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Long-Run Cross-State Growth Comparison in Mexico

German-Soto, Vicente and Gluschenko, Konstantin (2021): Long-Run Cross-State Growth Comparison in Mexico.

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Abstract

In this paper, we examine economic growth in Mexican states over 1940–2015, focusing on the issue of their convergence interpreted as catching-up. A nonlinear econometric model with asymptotically decaying trends of the income gap is applied for the analysis. Particular cases of the baseline model capture other types of the income gap dynamics, namely, time-invariance, zero gap, and deterministic divergence. We analyze convergence of every state to the national level and convergence in each of 496 state pairs. Both analyses suggest one or other type of regularity to be peculiar to roughly 40% of income gap time series. Convergence is found in 6% to 15% of cases. Depending on approach to choosing among competing versions of the model, we find 55 or 76 convergence clubs; an individual club includes 3 to 7 members. The clubs heavily overlap, which makes interpretation of the pattern obtained to be a daunting task.

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