Manufacturing growth in the Mexican states 1988-1993: the relevance of public policy and market-determined factors

Abstract

The objective of this paper is to make a modest contribution to the understanding of the relationship between some state tax and expenditure characteristics and state industrial growth. Multiple regression analysis is applied to a disequilibrium-adjustment model which consists of relating changes in a measure of manufacturing growth over a period to levels of market-determined and public policy variables at the beginning of the period, wich are assumed to capture potential profitability. The central assumption is that the higher a state's potential profitability, the higher its growth of manufacturing production. The analysis is based on data for the 31 states and the Federal District, and it focuses on the period 1988-1993.