Resumen
This paper examines the dynamic association between foreign direct investment (FDI), public investment of local governments (IPUB) and economic growth for the 32 states in Mexico grouped by region and level of competitiveness for the 2006-2015 period. In particular, we examine the crowding-in and crowding- out effects of the two types of investments, as well as their impact on economic growth. We employ a panel data vector autorregression (VARP) model from which we obtain evidence indicating that IPUB shocks have a negative impact on the response of IED and also that IPUB responds positively, but weakly to FDI. We also find a negative and significant response of regional GDP growth to IPUB shocks, particularly in the north of Mexico. Finally, we find that shocks to FDI do not encourage GDP growth and that states in the south even experi- ence negative rates of growth of per capita GDP.