Chiapas, the South, and Mexico’s Regional Inequality in the Context of Trade Openness

Abstract

This paper studies the southern state of Chiapas in the context of Mexico’s regional inequality, and particularly examines the effects of Mexico's trade policy. The paper shows that Chiapas is one of a group of southern states that have consistently performed worse than other states from 1940 to 2000, even during periods when regional inequality has improved. The paper demonstrates that Mexico’s trade policies have affected states differently, depending on their endowments of infrastructure. This partly explains why Chiapas and its neighbors – states with exceptionally low values of infrastructure – consistently performed worse than other states over the entire time period, and particularly poorly in the open trade regime. Finally, the paper argues that these low levels of infrastructure have deep historical roots in the government policies implemented during the 20th century. I conclude that it is unlikely that the south will catch up without policies specifically addressing this infrastructure gap.