Has Trade Liberalization Increased Economic Inequality among the Mexican States? An Analysis from a Spatial Econometric Perspective

What are the empirical effects of trade liberalization? This question is debated nowadays, in both an international and a regional scope. This work analyzes the economic inequality among Mexican states by means of a convergence methodology and spatial econometrics techniques. Results indicate a positive association between spatial autocorrelation and convergence, which has been diminishing during recent years. We also estimate the magnitude and direction of this relationship, and find that the lack of convergence agrees with trade openness in the country. Spatial dependence indexes point out a consistent low income cluster in the South of the country, which is worrying.