The World Bank Economic Review Advance Access originally published online on December 23, 2005
The World Bank Economic Review 2005 19(3):345-378; doi:10.1093/wber/lhi018
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Spatial Dimensions of Trade Liberalization and Economic Convergence: Mexico 1985–2002
Patricio Aroca is a professor and director of the Institute for Applied Regional Economy (IDEAR) at the Universidad Católica del Norte, Antofagasta, Chile; his email address is paroca{at}ucn.cl.
Mariano Bosch is a PhD student in economics at the London School of Economics and Political Science; his email address is m.bosch{at}lse.ac.uk.
William F. Maloney is a lead economist in the Office of the Chief Economist for Latin America at the World Bank; his email address is wmaloney{at}worldbank.org.
This article employs established techniques from the spatial economics literature to identify regional patterns of income and growth in Mexico and to examine how they have changed over the period spanned by trade liberalization and how they may be linked to the income divergence observed following liberalization. The article first shows that divergence has emerged in the form of several income clusters that only partially correspond to traditional geographic regions. Next, when regions are defined by spatial correlation in incomes, a "south" clearly exists, but the "north" seems to be restricted to the states directly on the U.S. border and there is no "center" region. Overall, the principal dynamic of both the increased spatial dependency and the increased divergence lies not on the border but in the sustained underperformance of the southern states, starting before the North American Free-Trade Agreement, and to a lesser extent in the superior performance of an emerging convergence club in the north-center of the country.