IDEAS home Printed from
   My bibliography  Save this paper

Institutional Factors in the Economic growth of Mexico


  • Luisa Decuir-Viruez



During the last three decades Mexico has grown with an annual average rate of 4%, even with the changes from an inward-looking developing economic strategy towards a more open economy with a far-reaching trade liberalisation program. But the story at the sub-national level is different; these changes have modified the regional development strategies and consequently the growth paths of the 32 Mexican states. There is evidence of an uneven growth, greater disparities and important differences in welfare standards among regions. Labour, physical and human capital are traditional factors that can explain these differences, but how much agglomeration economies and institutions have contributed to them. Using elements from the neoclassical, new growth theories and new economic geography we measure the contribution of these factors. We open the discussion on how institutional factor determine growth rate, how we define and measure them in a developing economies such as Mexico. Firstly, we assume that markets are socially constructed and economic behaviour is created in networks of interpersonal relations. Institutions are according to North(1991) the game rules, in other words, the man-designed limits that determine the forms of social relationships. The importance of these institutional elements in the regional level could be found in the contribution they have had in the reorganization of the production forms, through the reduction of transaction and production costs, the definition of the incentives structure and the changes of social participation. In this scheme, two groups of institutional elements could be identified: a)the soft institutional factors that refers to individual habits, routines, customs, traditions, social norms and values, which show some of the characteristics of the networks of interpersonal relations; b)the hard institutional factors are the long-lasting collective forces that shape the economy, such as rules, laws, constitutions, property rights, etc. However institutional factor can not explain by itself high growth rate, but added to economic and social variables, it might contribute to create a dynamic processes with higher levels of growth. Assuming this perspective, we hypothesise that the uneven regional growth in Mexico can be explained by institutional factors. Firstly, we propose that states with an economic local policy more open to trade and foreign investment have led to higher growth rates; contrasting with those states that maintain stronger links with central government. Secondly, we add some of the characteristics of the networks in the regions, in order to show if a greater participation of population and changes in the political local governments have had an impact on growth. Our results indicate that there has not been any regional convergence after the openness period (1985-2000) and that the institutional structure has a significant relation with higher growth rates states.

Suggested Citation

  • Luisa Decuir-Viruez, 2003. "Institutional Factors in the Economic growth of Mexico," ERSA conference papers ersa03p264, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa03p264

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. John F. Helliwell & Robert D. Putnam, 1995. "Economic Growth and Social Capital in Italy," Eastern Economic Journal, Eastern Economic Association, vol. 21(3), pages 295-307, Summer.
    2. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1251-1288.
    3. Hall, Robert E & Jones, Charles I, 1997. "Levels of Economic Activity across Countries," American Economic Review, American Economic Association, vol. 87(2), pages 173-177, May.
    4. 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;Regional Science Association International, vol. 81(2), pages 139-155.
    5. Gerardo Esquivel, 2000. "Geografía y desarrollo económico en México," IDB Publications (Working Papers) 2049, Inter-American Development Bank.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Gnidchenko, Andrey, 2011. "Моделирование Технологических И Институциональных Эффектов В Макроэкономическом Прогнозировании
      [Technological and Institutional Effects Modeling in Macroeconomic Forecasting]
      ," MPRA Paper 35484, University Library of Munich, Germany, revised May 2011.
    2. Maria Luisa Decuir-Viruez, 2006. "Institutions and Regional Economic Growth: An Assessment of Mexican Regional Strategies 1970-2000," ERSA conference papers ersa06p344, European Regional Science Association.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa03p264. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.