| Cross-Border
Economic Bulletin - April 2001 Economic Development and Measures of Well-Being in Northern Mexico One of the more interesting features of the US-Mexico border is the contrast between the interior of each country and its border region. On the Mexican side, border municipios tend to have higher incomes and better measures of well-being than most of the rest of the country. By contrast, on the US side, border counties excepting San Diego are consistently poorer and often have measures of well-being that are significantly below the rest of the nation. This issue of the Cross Border Economic Bulletin focuses on the Mexican side of the border and examines the characteristics of economic development in the state of Baja California. It compares income per capita measures with other Mexican states and discusses the limitations of income as an indicator of development. It then looks at two additional measures of development, one from the United Nations and the other from Mexico's Instituto Nacional de Estadística, Geografía, e Informática (INEGI). The highlights are:
Border incomes in Baja California and other states Since 1993, state-level estimates of regional product have been calculated annually. These estimates are equivalent to gross domestic product at the state level, and are a measure of the peso-value of all final goods and services produced in the state during the year. The most recent data are for 1999 and are presented in Table 1 on a per capita basis. In order to provide a standard for comparison, and to show the relative prosperity of the border region, data are also presented for the five other border states and the nation as a whole.Table 1 illustrates the higher levels of output and income in the border region. On average, income per capita in the border region is about 48% higher than the average in the rest of Mexico. Table 1: Per Capita Gross State Product in US Dollars
An Alternative Development Indicator Comparisons between countries or regions are often limited to incomes per capita, as in Table 1, even though the limitations of income as a measure of well-being is well known. Consider for example that measures of income levels are uninformative on income distribution and related issues: health care, education, urban-rural differences, and variations in economic opportunity by race, ethnicity, and gender. In addition, there is no consideration given to water and air quality, nor any other element of the environment.Recognizing these limitations, the United Nations implemented a program in 1990 that offers a single summary statistic, called the Human Development Index (HDI), which attempts to quantify "human development." The economists that created the HDI explicitly recognized that human development is a multidimensional process, and that no single number can adequately summarize it. Nevertheless, they felt that they needed a single number that could compete with per capita income and that would widen the debate about development. The HDI is a weighted average of three indexes: per capita income, education, and life expectancy. The UN selected these variables for their simplicity and practicality, as well as the information they convey about material well being, health, and the capabilities of the population. Table 2 is a construction of the HDI's for Baja California, the other border states, and the entire nation. The data support the view that border region development is greater than the average for the nation. Table 2: Human Development Indexes, Mexico and the Border
Well-Being Rankings of Mexico's Municipalities Mexico's census bureau, the Instituto Nacional de Estadística, Geografía, e Informática (INEGI) has recently developed a set of hierarchical rankings of well-being (niveles de bienestar) in the 2,443 municipalities of Mexico, including the Federal District and its administrative subunits (delegaciones). INEGI uses a statistical technique called cluster analysis to compare and rank municipalities against each, both within their state and against all other municipalities in the nation. Cluster analysis uses a large number of social and demographic variables to search for groups of municipalities with similar characteristics. These are then ranked at the same level of well-being. Table 3 shows the types of variables gathered within each municipio.Table 3: Variables Used to Measure Well-Being in Mexico's Municipalities
INEGI has created three sets of rankings for comparing levels of well-being in Mexico: (1) state level rankings; (2) municipalities ranked against all other municipalities; and (3) each municipality ranked against municipalities in the same state. Table 4 shows these results. In spite of the relative comprehensiveness of these measures, the statistical technique does not enable a high level of differentiation. Consequently, 58% of the population lands in the same category when municipalities across the nation are compared to each other. Nevertheless, at least three useful points emerge. Table 4: Hierarchical Rankings of Well-Being in Baja California
First, the general results of the rankings are consistent with the income measures of Table 1 and the Human Development Indexes of Table 2. Second, the 36 measured variables place Mexicali in its own group in Baja California. And third, there is no explicit consideration given to environmental measures. Conclusion It should come as no surprise that rapid economic growth in northern Mexico has led to measurements of well-being that are significantly better than most-but not all-of the rest of the nation. It would be surprising if this were not the case, since the pursuit of economic growth is often the main component of development policy, since economic growth results in more resources becoming available, and since the rapid migration of Mexicans to the border is an expression of people's preferences. This does not contradict the point of previous editions of the Cross Border Economic Bulletin, where it was argued that rapid growth in manufacturing and immigration into Baja California and other northern border states pose serious challenges to regional infrastructure and levels of well-being. It would be a mistake to interpret the measures of well-being as sufficient, or to assume that the congestion effects of rapid growth cannot reverse the hierarchical rankings.The Cross-Border Economic Bulletin is prepared monthly by Dr. Jim Gerber, professor of economics at San Diego State University. It is underwritten by Concert, a global venture of AT&T and BT. |