Volume 43, Number 168,
January-March 2012
Interstate Tourism Development
between Puerto Vallarta and Bahía de Banderas: Mexico
Marco A. Merchand Rojas

Even Krugman, P. (1995) recognizes that studying regional economies can increase our knowledge of the international economy. Krugman states that the international economy is largely a special case of economic geography. As such, one of the best ways to understand how the international economy works is to observe what happens within nations.

Krugman reinforces the idea that regions are currently gaining importance and explains that regions in the heart of a country tend to be more specialized and engage in more trade than countries, even when the regions are just as large as the countries. Krugman explains that:

[...] uneven regional development can be explained in terms of historical contingencies. For example, the massive population concentration in the Northeast corridor of the United States is obviously not owing to the natural resources of the region. Rather, it is a result of the historical fact that European immigrants of the seventeenth and eighteenth century first arrived at the Eastern coast. Urban and industrial developments thus took place along this coast. Within this urban belt, New York continues to be the largest city - in large part because the Hudson River (which flows into the sea in New York) was linked to the Great Lakes by way of the Erie Canal in 1820 (1992: 17-19).

This quote is further strengthened by the question that Krugman poses: Why are wealth and populations geographically concentrated? Geographers would say that there are a variety of ways by which the initial advantages of some locations, which are no more than historical accident, tend to reinforce themselves over time. Self-reinforcing processes are often called examples of cumulative causation. For example, vacation centers that accommodate large hotel chains.

Once a region has a high productive concentration7, this pattern tends to be cumulative. The dominant region (Puerto Vallarta and Bahía de Banderas) acquires a location advantage. That is, the region becomes attractive due to the large number of companies that are already producing there (and not, for example, due to a greater presence of other factors). In other words, success brings about more success (Moncayo, 2003). The clearest example of cumulative causation involves the interaction of economies of scale, transport costs, and labor mobility. That is, regional economies are frequently characterized by uneven development, a process of cumulative causation by which regions with an initial advantage, due to an accident or historical reason, attract growing portions of industry and employment from other, less fortunate regions.

An immediate implication of market capitalism is its circularity; that is, large companies (hotel chains) want to be located in places with high market potential. This means places close to large economies of scale. Moreover, potential markets and economies of scale tend to be greater in places where more companies are located. As such, there is a natural self-reinforcing tendency for regional economic growth. The fundamental economic variable is the initial economic potential that a place provides and the location of businesses.

Krugman proposes a series of questions common to any model: When can it be said that the spatial concentration of an economic activity is sustainable? And if that concentration is reached, what would be the necessary conditions so that the advantages created by the concentration would bring about its maintenance? When can it be said that symmetric equilibrium is unstable without spatial concentration? What conditions are needed to exacerbate the small differences between locations, in such a way that, after a certain period of time, the symmetry between two previously identical places is spontaneously broken? (Fujita, Krugman and Venables, 2001:19).

The answers to these questions revolve around the balance between centripetal forces, or those that tend to bring about spatial concentration of economic activity, and centrifugal forces, which oppose said concentrations. For the nge, economic development is the result of the coming together of centripetal and centrifugal forces. The former arise from the combination of low transportation costs and taking advantage of economies of scale due to the size of the market in activities with high fixed costs. Increasing returns elevate the size of the most industrialized regions, positively influencing product growth. Human capital, technological externalities and links between entities are also associated with agglomeration, having a positive effect on productivity growth.

Centrifugal forces are a result of the immobility of factors or congestive factors, such as high land prices or reduced labor mobility. In other words, centrifugal forces result from the growth of external diseconomies. However, diversification and specialization also play an important role in economic development associated with dispersion.

Finally, it is fitting to point out that the nge sustains that economies of agglomeration (concentration of tourism, agriculture and industrial enterprises) corroborate the hypothesis of regional divergence. In other words, the free interplay of market forces irreversibly brings about an intensification of regional inequalities and increased polarization, in keeping with what other economists have previously proposed.

7 Territorial concentration basically arises from the interaction of increasing returns, transportation costs and demand. If the economies of scale are not sufficiently big enough, each manufacturer will prefer to provide goods or services to the national market from a single site. To minimize transportation costs, a location will be selected that allows for broad demand. But local demand will be greatest precisely in the places where the majority of manufacturers choose to locate themselves. In this way, a circular argument arises that tends to preserve the existence of concentrations. Once concentrations have been created, they are thus maintained, and disparities between regions are exacerbated.

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Published in Mexico, 2012-2018 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
CP 04510, México, D.F. Tel (52 55) 56 23 01 05 and (52 55) 56 24 23 39, fax (52 55) 56 23 00 97, www.probdes.iiec.unam.mx, revprode@unam.mx. Journal Editor: Moritz Cruz. Reservation of rights to exclusive use of the title: 04-2012-070613560300-203, ISSN: pending. Person responsible for the latest update of this issue: Minerva García, Circuito Maestro Mario de la Cueva s/n, Ciudad Universitaria, Coyoacán, CP 04510, México D.F., latest update: January 9th, 2019.
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