This review seeks to understand how to better support the competitiveness of Mexico through improved regional innovation systems and clusters that promote innovation in firms. Innovation is an important component of economic development and productivity growth, and hence the competitiveness of regions and nations. Firms are at the centre of this process, but they do not operate in isolation. They may benefit from linkages with other actors in a cluster and regional innovation system, where knowledge is created and/or diffused. Policies that support clusters and regional innovation systems (the spatial dimension of development) and the policy implications for different types of region have not received enough attention in Mexico. The main findings of this report are...

This review seeks to understand how to better support the competitiveness of Mexican regions through improved regional innovation systems and clusters. While the links between innovation and economic growth are not linear, innovation contributes to productivity improvements and hence the competitiveness of a region. The economic literature shows that clusters and regional innovation systems play a role in supporting this innovation process and in improving firm productivity.

This chapter provides quantitative evidence for the need of a regional approach to improving Mexico’s competitiveness. First it reviews the national context within which state performance should be contextualised. This context is one of macroeconomic stability but slow growth and stagnant productivity due in part to low levels of investment in knowledge economy drivers. The chapter then discusses the regional economic performance differences across the country, a tale of different “Mexicos” with persisting income and productivity gaps. Finally, there is an analysis at the state level of the inputs, linkages and outputs related to innovation performance. There are significant sub-national data gaps in Mexico for such an analysis, but available information shows there is clearly a concentration of innovation inputs and outputs in a limited number of Mexican states.

As the data reveals, there is an imperative to improve both labour productivity and multi-factor productivity growth to ensure Mexico’s future competitiveness. Mexico’s competitive advantages in low-cost labour are slipping with respect to emerging market competitors, yet there is insufficient investment to ensure an effective transition to the knowledge economy. Furthermore, as innovation investment is pro-cyclical, there is a need to ensure continued public and private sector investment in innovation despite the financial and economic crisis so as to ensure sustainable growth in the long term. 

Mexico’s lack of productivity growth is one of the primary barriers to country competitiveness. Unlike in many OECD countries, there are relatively few incentives provided by national policy in a range of policy families to promote the development of regional innovation systems and clusters as a vehicle for supporting productivity growth (see Chapter 2). Are Mexican states (and in some cases municipalities) able to fill the gap? Although in a federal country the expectation would be for states to take a lead role in supporting regional innovation systems, the high level of fiscal centralisation (see Chapter 4), along with the territorial concentration of innovation resources within the country (see Chapter 1), are among the barriers for states. 

All levels of government can influence the competitiveness of a region. While the competitiveness of a place is due to a number of factors, the focus for this review is on what can support productivity improvements for firms via clustering and regional innovation systems. While Chapters 2 and 3 reviewed the policies at national and state levels that may reinforce these phenomena, this chapter focuses on the governance arrangements that could support such policy goals.

The state of Aguascalientes is in the Centre-West meso-region in the middle of Mexico with proximity to the large domestic markets in the North and Central regions of the country. It is one of the smallest states both in terms of size and population with approximately 1.1 million inhabitants. Given its high degree of urbanisation (81.2% versus a national average of 76.5%), and with 84% of the population concentrated in the metropolitan area of the City of Aguascalientes, it is the fifth most densely populated state. The population is growing at over twice the national rate (at 2.2% annually versus 1.0% nationwide). The state has a relatively higher level of education with a greater rate of tertiary educational attainment (18.2% versus 16.4% nationally). All this has contributed to the state having good performance on the Human Development Index, ranking eighth out of 32 states, one of the least marginalised populations in the country and the lowest income distribution disparities in the country, as expressed by the Gini coefficient. 

The state of Chihuahua is a Northern border (to the US) state located between the North-East and North-West meso-regions. It is big by Mexico standards, actually the largest state (larger than the United Kingdom) and has a population of just over 3.2 million inhabitants (3.1% of country). The state population is growing slightly faster than the national average (1.2% versus 1.0%). In terms of educational attainment, it is slightly ahead of the national average in schooling years and below the national average in terms of the proportion of its population over 15 years that completed secondary schooling.

The state of Coahuila, located on the US border in the North-East meso-region, is the third largest state in terms of surface area. But with only 2.5 million inhabitants, it is the16th state in terms of population and one of the least densely populated. The state has a much lower share of its population in rural areas, only 10% in cities with under 2 500 inhabitants versus 23.5% nationally. The state population is growing somewhat above the national average at 1.5% versus 1.0% nationwide. The state also has a very small indigenous ethnic population. In terms of educational attainment, it is ahead the national averages with 19% having a tertiary education (fifth ranked).

The state of Colima is a small coastal state, the fourth smallest in the whole of Mexico, located in the Centre-West meso-region. It has the most active Pacific coast port of Mexico, Manzanillo, that with Colima City concentrate most of the state’s economic activity. It is well connected with other larger bordering states such as Jalisco and Michoacan. With a population of almost 578 000 inhabitants it is the second smallest state in Mexico in terms of population. The state is the tenth most dense, and has a relatively higher share of the population in urban areas. The state population is growing lower than the nation, at a rate of 0.8% from 2000-2005 versus 1.0% nationally. The state has somewhat higher education levels than the national average. 

The state of Jalisco on the Pacific coast of Mexico is located in the Centre-West meso-region. Its capital city, Guadalajara, is the second most populous in the country. The state is the seventh largest in surface area (about the size of the BENELUX) and has a population of approximately 6.8 million inhabitants (fourth largest in the country). Jalisco has a higher share of its population in urban areas than the national average and most of its economic activity and population is encompassed in the metropolitan area of the capital city of Guadalajara, which includes several municipalities. The state population is growing at a slightly higher rate than the national average (1.2% versus 1.0%). However, that growth rate is diminished by high levels of out migration, as it is the state that sends the most immigrants to the US annually. Education levels of the population overall are slightly above averages for the nation as a whole. 

The State of Mexico is located in the Centre meso-region. Alongside Mexico City (Federal District), its populous municipalities encompass the largest metropolitan area in the country with over 18.8 million inhabitants. Because of its proximity to the national capital, the State of Mexico followed the industrial growth of this city for most of the last century and more recently has attracted other manufacturing industries. It is the 25th largest state in surface area, but with a population of over 14 million inhabitants it is the most populous state (13.6% of the nation) and after Mexico City, the most densely populated. Most of the state’s economic activity and population is encompassed in the metropolitan area of Mexico City (national capital) including 40 of its 125 municipalities. The state population is growing at a somewhat higher rate than the national average (1.2% versus 1.0%). In terms of overall rates of educational attainment, the state is slightly above the national averages.

The state of Michoacan in central Mexico (the Centre-West meso-region) is the 16th largest state in terms of land size. With a population of just over four million inhabitants (3.8% of the national total), it is the 14th most densely populated. Particularities include the large share of rural residents at 32% of the state’s population (23.5% national average). After the capital Morelia, other important cities include Uruapan, Pátzcuaro, Zamora and Lazaro Cárdenas. It has a major port in Lazaro Cardenas of great importance on the Pacific Coast. The state population actually declined between 2000-2005 (-0.1%) due to migration to the US and other Mexican states, with 6.7% of its population 15-64 having migrated to the US in the last year recorded (second largest annual flows in absolute terms). The state consequently receives considerable amounts of remittances. In terms of educational attainment, it is far behind the national averages in both schooling years and the proportion of its population over 15 years that completed secondary schooling.

The state of Nuevo Leon is a Northern border state in the North-East meso-region. It is the 13th largest in surface area (just smaller than Ireland). However, with a population of around 4.2 million inhabitants (4.1% of the country, eighth nationally), it is the 15th most densely populated. Some particularities of its population are its highly urban proportion of 94.3% (76.5% national average) and that most of its economic activity and population is encompassed in the metropolitan area of the capital city of Monterrey. The state population is growing at a higher rate than the national level (1.6% versus 1.0%). The state is strongly linked to the US in trade, business environment and culture. However, the economic success does not result in significant levels of out-migration to the US. In terms of educational attainment, it is ahead of national averages in both schooling years and in the proportion of its population over 15 years that completed secondary schooling. The state is a particularly advanced economy with good living standards and overall levels of welfare. 

The state of Puebla is geographically located in the Southern central part of Mexico (in the Centre meso-region but also part of the South-Southeast meso-region). The state is close to the Metropolitan Area of Mexico City (with more than 18 million inhabitants). Its territory is relatively small (20th out of 32 in surface area) and is the seventh most densely populated with slightly over 5.3 million inhabitants. It nevertheless has a somewhat higher share of rural residents than the national average (29.4% versus 23.5%). Its annual population growth is about the same as the national level at 1%. In terms of educational attainment, it is behind the national averages in both schooling years and in the proportion of its population over 15 years that completed secondary schooling. 

The state of Queretaro is located in the Centre-West meso-region, but is also part of the Centre region. Its capital city, Queretaro City, has been growing and developing rapidly over the last 20 years. Part of Mexico City’s population and industrial decentralisation has relocated in this state. It is only the 27th largest state in surface area (about half the size of Slovenia), and with a population of 1.6 million inhabitants it is the 23rd largest state and the eighth most densely populated. Nevertheless, it does have 30% of its population living in rural areas, higher than the 23.5% average nationally, as most of its economic activity and population is encompassed in the metropolitan area of the capital city of Queretaro. The state population is growing at a markedly faster rate than the national average (2.3% versus 1% nationally), even if there is a slightly higher propensity for out migration to the US than nationally. It is at national averages in both schooling years and in the proportion of its population over 15 years that completed secondary schooling, however in terms of tertiary attainment rates it is well above average.

The state of San Luis Potosi is in the Centre-West meso-region of Mexico. The state has a diversity of climates within its borders. It is the 15th largest in size, and with a population of just over 2.4 million inhabitants (2.3% of nation), has a lower than average population density (ranked 21st). A few of the state’s larger cities include San Luis Potosí, its capital city, Soledad de Graciano Sanchez, Ciudad Valles, Tamazunchale and Matehuala. The state has a highly rural proportion of 37.4%, higher than the national average of 23.5%. The state population is growing slower than the national average (0.8% versus 1.0%) in part due to migration to the US and other neighbouring states. As a result of this out migration, it is the fifth state in terms of remittances. In terms of educational attainment, it is behind the national averages in both schooling years and in the proportion of its population over 15 years that completed secondary schooling. 

The state of Tamaulipas is a border state in the North-East meso-region. It has coast to the Gulf of Mexico and is also an oil and gas rich state. It is the 6th largest in surface area (about half the size of Austria). With a population of just over 3 million inhabitants (2.9% of Mexico’s total) it is ranked 23rd in terms of population density. The state has a more urbanised population than the national average at 87.2% versus 76.5% nationally. Several important cities in the state include: Tampico (port), Ciudad Victoria, Ciudad Madero, Nuevo Laredo (border to US city), Reynosa (border to US city) and Matamoros (border to US city). The state population is growing at a higher rate than the national average (1.7% versus 1.0% nationally). In terms of education, it is ahead of the national averages in both schooling years and in the proportion of its population over 15 years that completed secondary schooling. 

The state of Yucatan is one of three states in the Southeast Mexican Peninsula (South- Southeast meso-region). It is the 15th largest in surface area and with a population of 1.9 million (1.8% of Mexico), it is the 18th most densely populated. Nevertheless, the state has a high share of its population in urban areas at 83% compared to a national average of 76.5%. Some of the state’s larger cities include Mérida, Valladolid, Puerto Progreso, Motul and Tizimín. The state population is growing notably faster than the national average (1.6% versus 1%). As the state is far from the US, it has a very low share of its adult population that has migrated there, a factor contributing to the relatively higher rates of population growth in the state. In terms of educational attainment, it is behind the national averages in both schooling years and in the proportion of its population over 15 years that has completed secondary schooling. 

The state of Zacatecas is the northernmost state of the Centre-West meso-region. It is the eighth largest in surface area, about the size of the Czech Republic. However, with a population of just over 1.4 million, (1.3% of Mexico’s population), it is the 26th most densely populated. It has a high share of rural population of 42.8% (23.5% national average). Among the largest cities are Zacatecas City, Fresnillo, Guadalupe, Jerez, Pinos, Sombrerete and Rio Grande, although the capital Zacatecas is by far the most significant. The state population is growing very slowly at only 0.2% per year (one fifth of the national average annual growth rate of 1.0%) due to massive migration of the working age population to the US and other neighbouring states. Consequently, the state is the largest recipient of remittances from abroad. In terms of educational attainment, it is far behind the national averages in both schooling years and in the proportion of its population over 15 years that completed secondary schooling.