Economic Complexity and Regional Manufacturing Performance in Mexico, 2004–2019

The development of Mexico’s manufacturing sector has progressed unevenly across regions and industry groups, with the underlying causes varying over time. Using data from 2004 to 2019, we find that all Mexican regions experienced increased specialization and diversification. However, only those regions that shifted toward more complex manufacturing activities were able to expand their share of national manufacturing output. These findings underscore the critical role of industrial sophistication in shaping regional economic relevance. Consistent with prior research, our results highlight the importance of a clear and strategic industrial policy to support less dynamic regions. Such policy is essential for enabling structural transformation, fostering more balanced and inclusive economic growth, and overcoming persistent institutional and productive constraints that continue to hinder regional development. JEL Classification: L60, R11, R12