Testing Stochastic Convergence among Mexican States: A Polynomial Regression Analysis


  • Vicente German-Soto Faculty of Economics, Autonomous University of Coahuila
  • Natalia Salazar Garza Faculty of Economics, Autonomous University of Coahuila




Convergence, polynomial regression, economic growth, Mexican states


Another look on the economic convergence among Mexican states is offered examining whether they are approaching along 1940-2010. Methodology is based on polynomial regressions, a method that determines whether predictions can be significantly improved by increasing the complexity of the fitted straight-line model. Estimates from a set of polynomial terms are a theoretical approximation to income differentials, so it constitutes an adequate frame to analyze if different initial conditions tend to diminish in the long-run. We calibrate for each economy the polynomial equation of best adjustment supported in information criteria and a strategy of backward iterative elimination. Empirical results are according with the stochastic convergence, but in a relationship where it changed after trade opening, poorer states are diverging and richer states are converging. A focalized regional policy is necessary with the aim to correct the biases produced in a context where some regions are lagging while others more are advancing.




Special Issues | Economic Growth and Convergence: Analyses for the Mexican States