Economic Complexity of the Special Economic Zones in Mexico: Opportunities for Diversification and Industrial Sophistication

Abstract

This paper evaluates the potential for diversification and production sophistication of the states where the first three Special Economic Zones (EEZs) will be installed in Mexico. Using the methodology of economic complexity proposed by Hausmann, Hidalgo et al. (2014), economic activities are classified based on their complexity and a distance measure is estimated to identify the most viable manufacturing industries to be developed given the productive capabilities existing in each region. The results reveal the differences between the economic structures of each entity, as well as the particular opportunities for the states have to transform the structures; this is why these results are a valuable input for decision-making in the first stage of the model's implementation.

The policy implications of economic complexity

“…This makes them useful in efforts of structural upgrading, especially when complemented with other metrics focused on environmental sustainability (Romero and Gramkow, 2021) or inequality reduction (Hartmann et al, 2017). These results have also been validated during the last decade in dozens of independent studies showing the applicability of these methods for a wide range of geographic scales (neighborhoods, municipalities, cities, regions, and countries) and activities, from urban amenities and research areas to patentable technologies and product exports (Balland and Rigby, 2017;Bandeira Morais et al, 2018;Barza et al, 2020;Chávez et al, 2017;Chu and Hoang, 2020;De Waldemar and Poncet, 2013;Felipe et al, 2012b;Fritz and Manduca, 2021;Guevara et al, 2016;Hartmann et al, 2017;Hidalgo et al, 2018Hidalgo et al, , 2020Jara-Figueroa et al, 2018;Koch, 2021;Kogler et al, 2013;Lo Turco and Maggioni, 2020;Lyubimov et al, 2017Lyubimov et al, , 2018Ourens, 2012;Poncet and de Waldemar, 2013;Romero and Gramkow, 2021;Sbardella et al, 2017;Stojkoski et al, 2016;Zaldívar et al, 2019).…”

“…Today, it is not uncommon to hear experts across the world debate about the need to upgrade, sophisticate, or "complexify" an economy, which is how the ideas of economic complexity are communicated in the mainstream. We can find these concepts on reports and studies focused on the economies of China (Chen et al, 2017;Dong et al, 2022;Ferrarini and Scaramozzino, 2015;Gao et al, 2021;Gao and Zhou, 2018;Guo and He, 2017;He and Zhu, 2019;Zhu et al, 2020), Mexico (Chávez et al, 2017;Pérez Hernández et al, 2019;Zaldívar et al, 2019), Russia (Lyubimov et al, 2017(Lyubimov et al, , 2018, Brazil (Britto et al, 2016;Dordmond et al, 2020;Gala, 2017;Jara-Figueroa et al, 2018;Swart and Brinkmann, 2020), Uruguay (Ferreira-Coimbra and Vaillant, 2009), Turkey (Coskun et al, 2018;Erkan and Yildirimci, 2015;Hartmann, 2016), and Paraguay (González et al, 2018), to name a few. These ideas are also in efforts focused on the economic structures of developed nations, such as the United States (Balland and Rigby, 2017;Essletzbichler, 2015;Farinha et al, 2019;Fritz and Manduca, 2021;Lo Turco and Maggioni, 2020;Rigby, 2015), Canada Turkina, 2020a, 2020b), Australia (Reynolds et al, 2018), Italy (Basile et al, 2019;Cicerone et al, 2020;Innocenti and Lazzeretti, 2019aStafforte and Tamberi, 2012;…”