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Institutions and Regional Economic Growth: An Assessment of Mexican Regional Strategies 1970-2000

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  • Maria Luisa Decuir-Viruez

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Abstract

Different factors have been included in order to explain the causes of growth and the disparities observed in the last century. This paper examines the role of institutional factors in the growth rates observed among the 32 states in Mexico in the period 1970-2000. The institutional elements considered are the “strategies†of local governments, in order to assess if the active strategies (those that are participative, open to global economies and less dependent upon central authorities) have better results in terms of growth than the passive type (those that are dependent on central authorities and have restricted external links). Following on from the documents presented at the ERSA Annual Conferences of 2003/4/5, this paper presents the final assessment of the relationship between institutional elements and growth. This includes identification and measurement of the institutional elements (strategies) through Principal Components Analysis (PCA); and its evaluation with growth using Ordinary Least Square Regressions (OLS). The PCA results identified components related to hard and soft institutional elements (strategies and social networks). Meanwhile, the OLS results suggest that institutions matter; in the case of Mexico, the strategies taken by regional governments in the period 1970-2000 have had some influence in their paths of growth and levels of investment. Furthermore, after 1985 there is evidence that the active strategies (which have substituted the national regional policy) are related to a positive performance, in contrast to the passive type.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa06p344.

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Date of creation: Aug 2006
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Handle: RePEc:wiw:wiwrsa:ersa06p344

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  1. Xavier Sala-i-Martin, 2002. "15 Years of New Growth Economics : What Have we Learnt?," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, Central Bank of Chile, vol. 5(2), pages 5-15, August.
  2. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, American Economic Association, vol. 73(1), pages 31-43, March.
  3. Anil Rupasingha & Stephan J. Goetz & David Freshwater, 2002. "Social and institutional factors as determinants of economic growth: Evidence from the United States counties," Papers in Regional Science, Springer, Springer, vol. 81(2), pages 139-155.
  4. Luisa Decuir-Viruez, 2003. "Institutional Factors in the Economic growth of Mexico," ERSA conference papers, European Regional Science Association ersa03p264, European Regional Science Association.
  5. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, Elsevier, vol. 16(2), pages 141-163, September.
  6. Rodriguez-Pose, Andres, 1998. "Dynamics of Regional Growth in Europe: Social and Political Factors," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198233831, October.
  7. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1251-88, November.
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