The Relationship between infrastructure and regional economic growth: evidence from Mexico

Abstract

The relationship between physical infrastructure and economic growth has been investigated by many, with the direction and magnitude of the result depending on the data and the empirical model applied. This paper adds to the literature by addressing spatial heterogeneity and possible endogeneity in a panel of 32 Mexican states for the period 2005-2018, thus many limitations of earlier studies are overcome. First results indicate a U-shaped relationship with positive spillovers; however, robustness checks do not confirm these findings. Most evidence points towards infrastructure not having any significant impact on regional economic growth in Mexico.