Testing Stochastic Convergence among Mexican States: A Polynomial Regression Analysis
DOI:
https://doi.org/10.6000/1929-7092.2016.05.04Keywords:
Convergence, polynomial regression, economic growth, Mexican statesAbstract
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.References
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http://dx.doi.org/10.1016/S1059-0560(99)00020-9
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http://dx.doi.org/10.1080/00036846.2014.1000523
Lucas, Robert E. 1988. “On the Mechanics of Economic Development.” Journal of Monetary Economics, 22(1):3–42.
http://dx.doi.org/10.1016/0304-3932(88)90168-7
Mankiw, N. Gregory; Romer, David and Weil, David N. 1992. “A Contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics 107(2):407–437.
http://dx.doi.org/10.2307/2118477
Montañés Antonio; Olloqui, Irene and Calvo, Elena. 2005. “Selection of the Break in the Perron-Type Test.” Journal of Econometrics 129:41–64.
http://dx.doi.org/10.1016/j.jeconom.2004.09.003
Nahar, S. and Inder Brett. 2002. “Testing Convergence in Economic Growth for OECD Countries.” Applied Economics 34:2011–2022.
http://dx.doi.org/10.1080/00036840110117837
Ng, Serena and Perron, Pierre. 1995. “Unit Root Tests in ARMA Models with Data-Dependent Methods for the Selection of the Truncation Lag.” Journal of the American Statistical Association 90:268–281.
http://dx.doi.org/10.1080/01621459.1995.10476510
Ng, Serena and Perron, Pierre. 2001. “Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power.” Econometrica 69(6):1519–1554.
http://dx.doi.org/10.1111/1468-0262.00256
Nonneman, Walter and Vanhoudt, Patrick. 1996. “A Further Augmentation of the Solow Model and the Empirics of Economic Growth for OECD Countries.” Quarterly Journal of Economics, 111(3):943–953.
http://dx.doi.org/10.2307/2946677
Quah, Danny T. 1996. “Empirics for Economic Growth and Convergence.” European Economic Review 40(6):1353–1375.
http://dx.doi.org/10.1016/0014-2921(95)00051-8
Rey, Sergio J. and Montouri, Brett D. 1999. “US Regional Income Convergence: A Spatial Econometric Perspective.” Regional Studies 33(2):143–156.
http://dx.doi.org/10.1080/00343409950122945
Romer, Paul M. 1986. “Increasing Returns and Long-Run Growth.” Journal of Political Economy 94:1002–1037.
http://dx.doi.org/10.1086/261420
Solow, Robert. 1956. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70(1):65–94.
http://dx.doi.org/10.2307/1884513
Yau, Ruey and Hueng, C. James. (2007). “Output Convergence Revisited: New Time Series Results on Industrialized Countries.” Applied Economics Letters 14:75–77.
http://dx.doi.org/10.1080/13504850500425543""
http://dx.doi.org/10.1007/BF00150197
Badinger, Harald; Müller, Werner, and Tondl, Gabriele. 2004. “Regional Convergence in the European Union, 1985-1999: A Spatial Dynamic Panel Analysis.” Regional Studies 38(3):241–253.
http://dx.doi.org/10.1080/003434042000211105
Barberá, Rafael A. and Doncel, Luis M. 2003. La Moderna Economía del Crecimiento, Madrid: Síntesis.
Barro, Robert J. and Sala-i-Martin, Xavier. 1991. “Convergence across States and Regions.” Brookings Papers on Economic Activity 1:107–158.
http://dx.doi.org/10.2307/2534639
Barro, Robert J. and Sala-i-Martin, Xavier. 2004. Economic Growth, Cambridge: The MIT Press.
Ben-David, Dan. 1998. “Convergence Clubs and Subsistence Economies.” Journal of Development Studies 55(1):155–171.
http://dx.doi.org/10.1016/s0304-3878(97)00060-6
Bernard, Andrew B. and Durlauf, Steven N. 1995. “Convergence in International Output.” Journal of Applied Econometrics 10:97–108.
http://dx.doi.org/10.1002/jae.3950100202
Berthelemy, Jean C. and Varoudakis, Aristomene. 1996. “Economic Growth, Convergence Clubs, and the Role of Financial Development.” Oxford Economic Papers 48(2):300–328.
http://dx.doi.org/10.1093/oxfordjournals.oep.a028570
Bianchi, Marco. 1997. “Testing for Convergence: Evidence from Non-Parametric Multimodality Tests.” Journal of Applied Econometrics 12(4):393–409.
http://dx.doi.org/10.1002/(SICI)1099-1255(199707)12:4<393::AID-JAE447>3.0.CO;2-J
Carlino, Gerald. A. and Mills, Leonard. 1993. “Are U.S. Regional Incomes Converging? A Time Series Analysis.” Journal of Monetary Economics 32:335–346.
http://dx.doi.org/10.1016/0304-3932(93)90009-5
Chatterji, Monojit. 1992. “Convergence Clubs and Endogenous Growth.” Oxford Review of Economic Policy 8(4):57–69.
http://dx.doi.org/10.1093/oxrep/8.4.57
Crafts, Nicholas. 1999. “Economic Growth in the Twentieth Century.” Oxford Review of Economic Policy 15(4):18–34.
http://dx.doi.org/10.1093/oxrep/15.4.18
Deardorff, Alan V. 2001. “Rich and Poor Countries in Neoclassical Trade and Growth.” The Economic Journal 111(470):277–294.
http://dx.doi.org/10.1111/1468-0297.00608
Ertur, Cem; Le Gallo, Julie, and Baumont, Catherine. 2006. “The European Regional Convergence Process, 1980-1995: Do Spatial Regimes and Spatial Dependence Matter?” International Regional Science Review 29(1):3–34.
http://dx.doi.org/10.1177/0160017605279453
Evans, Paul and Karras, Georgios. 1996. “Convergence Revisited.” Journal of Monetary Economics 37:249–265.
http://dx.doi.org/10.1016/S0304-3932(96)90036-7
Fischer, Manfred M. 2011. “A Spatial Mankiw-Romer-Weil Model: Theory and Evidence.” The Annals of Regional Science 47(2):419–436.
http://dx.doi.org/10.1007/s00168-010-0384-6
German-Soto, Vicente and Chapa Cantú, Joana C. 2015. “Cointegration with Structural Changes between per capita Product and Income Inequality in Mexico.” Applied Economics 47(49):5215–5228.
http://dx.doi.org/10.1080/00036846.2015.1044649
German-Soto, Vicente. 2005. “Generación del Producto Interno Bruto Mexicano por Entidad Federativa, 1940-1992.” El Trimestre Económico 72(287):617–653.
German-Soto, Vicente. 2008. “El Stock de Capital Industrial Medido a Través de la Relación Inversión-Empleo: Estimaciones para los Estados Mexicanos.” Ensayos. Revista de Economía 27(1):53–80.
German-Soto, Vicente. 2013. Metodología para Generar Información Regional. Aplicación a la Industria Mexicana, México: Plaza y Valdés.
Germán-Soto, Vicente; Rodríguez Pérez, Reyna E. and Escamilla Jiménez, Carmen N. 2013. “Acumulación y Desigualdad del Capital Humano entre los Estados Mexicanos Durante 1960-2008.” Paradigma Económico 5(2):5–31.
Grossman, Gene M. and Helpman, Elhanan. 1991. Innovation and Growth in the Global Economy, Cambridge: The MIT Press.
Guerrieri, Paolo. 1990. Las Fluctuaciones Económicas, Barcelona: Oikos-Tau.
Hammond, George W. 2006. “A Time Series Analysis of U.S. Metropolitan and non-Metropolitan Income Divergence.” The Annals of Regional Science 40:81–94.
http://dx.doi.org/10.1007/s00168-005-0029-3
Hobijn, Bart and Franses, Philip H. 2000. “Asymptotically Perfect and Relative Convergence of Productivity.” Journal of Applied Econometrics 15(1):59–81.
http://dx.doi.org/10.1002/(SICI)1099-1255(200001/02)15:1<59::AID-JAE544>3.0.CO;2-1
Islam, Nazrul. 1995. “Growth Empirics: A Panel Data Approach.” Quarterly Journal of Economics 110(4):1127–1170.
http://dx.doi.org/10.2307/2946651
Jones, Charles I. 2000. Introducción al Crecimiento Económico, México: Pearson Educación.
Kleinbaum, David G.; Kupper, Lawrence L.; Nizam, Azhar and Muller, Keith E. 2008. Applied Regression Analysis and other Multivariate Methods, U.S.: Duxbury Press.
Lee, Kevin; Pesaran, M. Hashem and Smith, Ron. 1997. “Growth and Convergence in a Multi-Country Empirical Stochastic Solow Model.” Journal of Applied Econometrics 12:357–392.
http://dx.doi.org/10.1002/(SICI)1099-1255(199707)12:4<357::AID-JAE441>3.0.CO;2-T
Levy, Santiago and Walton, Michael. 2009. “Equity, Competition, and Growth in Mexico: An Overview.” In No Growth without Equity? Equity, Competition, and Growth in Income inequality in Mexico edited by S. Levy and M. Walton. Washington: Palgrave Macmillan and the World Bank.
Li, Qing and Papell, David. 1999. “Convergence of International Output Time Series Evidence for 16 OECD Countries.” International Review of Economics and Finance 8:267–280.
http://dx.doi.org/10.1016/S1059-0560(99)00020-9
Lu, Shengrong and Wang, Yanwu. 2015. “Convergence, Technological Interdependence and Spatial Externalities: A Spatial Dynamic Panel Data Analysis.” Applied Economics 47(18):1833–1846.
http://dx.doi.org/10.1080/00036846.2014.1000523
Lucas, Robert E. 1988. “On the Mechanics of Economic Development.” Journal of Monetary Economics, 22(1):3–42.
http://dx.doi.org/10.1016/0304-3932(88)90168-7
Mankiw, N. Gregory; Romer, David and Weil, David N. 1992. “A Contribution to the Empirics of Economic Growth.” Quarterly Journal of Economics 107(2):407–437.
http://dx.doi.org/10.2307/2118477
Montañés Antonio; Olloqui, Irene and Calvo, Elena. 2005. “Selection of the Break in the Perron-Type Test.” Journal of Econometrics 129:41–64.
http://dx.doi.org/10.1016/j.jeconom.2004.09.003
Nahar, S. and Inder Brett. 2002. “Testing Convergence in Economic Growth for OECD Countries.” Applied Economics 34:2011–2022.
http://dx.doi.org/10.1080/00036840110117837
Ng, Serena and Perron, Pierre. 1995. “Unit Root Tests in ARMA Models with Data-Dependent Methods for the Selection of the Truncation Lag.” Journal of the American Statistical Association 90:268–281.
http://dx.doi.org/10.1080/01621459.1995.10476510
Ng, Serena and Perron, Pierre. 2001. “Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power.” Econometrica 69(6):1519–1554.
http://dx.doi.org/10.1111/1468-0262.00256
Nonneman, Walter and Vanhoudt, Patrick. 1996. “A Further Augmentation of the Solow Model and the Empirics of Economic Growth for OECD Countries.” Quarterly Journal of Economics, 111(3):943–953.
http://dx.doi.org/10.2307/2946677
Quah, Danny T. 1996. “Empirics for Economic Growth and Convergence.” European Economic Review 40(6):1353–1375.
http://dx.doi.org/10.1016/0014-2921(95)00051-8
Rey, Sergio J. and Montouri, Brett D. 1999. “US Regional Income Convergence: A Spatial Econometric Perspective.” Regional Studies 33(2):143–156.
http://dx.doi.org/10.1080/00343409950122945
Romer, Paul M. 1986. “Increasing Returns and Long-Run Growth.” Journal of Political Economy 94:1002–1037.
http://dx.doi.org/10.1086/261420
Solow, Robert. 1956. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70(1):65–94.
http://dx.doi.org/10.2307/1884513
Yau, Ruey and Hueng, C. James. (2007). “Output Convergence Revisited: New Time Series Results on Industrialized Countries.” Applied Economics Letters 14:75–77.
http://dx.doi.org/10.1080/13504850500425543""
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German-Soto, V., & Salazar Garza, N. (2016). Testing Stochastic Convergence among Mexican States: A Polynomial Regression Analysis. Journal of Reviews on Global Economics, 5, 36–47. https://doi.org/10.6000/1929-7092.2016.05.04
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Special Issues | Economic Growth and Convergence: Analyses for the Mexican States
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