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Regional industrial informality and efficiency in Mexico, 1990–2013

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  • Brock, Gregory
  • German-Soto, Vicente

Abstract

The impact of electricity consumption on aggregate regional Mexican industrial labor productivity is examined using a stochastic production function. Electricity consumption is also used to gauge macroeconomic informality that varies greatly across regions with no geographic advantage in reducing it. Unlike prior research, persistent regional technical inefficiency is found that has little impact on reducing informality but may help reducing corruption. Although electricity consumption contributes positively to industrial labor productivity over time, Mexican industry has yet to transition to a much lower consumption/output ratio found in other countries. Regional policies supporting returns to human capital accumulation being better kept by workers while technical inefficiency is reduced are recommended.

Suggested Citation

  • Brock, Gregory & German-Soto, Vicente, 2017. "Regional industrial informality and efficiency in Mexico, 1990–2013," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 928-941.
    • Handle: RePEc:eee:jpolmo:v:39:y:2017:i:5:p:928-941
    DOI: 10.1016/j.jpolmod.2017.07.002
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    2. Farzanegan, Mohammad Reza & Hassan, Mai & Badreldin, Ahmed Mohamed, 2020. "Economic liberalization in Egypt: A way to reduce the shadow economy?," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 307-327.

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    More about this item

    Keywords

    Electricity consumption; Informal economy; Corruption; Mexican industry;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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