Economic Growth and Regional Integration in Mexico

In this paper we examine the regional structure of output growth, volatility and prosperity in Mexico, focusing in particular on the degree of integration between both the regions and the individual states of the country. The results suggest that there is a high degree of similarity across the regions in the responses to domestic and international shocks affecting the economy, but there are also significant differences across the individual states within each region. We identify a positive relationship between output growth and volatility, but the relationship between growth and regional disparities appears to be negative, suggesting that higher (lower) growth is generally associated with lower (higher) regional dispersion in per capita GDP levels.