Path Dependency and the Allocation of Public Investment in Mexico

Abstract

The distribution of public investment within federal states is often subject to significant political discretion. Yet one of the possible consequences of such discretion is the appearance of path dependency in the way in which public investment is distributed. Mexico offers a unique example of the effect of path dependency in resource allocation, as there has been no political competition over more than seventy years. The authors seek to examine the dynamic structure of the regional distribution of public investment empirically, to test for the existence of path dependency and the influence of the different federal governments in Mexico. They use time-series intervention analysis methodology to study the structure of, and the influence of government change in the allocation of, public investment in Mexico between 1971 and 1999. Findings suggest the existence of path dependency in the distribution of public investment in Mexico during all except for the most recent governments. In other words, federal government change made little difference to the way in which public investment was allocated. Path dependency was only broken in the 1990s, coinciding with the setting up of the North American economic integration process, which in turn led to the loss of public support for the single political party, the Partido Revolitcionario Institucional or PRI, which had been in power in Mexico over the last seventy years.