Regional Industrial Growth in Mexico: Do Human Capital and Infrastructure Matter?

Abstract

A production function analysis of the 32 Mexican regions reveals almost no technological progress and human capital impact in Mexican industry over a 44 year period. While extensive growth is found prior to 1985, little evidence for extensive or intensive growth except for the labor input is found. Recently developed variables for infrastructure suggest neither transportation nor communications infrastructure is impacting on industrial growth in a significant way. Human capital is not yet important in the open era, but should be included as a separate factor of production in analyzing Mexican industrial growth though the impact is sensitive to how it is defined. Results appear robust to various regional groupings suggesting outlying regions need policies similar to the rest of the country.

Keywords: Mexico’s regions, long run industrial growth, human capital, infrastructure

JEL Classification: R11, O15, J24, H54