Mar 26, 2013

The Wealth of Subnations

So why does Nuevo Leon have four times the per-capita GDP of Chiapas, despite the fact that both regions have been states of Mexico since 1824? The analysis in this paper suggests that one important reason is the di erence in geography between the two states. Relative to Nuevo Leon, the largest geographic disadvantage of Chiapas may be its tropical climate; Chiapas is 98% tropical whereas Nuevo Leon is only 18% tropical. In addition, Chiapas has greater terrain ruggedness, fewer mineral resources, and greater malaria risk than Nuevo Leon, all of which could contribute to Chiapas' poor economic outcomes. 
On the other hand, Chiapas has ocean access and Nuevo Leon is landlocked, but this advantage does not appear to o set Chiapas' other geographic disadvantages. From an institutional perspective, Chiapas has worse institutional quality than Nuevo Leon, particularly in the areas of corruption control and regulatory efficiency, but my analysis suggests that these differences may not be an important reason for the differences in income between the two states. Given that the states are not autonomous, national institutions may play a greater role than subnational institutions in Chiapas and Nuevo Leon.
That is from the conclusion of this very interesting and controversial paper (Todd Mitton, March 2013). 


  1. You've squished a bunch of words together near the end.

  2. That's to make it look like your computer is haunted. woooooo!