Why Mexico's regional income convergence broke down

According to previous research, Mexico's trade reforms led to a divergent pattern in regional percapita output levels. This research did not fully include Mexico's regional growth performance after 1994, when NAFTA started operating. In this paper, I extend the sample to include Mexico's regional growth patterns after this treaty was enacted and I explore what factors may account for this result. The findings suggest that the divergent pattern observed after 1985 was not reversed with NAFTA. The results also suggest that the winners from the reforms were those states initially endowed with, or able to attract, higher levels of human and physical capital and better infrastructure. (c) 2004 Elsevier B.V. All rights reserved.