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The Impact of Infrastructure on Mexican Manufacturing Growth

  • Alejandro Castañeda

    ()

    (Centro de Estudios Económicos, El Colegio de México. México, D.F. Mexico)

  • Pablo Cotler

    ()

    (Departamento de Economía, Universidad Iberoamericana. México, D.F. Mexico)

  • Octavio Gutiérrez

    ()

    (Secretaría de Hacienda y Crédito Público. México, D.F. Mexico)

This paper analyses the impact of infrastructure on the growth rate of the Mexican manufacturing sector. For such purpose, two measures of infrastructure are used: highways and electricity. Further, we also estimate the degree of returns to scale and the markup. We pooled two digit industries to obtain the estimates of the whole manufacturing sector. For the entire manufacturing sector, our results do not show evidence of increasing returns but the existence of market power cannot be rejected. We find that both types of public infrastructure have a significant effect on manufacturing growth and its inclusion reduces the estimated values of returns to scale and market power. Once we use sectoral data, we obtain mixed results: public infrastructure affects significantly only some sectors.

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File URL: http://www.economiamexicana.cide.edu/num_anteriores/IX-2/02_ALEJANDRO_CASTANEDA_143-164.pdf
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Article provided by in its journal Economia Mexicana NUEVA EPOCA.

Volume (Year): IX (2000)
Issue (Month): 2 (July-December)
Pages: 143-164

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Handle: RePEc:emc:ecomex:v:9:y:2000:i:2:p:143-164
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  1. Charles R. Nelson & Richard Startz, 1988. "Some Further Results on the Exact Small Sample Properties of the Instrumental Variable Estimator," NBER Technical Working Papers 0068, National Bureau of Economic Research, Inc.
  2. Alejandro Castañeda Sabido, 1998. "Measuring the degree of collusive conduct in the Mexican manufacturing sector," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 13(2), pages 157-169.
  3. Nelson, C. & Startz, R., 1988. "The Distribution Of The Instrumental Variables Estimator And Its T-Ratio When The Instrument Is A Poor One," Working Papers 88-07, University of Washington, Department of Economics.
  4. Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
  5. M. Ishaq Nadiri & Theofanis P. Mamuneas, 1994. "Infrastructure and Public R&D Investments, and the Growth of Factor Productivity in US Manufacturing Industries," NBER Working Papers 4845, National Bureau of Economic Research, Inc.
  6. Feltenstein, Andrew & Ha, Jiming, 1995. "The Role of Infrastructure in Mexican Economic Reform," World Bank Economic Review, World Bank Group, vol. 9(2), pages 287-304, May.
  7. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
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