Institutional Factors and Economic Growth in Mexico - Two regional case studies - Aguascalientes and Veracruz (1970-2000)

This paper examines the role of institutional factors in the economic growth of Mexican regions. Following on from the documents presented at the ERSA Annual Conferences of 2003/4, it contains an analysis of two of these regions and seeks to illustrate the characteristics and evolution of their institutional frameworks as well as their relationship with economic growth. The regions are Aguascalientes - one of the most successful cases in Mexico in the period 1970 to 2000 - and Veracruz - one of the most lagging regions for the same period. The aim of this paper is to find the institutional elements (incentives, rules, laws and informal agreements) that are behind the economic variables, and, ultimately, to evaluate whether they have helped these regions to have better results in terms of growth. Market orientation, the strategic sectors, their instruments of promotion and export and Foreign Direct Investment projects (fiscal incentives, installation and administrative facilities) were all evaluated at local level. The fluctuations of local public finances and the level of financial autonomy were also included in the analysis. With the results of this paper we intend to contribute to the understanding of the relationship between institutional features and regional growth.