The determinants of the regional patterns of manufacturing growth in Mexico, 1970-1988

This research analyzes the determinants of the interregional manufacturing growth in Mexico through the application of multiple regression analysis to a model that explores the relationship between state manufacturing growth and state attributes, that are assumed to capture state profitability. A disequilibrium model is adopted, in which changes in state manufacturing output during a period are associated with levels of state attributes at the beginning of the period. This assumes that industry growth occurs as industry moves to areas with above-equilibrium profit levels. The model is tested for 19 industries and two periods (1970-1980 and 1980-1988) based on cross-section data for all the Mexican states, and using the SUR technique. This research also defines the changes in the regional distribution of manufacturing through the computation of regional output shares over time and a shift-share analysis for two periods. All the analyses are carried out by industries.; A moderate shift of output away from the Metropolitan Area of Mexico City (MAMC) and largely toward the Central region occurred in 1970-1980, which was largely accounted for by industrial chemicals, automobiles, and machinery and equipment. During 1980-1988, the shift away from the MAMC became very pronounced, and it was largely toward the North-central and Central-west regions. The shift toward the former was impressive, and it was mostly accounted for by automobiles and electric machinery and equipment. The deconcentration of manufactures has thus been biased toward regions that already had a stable industrial base since the early 1970s.; Manufacturing within the main industrial regions expanded in different ways. In 1970-1980, the above average growth of the MAMC (in the group of industries analyzed) was due to its rather strong specialization in fast-growth industries, and it was achieved despite of its deteriorating competitive position. In contrast, the above average growth of the Central and Central-west regions occurred mostly because of competitive position improvements. But these regions' specialization in fast-growth industries also contributed to their above average performance. The Northeast's above average growth reflected a balanced contribution of both factors.; In 1980-1988, all regions recorded a negative impact from their industrial mix as most industries recorded either a decline or a sluggish growth at the national level. The MAMC recorded a sizable decline in output as its competitive position also experienced a drastic deterioration. In contrast, the noticeable improvements in the competitive position of the North-central, Northwest, and Central regions, were large enough to produce an above average performance.; Among those state characteristics accounted for in the regression model, market potential and, to a lesser extent agglomeration economies, are the most influential for the period 1970-1980. In general, durable and intermediate goods industries show an stronger tendency than consumer goods industries to expand output in states with advantages in these factors. Manufacturing output growth appears to be insensitive to inter-state differentials in labor productivity. Contrary to expectations, manufacturing industries have not avoided states with high business tax efforts. Likewise, public investment in economic infrastructure does not appear to be a factor for the growth of most industries across states. (Abstract shortened by UMI.)...