Is NAFTA Polarizing Mexico? Or El Sur Tambien Existe? Spatial Dimensions of Mexico's Post-Liberalization Growth

Aroca, Patricio; Maloney, William F.; Bosch Mossi, Mariano

doi:10.2139/ssrn.402440

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Is NAFTA Polarizing Mexico? Or El Sur Tambien Existe? Spatial Dimensions of Mexico's Post-Liberalization Growth

28 Pages Posted: 18 Jun 2003

See all articles by Patricio Aroca

William F. Maloney

World Bank - Poverty and Economic Management Unit; IZA Institute of Labor Economics; World Bank - Development Research Group (DECRG)

Standard parametric tests of convergence cannot capture whether the increased dispersion among state incomes is due to a steepening gradient between north and south, a few hot states randomly distributed, or as an intermediate position, the emergence of convergence clubs. This paper tests for spatial dependency in income levels and growth rates before and after the trade liberalization of 1985. Looking at levels of income per capita, we clearly identify a "South", but there is no "North" or "Center". Beyond the frontline states on the US border, we immediately enter an area as poor as the South and incomes in the central zone itself are almost randomly distributed geographically. Growth shows little evidence of spatial dependency in any period: There is only weak evidence of a South and none of a North. A strong co-movement of Chiapas and Oaxaca emerged in the 1995-00 period, but it had little historical precedent and whether it will continue cannot be foreseen.

Keywords: Regional Covergence, Growth, Spatial Econometrics, Markov Chains, Mexico

JEL Classification: O1, R11, R12, F1

Suggested Citation: Suggested Citation

Aroca, Patricio and Maloney, William F. and Bosch Mossi, Mariano, Is NAFTA Polarizing Mexico? Or El Sur Tambien Existe? Spatial Dimensions of Mexico's Post-Liberalization Growth (January 2003). Available at SSRN: https://ssrn.com/abstract=402440 or http://dx.doi.org/10.2139/ssrn.402440