Trade liberalization and productivity growth: some lesson from the Mexican case

Applying the most recent methodology for explaining economic growth differences across countries (Barro, 1997), education and infrastructure have been considered relevant in explaining productivity growth differences in Mexican urban manufacturing (De Leon, 1999). In this article, I evaluated whether there is a significant change in the relevance of these variables under trade liberalization. In particular, I evaluated the hypothesis that trade liberalization would promote productivity growth in the northern cities as result of the dynamic effect of trade given that these cities are close to the new central market for Mexican manufacturing and the lost of relevance in the previous accumulated growth factors (Livas y Krugman, 1992 and Hanson, 1994). In contrast to that hypothesis, I observe that urban manufacturing close to the U.S.A. did not show a better performance than the rest of the cities as expected and that accumulated growth factors, such as education and infrastructure are still relevant in explaining productivity growth across urban manufacturing in Mexico.