Mexico’s economic infrastructure: International benchmark and its impact on growth

Abstract

After much debate, many academic circles have concluded that under the right circumstances, infrastructure stocks may be a promoter for growth. This paper bench-marks Mexico’s infrastructure quantity stocks and identifies Mexico’s infrastructure bottlenecks in regard to 94 countries. With a sample of annual data from 1960 to 2014, the analysis focuses on three economic sectors—telecommunications, energy and transport—by three exercises: (1) reviewing trends (simple and conditional) from an international perspective, (2) estimating infrastructure’s effect on growth with the generalized method of moments methodology, and finally, (3) calculating Mexico’s infrastructure gap compared to region leaders. The main findings indicate that Mexico’s infrastructure stocks were the lowest compared to similar countries in 1990. In 2010, Mexico improved its infrastructure stock provision, but still lags from the world mean. With 6-year average periods, there is statistically significant evidence of a positive effect of infrastructure on growth. Overall, Mexican infrastructure quantity is behind most regional leader’s, barely surpassing that of India’s.