Migrants’ remittances, convergence and spatial heterogeneity in Mexico

Fernando Lozano-Ascencio, Universidad Nacional Autónoma de México
Marcos Valdivia-López, Universidad Nacional Autónoma de México

The main objective of this paper is to evaluate the impact of Mexican migrants’ remittances on economic development in Mexico. We are interested in examining the effect of remittances on the country’s regional convergence and inequality processes during the 1995-2005 period. The methodological strategy of empirical measurement to evaluate the hypothesis of spatial heterogeneity of remittances, involves integrating geographic information with spatial statistical techniques. We use spatial econometrics techniques to implement economic growth models that explicitly incorporate demographic and spatial variables. Unlike the perspectives from opposing poles, which place the impact of remittances as either applying a brake or an accelerator on economic development, this paper shows that the impact of remittances in Mexico is essentially heterogeneous: in some regions remittances have a positive impact on regional economic and, in some other regions have a negative impact, that is, the higher the growth rate of remittances, the lower the rhythm of economic growth.