REGIONAL ECONOMIC CONVERGENCE IN MEXICO - AN ANALYSIS BY INDUSTRY

Existing studies of convergence across jurisdictions of a nation have focused on developed economies. A key assumption underlying regional convergence is geographical factor mobility, and in a developed economy, mobility is facilitated by low transportation costs. By the same token, convergence in a less-developed economy may be impeded by the absence of a well-developed transportation infrastructure. We examine the rate and industrial composition of economic convergence in a neighboring less-developed country (LDC), Mexico, to examine how it might have differed from the U.S. experience. We find evidence of stronger convergence in Gross State Product per capita in Mexico relative to existing estimates of U.S. convergence. Further, while manufacturing activity has been found to be a primary source of convergence in the U.S., we find weaker evidence of convergence of manufacturing activity in Mexico. On the other hand, industries such as hotels and transportation were found to be significantly influential in regional convergence in the Mexican economy.