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Trade Liberalization and Regional Income Convergence in Mexico: a Time-Series Analysis

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  • Manuel Gomez

    () (Department of Economics and Finance, Universidad de Guanajuato)

  • Daniel Ventosa-Santaularia

    () (Department of Economics and Finance, Universidad de Guanajuato)

Abstract

We study the hypothesis of convergence amongst Mexican regions since 1940 with special interest in the post-trade liberalization period. A standard time-series convergence test shows that per capita income levels between the capital and the rest of the regions tend to narrow over time. Using the concept of deterministic and stochastic convergence, we describe the specific characteristics of the growth pattern for each of the regions. We find evidence that supports the hypothesis that trade reforms reversed the convergence process of some regions, especially those less developed. Results further suggest that trade liberalization did not contribute to per capita income convergence between the U.S. and Mexico border regions.

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Bibliographic Info

Paper provided by Universidad de Guanajuato, Department of Economics and Finance in its series Department of Economics and Finance Working Papers with number EM200702.

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Length: 16 pages
Date of creation: Mar 2007
Date of revision:
Publication status: Published in Trimestre Económico (2009)
Handle: RePEc:gua:wpaper:em200702

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Web page: http://economia.ugto.org/
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Keywords: Catching-up; Convergence; Deterministic Trend; Unit Root;

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  1. Andrew B. Bernard & Steven N. Durlauf, 1994. "Interpreting Tests of the Convergence Hypothesis," NBER Technical Working Papers 0159, National Bureau of Economic Research, Inc.
  2. Kian-Ping Lim & M. Azali & Hock-Ann Lee, 2005. "Income Disparity between Japan and ASEAN-5 Economies: Converge, Catching Up or Diverge?," Economics Bulletin, AccessEcon, vol. 6(13), pages 1-20.
  3. Chiquiar, Daniel, 2005. "Why Mexico's regional income convergence broke down," Journal of Development Economics, Elsevier, vol. 77(1), pages 257-275, June.
  4. Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1, April.
    • Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1, April.
  5. Javier Sánchez-Reaza, 2002. "The Impact of Trade Liberalization on Regional Disparities in Mexico," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 33(1), pages 72-90.
  6. Slaughter, Matthew J., 2001. "Trade liberalization and per capita income convergence: a difference-in-differences analysis," Journal of International Economics, Elsevier, vol. 55(1), pages 203-228, October.
  7. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
  8. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
  9. repec:ebl:ecbull:v:6:y:2005:i:13:p:1-20 is not listed on IDEAS
  10. Oxley, Les & Greasley, David, 1995. "A Time-Series Perspective on Convergence: Australia, UK and USA since 1870," The Economic Record, The Economic Society of Australia, vol. 71(214), pages 259-70, September.
  11. Li, Qing & Papell, David, 1999. "Convergence of international output Time series evidence for 16 OECD countries," International Review of Economics & Finance, Elsevier, vol. 8(3), pages 267-280, September.
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Cited by:
  1. Baafi Antwi, Joseph, 2010. "Ghana's Economic Growth in perspective: A time series approach to Convergence and Growth Determinants," MPRA Paper 23455, University Library of Munich, Germany, revised 12 Jun 2010.

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