Regional Integration and Convergence: Some Evidence for Mexican Regions 1994-2004

Abstract:     
This paper aims to outline evidence on how regional integration can be beneficial for income convergence of Mexican regions over the period 1994 to 2004. Thus, two main concepts of convergence are studying: the sigma and beta-convergence. More precisely, we are estimating an augmented model of conditional beta-convergence within the panel data approach that considers, in essence, border-effect and human capital, as key factors. The findings tend to emphasize a national gap between Mexican regions which indicates that spatial belonging matters. Thus, based on north regional outcomes, Mexico would be advantaged in joining preferential agreements within upper developed countries, for instance the North American Free Trade Agreement, although, from south regional point of view, it should be better-advised to enter into a formal agreement with even-developed nations, such like the Latin American Integration Association.

Keywords: convergence, panel data, regional integration, Mexico

JEL Classification: C33, O47, O54

Accepted Paper Series