Association for Public Policy Analysis & Management

The development of economic infrastructure has been widely considered at the top of public policy agendas due to its positive potential impact on both growth and income distribution —and, hence, poverty. Moreover, infrastructure placement within a country or a regional bloc is crucial to account for either positive externalities (such as growth spillovers) or negative ones (that is, pulling-in growth). This paper contributes to the debate on spatial analysis by evaluating the impact of four economic infrastructure sectors — namely, telecommunications, energy, transport, and water— on growth and the convergence process across 30 Mexican states from 1995 - 2015. To accomplish this task, the paper uses a spatial panel data approach to estimate spill-over effects in the relationship between regional economic growth and infrastructure. The evidence in this paper so far suggests that i) the states with higher provision of infrastructure services tend to pull-in growth from first-tier surrounding geographic entities, ii) the effects are not equal between sectors, and iii) all economic infrastructure sectors show strong correlation in the regional panel setting level.