Spatial diffusion of economic growth and externalities in Mexico

Abstract

Economic growth and externalities are rooted in spatial dynamics, however the spread over space of these is not unlimited. In this document is estimated the distance threshold of physical capital externalities on output and the economic growth diffusion for the Mexican municipalities through a Spatial Durbin Model with spatial weight matrices based on distance, from 1988 to 2013. The results show evidence of weak spatial externalities by physical capital on output whose distance threshold is 60 km. Additionally, the diffusion of economic growth is directly related with the distance and a “U” shape relationship between convergence and distance.