ReportNo. 1081a-ME FILE COPY SpatialDevelopment in Mexico (In Three Volumes) Volume 1:The Text Public Disclosure Authorized January31, 1977 RETURNTOLXA & CGFILES Development EconomicsDepartment Latin America and the CaribbeanRegion Urban ProjectsDepartment FOR OFFICIALUSE ONLY Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank Public Disclosure Authorized Thisdocument has a restricteddistribution and may beused by recipients only in the performanceof theirofficial duties. Its contents may not otherwisebe disclosedwithout WorldBank authorization. FOROFFICIAL USE ONLY This is one of two reports derived from the findings of a mission to Mexico in January/February1974. The mission was led by Douglas Keare (DevelopmentEconomics Department) and Ian Scott (Latin America and the CaribbeanRegion) and included Roberto Cuca (DevelopmentEconomics Department),Sadasumi Hara (Transportationand Urban Projects Department), Y.J. Hwang (DevelopmentEconomics Department),Anna Sant'Anna (Development EconomicsDepartment), Professor John Friedman (Senior Consultant) and Jaime Biderman (Consultant - Research Assistant). The report has been prepared by Ian Scott with principal assistance by Douglas Keare. Editorial assistancewas provided by Linda Lessner. This document has a restricteddistribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclod without World Bank authoraton. SPATIAL DEVELOPMENT IN MEXICO TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............................ i - v 1. THE ISSUES OF SPATIAL POLICY ....................... 1 A. Background ......................... 1 B. The Issue of Centralization .... ............... 6 Background ............................... 6 The Case Against Centralization .......... 9 Problems of Macro-Economic Efficiency .... 9 Social Problems .......................... 12 Political Problems ...... ................. 13 The Quality of Life ...................... 13 Advantages of Centralization .... ......... 14 Advantages for Macro-Economic Efficiency.. 14 Non-Economic Advantages ...... 16 On Balance ............................... 17 C. Regional Balance ............... .. ............. 20 D. The Issue of Integration ........... ........... 23 E. Conclusions: The Goals of Spatial Policy 27 2. THE PARAMETERS OF SPATIAL POLICY .......... ......... 32 A. Non Spatial Parameters ............ .. .......... 32 B. Spatial Parameters ........ .................... 37 The Spatial Order ........................ 37 The Resource Structure .... ............... 47 C. Conclusions ........... ........................ 60 3. APPROACHES TO A SPATIAL STRATEGY .......... ......... 60 A. Introduction .................................. 60 B. Alternative I: A Growth Centers Strategy 62 C. Alternative II: A Gulf Coast Strategy ........ 68 D. Alternative III: Radical Decentralization .... 69 E. Urban Growth: The Next Twenty Five Years ...... 70 F. Areas for Priority Development . ............... 72 -2- Page No. 4. INSTRUMENTS FOR SPATIAL POLICY ..................... 74 A. Introduction .................................. 74 B. Existing Instruments of Spatial Policy ........ 75 Instruments Related to Industrial and Commercial Location .... ............... 75 Instruments Related to Administrative Decentralization ..... ................. 83 Instruments of Urban Development Policies .............................. 84 C. Suggested Instruments for Implementing a Spatial Policy .............................. 87 Organizing Spatial Planning and Development ................... 88 Implementing Growth Center Policies ...... 93 Training and Research Aspects of the Spatial Policy .. ...................... 103 SPATIAL DEVELOPMENT IN MEXICO SUMMARY AND CONCLUSIONS Introduction i. This report is concerned with the changing spatial dimensions of production, employment, and consumption in Mexico. Its aim is to organize and analyze available information on this so far relatively unexplored set of questions; to advance some tentative hypotheses concerning the desirabil- ity of affecting the spatial pattern of growth, as well as possible means of doing so; and, thereby, to inform, contribute to and stimulate the search for means of integrating "spatial concerns" into the processes of national policy formulation and investment allocation. To this end, its four chap- ters deal with the major issues of spatial policy, the parameters of spatial policy, alternative spatial strategies and finally instruments for spatial policy. The reader may find it useful to refer to a companion study, "Urban Development in Mexico", which analyses the historical evolution of the coun- try's present spatial structure and provides a background to this report. The Past as Prologue ii. The beginning of Mexico's present spatial system can be traced to the last quarter of the nineteenth century. Until then, the nation's economic space had been divided into a number of largely self-contained and essentially agrarian economies in which towns and cities existed to serve the limited economic needs of the rural sector. With the development of railroads and the related growth of export-oriented mining and agriculture, these enclaves were gradually integrated and developed into a network of major cities providing the basic framework of the country's spatial system. iii. As this happened, those cities which had already become relatively large and economically important by 1940 have since become larger and even more important. The membership and order of this group of (approximately 40) cities have remained quite stable during 1940-70 period. This notwith- standing, the continuing instability of size and economic roles within the group suggest that neither Mexico's urban system nor its spatial system has yet "matured". This apparent discrepancy is explained by two factors. First, the growth rates of the major cities have, with few exceptions, continued to fluctuate, sometimes widely, from decade to decade since 1960. Second, the only major exception to this rule has to do with a major "dis- tortion" in Mexico's urban system--the absolute size of the largest cities, particularly Mexico City. The composition of the set of cities at the top of the urban "hierarchy" has changed little, and their growth rates have fluctuated little, during the past three decades. In fact, Mexico City, Guadaljara and Monterrey have ranked first, second and third, respectively, for almost a century. Furthermore, Mexico City continues to dominate the system in such a way that the capital city may be characterized as the "core" and the rest of the country as the "periphery." - ii - The Issues of Spatial Development iv. This background serves to frame the three major issues of spatial development policy in Mexico today: (1) the question as to the desirability of the heavy centralization of people, prosperity and production in Mexico City; (2) the problems of the manifestly "unbalanced" nature of development between different regions; and (3) the enormous contrasts between urban and rural areas. For and Against Centralization v. It is widely believed that the overwhelming centralization of the Mexican space economy in one city is both inequitable and inconsistent with the nation's social and economic progress. But is this view justifiable? Although the present state of the art offers no feasible way of measuring the negative economic effects of concentration and centralization, it is often argued that important opportunities for economic growth are foregone as a result. The data do not permit a definitive conclusion; however, there is "circumstantial evidence" which may be cited. For example, it is evident that the resources of such well endowed parts of the "periphery" as the Gulf Coast have not been developed, and this can be represented as an opportunity cost of centralization. The costs of providing many kinds of social overhead in Mexico City are now higher than in any other part of the country, notably in respect to water, sewerage and electric power. It appears too that, among the ostensible economic disadvantages of centralization are those which refer to the structure of the national transportation network. First, it is highly centralized on Mexico City, which inevitably implies congestion of inter- regional traffic because so much of it passes through one place and also denotes congestion arising from traffic generated within the city. Secondly, the centralization of the transport system means that it fails to provide efficient access to, and especially between, many parts of the "periphery". vi. Not all of the adverse consequences of centralization are economic. Among the social disadvantages are several which lie beyond the scope of this report. Clearly, though, a strong relationship exists between urbani- zation and social progress, since the most urbanized states are the best- off in terms of general socio-economic welfare. A related problem is that of maintaining a manageable social order as Mexico City increases in size and as the absolute number of under-employed continues to grow. Linked to this is the political problem of efficiently governing an urban mass of more than 20 million people. Of a more sensitive political nature, is the feel- ing in some parts of the periphery that its needs and circumstances are mis- understood because of the centralization of decision-making in Mexico City. An unrelated consequence, suggested by the behavior of private firms, is that access to the Federal Government