Influence of Agglomerations in the Service Sector in Economic Growth: Mexico, 2005-2018.

University essay from Lunds universitet/Ekonomisk-historiska institutionen

Abstract: This thesis analyses the relationship between the presence of economic agglomerations and regional economic growth in Mexico during the period 2005- 2018. The focus is mainly toward understanding the influence of clusters in the service sector due to its increasing potential for driving the economy. The study also examines the effect of agglomerations on regional income inequality. To estimate these relationships, diverse indices of spatial cohesion are used in order to capture the different aspects of agglomeration economies and are later employed in a regression model. Agglomerations in the tertiary sector proved to be promoting economic growth and encouraging conditional convergence in a rate between 1.6 per cent to 3 per cent. Mexico City and the surrounding area showed the highest concentration of service activities and were also among the states that attained greater economic growth.

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