Sanchez-Reaza, Javier
(2003)
Trade, proximity and growth: The impact of economic integration on Mexico's regional disparities.
PhD thesis, London School of Economics and Political Science.
Abstract
Trade theories have stressed the importance of international exchanges in producing benefits for the nations involved. However, neo-classical models have not addressed the plausible spatial implications of trade. More recentiy, the new economic geography has argued that the benefits of trade can be either concentrated in few places or dispersed, subject to the levels of transportation costs. This thesis explores the case of one country to shed light over these theoretical issues. Mexico followed a development model based on import-substitution industrialisation (ISI) until the mid 1980s. This approach was replaced for an export-led strategy, initially based on trade liberalisation when it accessed the General Agreement on Tariffs and Trade (GATT) and later on membership of the North American Free Trade Agreement (NAFTA). These changes make of Mexico an ideal case to explore the impact of trade liberalisation and economic integration on territorial inequalities. Patterns of convergence during ISI and of divergence during GATT and NAFTA were identified through o and (B-convergence analyses. The results show that whereas the final stages of the ISI period were dominated by convergence trends, GATT and NAFTA have led to divergence. In particular, economic integration is related to divergence. Regression analyses show that the above transformations have led to greater concentration of economic activity and territorial polarisation. These changes have profoundly altered the factors associated with regional growth, mainly linked to oil exports, migration and distance to Mexico City at the demise of ISI. Most of these variables are less significant in explaining growth after GATT. NAFTA leads to a shift in the relevant market from Mexico City to the USA and exports are now supported by a dynamic maquiladora industry heavily concentrated in border-states. The above results are confirmed by the study of two regions. The states selected were Chihuahua in the North and Oaxaca in the South, which depict convergence/divergence trends. The northern state has profited from both trade-related periods, whereas the southern has declined after the opening up of the economy. Although industrialisation in the border is relatively more advanced than in the South, the latter seems to be heading in that direction. However, the type of industrial processes locating in both states could signal greater disparities in the future. The cases also show the emergence of regional and local governments as political actors having greater power in shaping territorial growth and the possibility of an emerging knowledge-based economy.
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