Measuring economic performance atmunicipal level from outer space: the case of Mexico

Objective: the aim of this paper is to assess whether economic performace at municipal level scatters across space and time within Mexican states. Methodology: we follow a two-step econometric strategy. The first step is to instrument for both GDP and GDPgrowth rates at municipal level by following Henderson et al.(2012)’s methodology. The second step is to regress a dynamic spatial econometric model by following Elhorst (2010)’s model specification and estimation strategy. Limitations: we consider 1) Distortions in luminosity data 2) Our results are based upon municipalities within state. We do not test spatial implications among municipalities that belong to different states. Originality: we partially follow Millán López and González Olivares (2024) research line notwithstanding, we go fur-ther to analyze spatial interactions at municipal level. Conclusions: our main findings are that economic perfor-mance of municipalities significantly depend upon their neighbor’s contemporaneous and lagged economic perfo-mance. Furthermore, this paper provides a specific estima-te to approximate both GDP and GDP growth rates wherethere is lack of statistical sources; for example, metropoli-tan or coastal areas.