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OECD Territorial Reviews: Chihuahua, Mexico 2012

image of OECD Territorial Reviews: Chihuahua, Mexico 2012

Located at the border with the US, Chihuahua has benefited from FDI and NAFTA. Chihuahua has been one of the richest regions in Mexico and one of the most dynamic in the OECD. However, the region’s FDI-trade link with the USA has also led to some vulnerability to external shocks. The two crises affecting the USA in the past decade affected Chihuahua more than any other state. Despite recent progress in the quality of education, other structural challenges such as lower productivity growth, high inactivity rates and dwindling employment rates have been factors in Chihuahua’s sluggish growth. Chihuahua not only displays large intra-regional and gender inequalities, but also the largest inter-ethnic inequality levels in the country. Chihuahua can gain from a territorial approach to policymaking that integrates sectoral policies, fostering value-added in rural activities, better linking SME-development and FDI-attraction policies, as well as between innovation capacities and applications. The region could also strengthen their recent inclusive governance arrangement with civil society and the private sector.  Growth and development can only be possible if the current challenges in insecurity, water shortage and public finance are addressed.

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Annex A. Growth Accounting

Economic growth can take place by increasing the amount and types of labour and capital used in production, as well as by improving overall efficiency in the way factors of production are employed, i.e. higher total factor productivity (TFP). Growth accounting means breaking down growth of GDP into the contribution of labour input, capital input and TFP. The growth accounting approach is based on the microeconomic theory of production and directly related to the calculation of TFP growth, measured by deducting from output growth, the growth of labour and capital inputs.

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