgos Basin. Just as the paramilitaries and guerrilla groups once did in Colombia, now feared Mexican gangs such as the Zetas and the Gulf Cartel finance their activities through kidnappings and the drug trade.

Mexico's poor oil and gas infrastructure has been cited as a major obstacle to the development of the oil industry, but even once infrastructure is in place, Colombia's experience should serve as a warning. There were 259 attacks on Colombia's Caño Limon pipeline in 2013 amid worrying signs that, with the arrival of international oil companies, Colombia's guerrilla groups were ditching kidnapping for the far more lucrative business of extorting Big Oil.

The $400 million U.S.-funded Merida Initiative is Mexico's answer to Plan Colombia, but its implementation will be challenging and we are not yet seeing results. Colombia has not — and may still not — escape the resource curse, and its security gains may be impressive only because of the low starting point (a spike in attacks on infrastructure in 2013 has spooked some investors).

The Colombian state is regaining its monopoly on legitimate violence, and the homicide rate is moving in the right direction. Unfortunately the same cannot be said for Mexico.

The retreat offshore

Despite the hype around onshore shale resources, the energy reforms are more likely to give a boost to Mexico's conventional oil and gas industry, attracting big oil majors with the resources to build offshore megaprojects in the Bay of Campeche (the Mexican extension of the Gulf of Mexico).

Retreating offshore in the wake of escalating violence is an old trick of oil majors in unstable jurisdictions. This was their response when theft, violence and unrest became too destructive in the Niger Delta.

Until Peña Nieto wins what seems like an unwinnable war on drugs, international investment in Mexico will carry a high price. More importantly, unless the constitutional reforms result in the building of more inclusive institutions, the rewards of that investment are as likely to trickle down to armed groups as they are to ordinary Mexicans. The Mexican government needs to get its house in order before it throws open its doors to oil companies.