Subnational Analysis of Economic Fitness and Income Dynamic: The Case of Mexican States

Abstract

In recent years, analytical tools of network theory have provided strong empirical support to the well-known hypothesis that regions develop through the local learning of capabilities (tacit productive knowledge). In this paper, we compare two indexes of competitiveness (or accumulated capabilities) for a subnational database of 32 Mexican states in the period 2004–2014. We find that Endogenous Fitness (i.e., region fitness and product complexity are derived jointly using only a Mexican exports database) has a better performance than Exogenous Fitness (i.e., product complexity comes from a world exports database and fitness is the sum of the complexity scores for the region’s competitive products). The performance criterion is established with the indicator’s capacity to meet a requirement of growth predictability: the existence of at least one laminar (ordered) regime in the fitness–income plane. In the Mexican data, Endogenous Fitness is a reliable predictor of per capita GDP in two distinct areas of the plane: one of continuous progress and opportunities, and another of stagnation and deteriorating fitness. The predictive capacity of this indicator becomes clear only when the metrics’ calculations are filtered by removing raw petroleum or oil-dependent states, while such capacity is robust to the inclusion of tourism—another important industry of the Mexican economy.

Fiscal management performance and local economic development: evidence from a large emerging economy

“…To analyze the effect of fiscal management performance on local development, we make use of GDP per capita as an indicator of economic development. Although there are criticisms regarding the use of this indicator (Acemoglu et al, 2001), it is widely used because of the practicality, simplicity and universality of its measure (see, for example, Bin and Peng, 2018;Castañeda and Romero-Padilla, 2018;Droller, 2018). The IBGE provides estimates for the GDP of the Brazilian municipalities from 2000 to 2015 (annual frequency) and population of each municipality.…”

“…Besides the variables mentioned above, taking into account the literature on economic development, which uses GDP per capita as a proxy, we use the following control variables in the models: WAGEformal workers' average wage (municipalitymonthly base). There is evidence, which suggests that a society with individuals capable of earning larger incomes on Fiscal management performance average tends to be more developed (see Castañeda and Romero-Padilla, 2018;Droller, 2018;Acemoglu et al, 2001). Formal worker's average wage data are available from the IBGE (Central Business Register).…”

Economic Complexity of the City Cluster in Guangdong–Hong Kong–Macao Greater Bay Area, China

“…Euclidean distance of the Mcp values between each city pair is calculated, and links are generated if the distance value falls below a given threshold. Across different years, it has been found that city pairs sharing similar distribution patterns exhibit a slight decreasing trend, with 24 links in 2000, 17 In general, Figure 1 shows that PRD cities are moving away from c1 (agriculture, forestry, livestock, fisheries), while shifting the focus towards c6 (finance), c7 (real estate), and c3 (building and construction). Such findings suggest that during the rapid-growth phase of PRD cities, the agricultural industry is the least economically sustainable sector, whereas finance, real estate, and building and construction are the most economically sustainable sectors.…”

“…Euclidean distance of the M cp values between each city pair is calculated, and links are generated if the distance value falls below a given threshold. Across different years, it has been found that city pairs sharing similar distribution patterns exhibit a slight decreasing trend, with 24 links in 2000, 17 Figure 3 shows the geographical distribution of economic complexity of the city cluster. Hong Kong-together with two super-cities, Shenzhen and Guangzhou and their surrounding cities-have formed a cluster that exhibits a high concentration in combined economic complexity.…”

“…The analysis includes normalisation such that small economies or industrial sectors are fairly considered. Such a model has been applied at the subnational level in Australia [15], Brazil [16], and Mexico [17]. These studies explore domestic trading patterns that are significantly different to international trades, such as service sectors and perishable foods.…”