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Harvard CID Global Empowerment meeting 2016: How can we make growth more inclusive? The case of Chiapas

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Chiapas is not only Mexico's poorest state, but also the one displaying the lowest rate of economic growth. As a consequence, the income gap between Chiapas and the rest of Mexico continues to widen. Usual suspects like education, infrastructure, or financial constraints, are not to blame for Chiapas' dismal performance. To the contrary, over the previous decade Chiapas has improved its relative position within Mexico in terms of average years of schooling, infrastructure - roads, ports, and airports; and access to credit. The state's poor economic record also contrasts with the macroeconomic and institutional stability that has prevailed in Mexico over this period. Harvard's Center for International Development (CID) teamed with the Mexican Ministry of Finance to launch a research initiative in the quest for the causes underlying Chiapas' backwardness.

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Harvard CID Global Empowerment meeting 2016: How can we make growth more inclusive? The case of Chiapas

  1. 1. How$can$we$make$growth$more$inclusive? The$Case$of$Chiapas$ 4/14/16 1 miguel_santos@hks.harvard.edu @miguelsantos129 9
  2. 2. Chiapas9is9not9only9Mexico´s9poorest9state… Source: INEGI9(PIB)9y9CONAPO9(Población) 24/14/16 0 50,000 100,000 150,000 200,000 250,000 300,000 Non:oil$Income$per$capita (constant9pesos92008) X96.1
  3. 3. 3 Large9differences9 in9Mexico9reproduce9 as9in9a9fractal9within9Chiapas 4/14/16 0 5,000 10,000 15,000 20,000 GDP$per$capita (constant$pesos$2010) Source:9PNUD,9con9base9en9Censo92010 X98.5
  4. 4. 4 …9it9is9also9the9lowest9growth9rate9amongst9Mexico´s9329states Source:9INEGI. 4/14/16 3.3% 3.2% 2.8% 2.5% 2.5% 2.5% 2.4% 2.3% 1.8% 1.8% 1.8% 1.7% 1.6% 1.6% 1.6% 1.6% 1.5% 1.4% 1.4% 1.4% 1.4% 1.4% 1.4% 1.3% 1.3% 1.2% 0.9% 0.8% 0.8% 0.5% 0.3% 0.2% 0.2% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Compounded$Annual$Growth$Rate (2003:2013)
  5. 5. 5 The9income9gap9between9 Chiapas9and9rest9of9Mexico9keeps9widening Fuente:9INEGI. 4/14/16 46.1% 43.6% 42.7% 42.4% 40.4% 41.1% 42.1% 42.8% 42.2% 41.2% 39.7% 53.4% 54.6% 54.0% 53.3% 53.4% 52.2% 54.6% 55.0% 53.0% 51.7% 51.3% 52.0% 51.8% 51.1% 49.6% 49.0% 49.0% 51.2% 49.6% 49.9% 49.3% 50.1% 35% 40% 45% 50% 55% 60% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Non:Oil$GDP$per$capita (as$percentage$of$national$income$per$capita) Chiapas Guerrero Oaxaca CAGR92003a2013: 1.4% CAGR92003a2013: 0.2%
  6. 6. 7 Usual9suspects:9 Is9it9because9 of9education? Strong9investment9in9education9has9reduced9the9schooling9gap… 4/14/16 Fuente:9Censo9Poblacional920109(INEGI).9
  7. 7. 84/14/16 Usual9suspects:9Is9it9because9of9education? To9earn9the9same9as9a9Mexican9worker9in9Chiapas9you9must9study9a9lot9more Monthly$income$from$work$and$years$of$schooling To$earn$the$same$as$a$Mexican$worker$ with$6$years$of$schooling,$in$Chiapas$you$ must$have$10$years$of$schooling
  8. 8. 94/14/16 Usual9suspects:9Is9it9because9the9quality9of9education? Quality9in9education9does9not9account9for9these9large9differences Monthly$income$from$work$and$years$of$schooling
  9. 9. Lessons9from9migrants:9Chiapas9vs.9Rest9of9Mexico9(100%) 10 0 20 40 60 80 100 120 140 Resto9de9Mexico Chiapas Total 100.0 67.2 15.1 51.6 115.1 118.8 *9Monthly9income,9controlling9for9years9of9schooling,9quality9(ENLACE),9experience,9gender9and9indigenous. Monthly Income Migrant Premium$ Total$monthly income Rest9of9Mexico Chiapas 4/14/16 Monthly Income Migrant Premium$ Total$monthly income
  10. 10. Usual9suspects9 only9account9for9less9than9oneathird9 of9the9 difference9 in9income9between9Chiapas9and9the9rest9of9Mexico 114/14/16 SCHOOLING EXPERIENCE$ FEMALE INDIGENOUS$ RURAL$ EXPLAINED$ VARIATION TOTAL$ INCOME$ GAP Chiapas$vs.$Rest$of$Mexico Factors$associated$to$income$difference 10.4% 2.1% 6.1% 5.3% 9.7% 21.4% 68.7%
  11. 11. The$Scrabble$theory$of$ development
  12. 12. The$Scrabble$theory$of$ development$in$Chiapas
  13. 13. 144/14/16 Economic9Complexity9Index9for9Exports a0.50 0.00 0.50 1.00 1.50 Tamaulipas Chihuahua Querétaro Nuevo9León México San9Luis9Potosí Baja9California Tlaxcala Morelos Coahuila Distrito9Federal Sonora Hidalgo Jalisco Aguascalientes Guanajuato Tabasco Veracruz Quintana9Roo Zacatecas Campeche Puebla Durango Yucatán Guerrero Michoacán Baja9California9Sur Oaxaca Colima Chiapas Nayarit Sinaloa
  14. 14. 154/14/16 Economic9Complexity9Index9for9Industries9(IMSS) a2.00 a1.50 a1.00 a0.50 0.00 0.50 1.00 1.50 2.00 Querétaro México Coahuila Nuevo9León Chihuahua Baja9California Guanajuato San9Luis9Potosí Tlaxcala Puebla Hidalgo Distrito9Federal Jalisco Tamaulipas Durango Aguascalientes Sonora Zacatecas Morelos Michoacán Yucatán Sinaloa Veracruz Colima Tabasco Baja9California9Sur Guerrero Oaxaca Nayarit Chiapas Quintana9Roo Campeche
  15. 15. There9exist9large9difference9 in9economic9complexity9within9Chiapas… 4/14/16 16 Low$ Complexity High$ Complexity
  16. 16. Economic9Complexity9increases9 the9explained9variation9of9total9 differences9 and9is9higher9than9any9other9of9the9factors 174/14/16 SCHOOLING EXPERIENCE$ FEMALE INDIGENOUS$ RURAL$ ECI EXPLAINED$ VARIATION TOTAL$ INCOME$ GAP 11.6% 2.5% Chiapas$vs.$Rest$of$Mexico Factors$associated$to$income$difference 5.4% 3.6% 7.8% 16.1% 36.1% 68.7%
  17. 17. What9did9Mexico9export9in92014? 184/14/16
  18. 18. What9did9Chiapas9export9in92014? 194/14/16
  19. 19. The9product9space9of9Mexico 204/14/16
  20. 20. The9product9space9of9Chiapas 214/14/16
  21. 21. The9product9space9of9Chiapas 224/14/16
  22. 22. 234/14/16 Yazaki is9the9exception9that9confirms9the9rule…
  23. 23. 1,550$direct$jobs 4/14/16 Octubre,92015 24
  24. 24. 25 Transportation9 costs9as9a9regressive9 tax 4/14/16 3009 2339 2009 1209 1209 1109 759 709 609 509 09 509 1009 1509 2009 2509 3009 3509 Director9 escuela Maestro9de9 escuela9 (bilingüe) Trabajadores9 Prospera Electricista Albañil Ayudante9 fábrica9Pox Otros9 trabajos9(en9 San9 Cristóbal) Ayudante9 albañil Ayudas9 varias9 campos9 maíz/frijol Lavandería Cruzton:$Daily$salaries$and$cost$of$transportation (40$pesos$round$trip$in$shared$cab) Salario9diario Salario9día9(neto9de9transporte) 13% 17% 20% 33% 33% 36% 53% 57% 67% 80% Daily9equivalent9of9 monthly9salaries9(309days) Wage9per9day Daily9wage9(urban) Daily9wage9(net9of9transport9costs)
  25. 25. 26 Identifying9potential9diversification9 opportunities9 at9the9municipality9level Tuxtla$Gutiérrez Tapachula San$Cristóbal de$las$Casas Comitán de$Dominguez 4/14/16
  26. 26. 27 There9are9not9much9low9hanging9fruits9in9Chiapas… 4/14/16
  27. 27. 28 As9one9may9find9in9places9like9Morelos… 4/14/16
  28. 28. 29 Fuente: Censo dePoblación 2010, cálculos propios. When9you9have9few9letters9it9is9difficult9to9acquire9new9letters… 4/14/16
  29. 29. Atlas$de$Complejidad$Económica Funcionalidades9 y9beneficios9 por9tipos9de9usuarios 30 Tuxtla$Gutierrez San$Cristobal de$las$Casas ComitánTapachula
  30. 30. So9what9do9we9propose?9Bring9the9mountain9closer9to9Muhammad 31 Pro:Chiapas: Investment$Promotion Bring$new$business$models • Tapachula • Comitan • Palenque • Chilon • Tuxtla • San9Cristobal • Reforma • Ocosingo Special$Economic$Zones Agro:industrial$Zones
  31. 31. 324/14/16 San9Cristobal9de9las Casas9has9a9great9potential9as9a9special9zone
  32. 32. Population9density9to9the9south9of9San9Cristobal9is9very9high 33 ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! !! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! !! ! ! ! !!! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! !!!! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! !! ! ! !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !! ! ! ! !!! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !!! ! ! ! !! ! ! ! !! ! !! ! ! ! ! ! ! ! ! ! ! ! $+ Buffer Areas $+ San Cristobal de las Casas ! Localities Buffer 10km Buffer 20km Buffer 35km Population High : 1527.79 Low : 80.2128 4/14/16
  33. 33. Atlas$de$Complejidad$Económica Funcionalidades9 y9beneficios9 por9tipos9de9usuarios 34 Pro:Chiapas: Investment$Promotion Special$Economic$Zones Agro:industrial$Zones Public$transportation: Solve$labor$mobility$bottleneck Housing$policy: Habitats$vs.$Housing$ Bring$new$business$models • Tapachula • Comitan • Palenque • Chilon • Tuxtla • San9Cristobal • Reforma • Ocosingo 4/14/16
  34. 34. Thank$you!
  35. 35. Large9distrust9prevails9beyond9the9family,9associations9 or9 cooperatives9 to9pool9assets9and9increase9 returns9are9veryy unlikely 36February,92016 Social network of women in Cruztón
  36. 36. Productive9dialog9workshops… 37February,92016
  37. 37. Productive9dialog9workshops… 38February,92016
  38. 38. Productive9dialog9workshops… 39February,92016

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