Industrialization of Peri Urban Interfaces in Commodity-Based Regions - Fh-Ventura

Bartlett - Development Planning Unit
University College of London

01 of September 2016
Industrialization of peri urban interfaces in

commodity-based regions.
Case Study: Tabasco, Mxico
Luis Felipe Hernandez Ventura

JHYQ3
A dissertation submitted in partial fulfilment of

the requirements for the Msc in Building & Urban
Design in Development
10,707 words
Acknowledgements
I want to thanks to my mother Marbella, my brother Edgar and my Father Jesus

for supporting me in every decision i have made in made. Without them my
master wouldnt have been possible.
I want to thank also to the Consejo Nacional de Ciencia y Tecnologa (CONACYT)
for supporting me and helping me to accomplish this milestone in my life. To the
professors from UCL, DPU and the BUDD program. Specially to Julio Davila and
Camillo Boano for being always willing to help the students.
To my peers, the BUDDies for making this year a wonderful experience in
London, Italy and Cambodia.
To my friends back in Mexico who supported me despite the distance and
inspire me to keep going.
No man is an island and I wouldnt have done anything without any of you.
Abstract
Tabasco is a place with an important oil wealth that has been mismanaged creating a commodity
dependence and neglecting their vulnerable groups. This has created an economic disbalance
increasing inequality and stopping innovation in industries different than oil. There is an increasing
population outside the urban centres with a dynamic growth and a very interesting development
mixing rural and urban services. As new future investment for oil extraction will take place in this peri
urban interfaces, there is the possibility to stop the tendency of commodity dependence and increase
diversification and industrialization in order to provide better opportunities to a wider population
base. This is an analysis of the current context of investment of the new energy reform and the effect
that it will undoubtedly have in the peri-urban areas of the region.
Table of contents
Introduction. 1
Chapter 1. Economic development and commodity dependency.

1.1 Development based on commodity revenues.

1.2 Economic diversification.

3
3
5
Chapter 2. Investment for opportunities. 7

2.1 Small and medium enterprises. 7
2.2 Infrastructure investment. 8
2.3 Urbanization and institutions. 9
Chapter 3. Urban expansion and its relation with the rural areas.
11
3.1 Peri-Urban Interface. 11
3.2 Reciprocal Urbanization. 13
Chapter 4. Context in Mxico 15

4.1 National government

15
4.2 Oil Reform 17
Chapter 5. Case study: Tabasco 21

5.1 Peri Urban areas in Tabasco

23

5.2 Fostering SMEs in Tabasco.

25

5.3 Infrastructure investment in Tabascos context.

26

5.4 Empirical assumptions.

27
Conclusion and recommendations. 29
References 31
List of figures.
Figure 1: Map of Mexico and the southeast region

1
Figure 2: Map of main economic sector per state in Mexico

16
Figure 3: Mexicos oil provinces 17
Figure 4: Sureste oil province 18
Figure 5: Southeast Oil Province location industry.

18
Figure 6: Oil production in Mexico (barrels per day)

19
Figure 7: Map of new contractual zones for private investment
20
Figure 8: GDP by sector in Tabasco 21
Figure 9: Map of urban settlements in Tabasco according to INEGI
21
Figure 10: Percentage of GDP participation by economic activity in Tabasco.
22
Figure 11: Percentage of occupied people by economic activity in Tabasco
22
Figure 12: Population living on Rural and Urban areas in Tabasco according to INEGI
23
Figure 13: Population living on different size settlements in Tabasco according to CONAPO 23
Figure 14: Map of population settlements by size.
24
Figure 15: Populations income in Tabasco.

24
Figure 14: Peri urban area and future expansion.
29
BOX 1. Aberdeen: a city made of oil.

BOX 2. Ecuador: diversification of the productive matrix.

4
5
Introduction
The hinterlands where the urban and rural areas meet, becomes the more
vulnerable area but at the same time the most feasible for positive change.
Infrastructure and industrialization can be catalysts for development in the
peri urban interface, especially on the contractual zones for oil extraction
where there will be an imminent investment in oil extraction.
Mexico is a resource-rich country with one of the most stable economies in
Latin America. Its geographical position allows for large exports to the United
States and South America; its location on Pacific Ocean and the Gulf of Mexico
connect it to the rest of the world. The climate allows for a variety of vegetation
and therefore facilitates great development for agriculture and it possesses
great mineral and oil wealth. The latter has been greatly exploited, being one
of the main economic assets in the country.
The southeast region of Mexico (Figure 1), having the most important oil
deposits, has had a slow and uneven development. With Tabasco at the
center of this area, the state sorely lacks a growth comparable to the value
of its natural resources. Urban expansion and access to services have been
fairly homogeneous. Only 77% of the states population have access to basic
services1 (INEGI, 2016b). However, more than 40%of the population es under
the poverty line2 (CONEVAL, 20143; OPHI, 20124)
______________________________
1.- Households with all basic services
are those that are connected to
the public water network inside
or outside the home; public water
network of another home or a public
key or hydrant; public drainage
system or septic tank; and electric
utility of a particular power plant, a
solar panel and some other source.
2.- Understanding poverty as the
lack of one or more factors such as
nutrition, drinking water, housing,
education,
healthcare,
social
security, basic services at home,
income and social cohesion.
3.- CONEVAL: 49.6% of which 14.3%
was extreme poverty.
4.- OPHI: 40.1% according to the
Multidimensional Poverty Index
(MPI)
Figure 1: Map of Mexico and the southeast region.
Own elaboration. 2016
Industrialization of peri urban interfaces in commodity-based regions. Case Study: Tabasco, Mxico
Acknowledging the limitations for processes and policies of planning, is

important to consider the variables in a social system and their interrelation
in order to take a close look into people's needs. Tabasco is a place with
an important oil wealth that has been mismanaged creating a commodity
dependence and neglecting their vulnerable groups. This has created
an economic disbalance increasing inequality and stopping innovation in
industries different than oil. There is an increasing population outside the
urban centres with a dynamic growth and a very interesting development
mixing rural and urban services. As new future investment for oil extraction
will take place in this peri urban interfaces, there is the possibility to stop
the tendency of commodity dependence and increase diversification
and industrialization in order to provide better opportunities to a wider
population base.
How can the economic spillover be used to strategically plan ahead
and reduce the macroeconomic risks of oil dependency?. And how can
infrastructure interventions support economic activities that are sustainable
as well as helping to reduce poverty and inequality in peri urban areas?
Firstly, I will analyze the problems created by the oil dependency and the ways
in which it has been handled in different international areas. Taking advantage
of this wealth Ill ask whether its possible for the state to diversify into other
industries for development in order to expand the job base and increase
income to the wider population.
In the second chapter, some investment strategies for diversifying industry will
be discussed, supporting small and medium enterprises and infrastructure
for interconnection, thus providing accessibility to a wider network that covers
whole region. Likewise, the role of institutions within the conceptual framework
for the establishment of SMEs and infrastructure to fulfill its role of providing
support for the creation of jobs for the people who need it rather than just
perpetuate corporate monopolies.
In the third chapter theres a description of how urban growth has happened in
developing countries and their spatial conceptualization beyond urban centers
dynamics, the relationship between rural and urban areas and peri urban
interface context, and the way in which the rural and urban growth relates and
the importance of connections to maintain the flow of information, people and
goods at a regional level.
Chapter four contextualizes the history and geography of Mexico, as well as
how its oil policies have led to dependence. Finally, the way a new energy
reform approved in 2014 aims to change this will be discussed.
Chapter five examines Tabascos particular characteristics of oil dependence
and the impact this has had on the development of peri urban areas. The
lack of support for small and medium industries, and the infrastructure and
institutional problems that have affected its growth and equality are also
investigated.
Finally, in the context of urban expansion and based on the empirical research,
a series of recommendations will be made. This is an attempt to analyze the
current context of investment of the new energy reform and the effect that it
will undoubtedly have in the peri urban areas of the region.
2
Chapter 1. Economic development and commodity

dependency.
Resource-rich countries have the potential to develop in many different
ways. However, their dependence on commodities can bring undesirable
consequences to the local economy. The correct use of natural resources
exploited in a region depends largely on the strength of its institutions. Proper
management of rents and commodities can ensure flow and distribution of
income among the people providing opportunities in order to maintain an
economically sustainable system.
1.1 Development based on commodity revenues

Many other countries of Latin America have fallen in the low-level equilibrium
trap (Nelson, 1956), where high-population growth has overcome production
systems and lack of stable political systems along with lacking investments
in education and technologies have made it difficult to overcome the poverty
line. This way, when the population grows, it pushes down the income per
capita to a subsistence level, thus requiring an increase to the income growth
rate to levels higher than the rate of increase in population. Weak institutions,
corruption, and hostility to commercial ventures made it very hard to diminish
this tendency for many countries in the global south despite them being
resource-rich. Proper management of commodities, along with a coordinated
investment effort, could help the economy avoid this trap.
Another common factor in resource-rich countries is that they have relied
on a commodity-based economy and have failed to foresee problems with
the Dutch Disease, which refers to the idea that natural resource exports
may come at the expense of the manufacturing sector (Guriev, Plekhanov
and Sonin, 2009). In a market thats based on investment and consumption
related to commodity revenues, the cost of labour and the prices of services
tend to increase. The labour shifts towards the dominant resource sector,
all the while inhibiting the development of manufacture production. Much of
manufacturing production develops through a learning by doing approach,
which may then be affected by the lack of improvement. In the long-term, the
lack of innovation in product quality affects growth in manufacturing revenues
(Barder, 2006). Also, distribution of commodity rents are shared between a
smaller base of economic units than manufacturing revenues. If a depreciation
of agro-industries happens without proper technical education, small farmers
are forced to migrate or resort to low-paid and non-farm employment (Tacoli,
1998), affecting their income and livelihood.
However, if managed correctly, some policies of agglomeration economies or
economies of scale suggest that concentration of industries around certain
goods or with specialization in one commodity could help clustering business.
Taking advantage and exchanging ideas can lead to innovation (Combes,
Duranton, Gobillon, L., & Roux, S. (2010). The agglomeration economies rely
on the strength of the institutions and the initiative of business to adapt to the
pole industry. But theres always the risk that some firms will become too big
and will increase the average cost, making it unsustainable.
Industry condensation and peoples knowledge in urban settlements in which

ideas move faster encourage knowledge spillovers creating learning intensive
regions (Carlino, 2001). These can come to be either by the condensation of the
same industry, which allows for specialization and innovation to travel faster, or
by concentrating an industrially diverse urban environment, therefore allowing
the exchange of different perspectives and developing new ideas, products
and processes. Capitalization of innovation is then expected to develop new
enterprises and lead to faster industrial growth.
In resource-rich countries, a commodity-based economy offers great
opportunities for development. However, there is a tendency to fall short of
expectations due to the volatility of the macroeconomic rents which then
undermines the incentives to improving institutions. (Guriev, Plekhanov and
Sonin, 2009)
BOX 1. Aberdeen: a city made of oil.

The city of Aberdeen is the third most populated city in Scotland. Since the discovery of oil in the North Sea in
1970 the city has gained great importance and economic strength. Unfortunately, dependence on oil brought
various economic consequences. For many years, economic development was locked-in to just oil.
Aberdeens industry role was limited only to being a glorified supply base and a branch plant of many
transnational corporations. However, this international influence allowed it to be the center of information
in learning-by-doing and learning by using processes which resulted in an accumulation of specialists. In
addition to that, a number of policy interventions helped explore marketing strategies beyond just business-led
exports.
A large number of native companies have taken advantage of the development in Aberdeen and have been
able to become successful exporters of products, services and processes. In so doing, they have strengthened
native businesses and investment in innovation to foster core technologies (Cumbers, 2000)
Aberdeens example (BOX 1) helps illustrate the importance of using the

resources of a commodity-based development in order to create and improve
local enterprises that can then integrate into a larger-scale exporting network
using knowledge previously-obtained from other industries.
Macroeconomic volatility is a major concern in cases of commodity dependence.
Many countries have relied mostly on oil prices, which have been high for a
long period of time, but are susceptible to shift. The quality of the political
and economic institutions is the base for the correct use of revenues during
any resource-surplus period. If a country shifts from manufacturing to only
commodity exports it will struggle when the macroeconomic factors change
(Mehlum, Moene and Torvik, 2006).
There are some strategies to avoid the low-level equilibrium trap through
the diversification of the economy: increasing investment in small industries,
promoting financial development, and improving institutions that helps reduce
the macroeconomic volatility.
1.2 Economic diversification

Economic diversification might help reduce the resource dependency on oil
extraction by addressing the bias caused by commodity rents. Creating a more
effective productive investment makes way for better institutions. Although
it might seem costly in the short-term by moving the investment away from
the oil extracting sector, in the long-term it will boost investment and growth
in other sectors, making the economy less volatile and less vulnerable to
macroeconomic shocks (Gylfason, 2001).
Policies that promote financial development and reduce the volatility of
commodity dependence will lower the economic risk and will help diversify
non-resource sectors (Guriev, Plekhanov and Sonin, 2009). However, there is
significant pressure from the rent-seeking sector and the commodity-based
industries to stop the institutional strengthening and not having to share the
fruits of economic growth so widely (Op. cit.).
Despite the slow development and mishaps of Ecuadors diversification
project (BOX 2) could have, its possible to see progress in transforming
beyond oil-dependency. At the moment, its difficult knowing if investment in
infrastructure and education will provide the expected results, but its clear
that opportunities are being created to use the available resources in the
country more efficiently and to foster a wider spectrum of industries based on
human capital and innovation.
BOX 2. Ecuador: diversification of the productive matrix.
The Ecuadorian economy has been characterized as a supplier of raw materials in the international market, at
the same time importing goods and services with higher added value. The constant and unexpected changes
in macroeconomic prices of raw materials, as well as the growing difference between prices of products with
higher value added and high technology. The Ecuadorian economy is in a situation of unequal exchange subject
to the fluctuation of the world market.
President Rafael Correa (2007 - present) during his administration pushed a process of changing the pattern
of productive economic specialization that allows Ecuador to generate higher added value production by
increasing education levels. Transforming the productive matrix is one of the most ambitious challenges of the
country. This will allow Ecuador to overcome the current model of wealth creation into one which is democratic,
inclusive, and based on knowledge and capabilities (SENPLADES, 2013).
The transformation is based on 14 productive sectors and five industries strategic for the process of changing
the productive matrix. It relies on generation of added value for product and services of exportation. The
investment made in scientific research and technological development has increased significantly since 2006
from 0.13% of the GDP to 0.4% in 2011 (World Bank, 2016), of which most is destined to the development of
human capital and education improvement research (29% in life sciences; 18% in social sciences, 5% in basic
science and 3% in branches linked to the arts (SENECYT, 2013)).
Ecuador is trying to consistently carry-out a socio-economic transformation fostering a strong and varied internal
market. Even if these changes have not yet been consolidated, the variety of policies reflect the aspirations
from a government that is strengthening human capital. However, given the current conditions, its difficult
to think that in the short-term Ecuador will mobilize the necessary resources for the transformation of the
productive matrix with the specialization of the so called strategic industries. Industrial policy specialists
advised that this is possible only when ther is a rooted strategic partnership between the private sector and
the government. There are active citizens who have taken a critical stance on the government arguing the
programme is inadequate because it has not restricted the excessive power of some national economic groups
and has not correctly set the bases for a new agrarian reform that will adapt to the new policies. (Cypher and
Alfaro, 2016).
Chapter 2. Investment for opportunities.

A commodity-based economy lacks sustainability to support a broad base
of population development. It seems necessary to explore alternatives for
adjustment and innovation of productive methods. In Latin American countries,
different methods of diversification have already been explored. The main
focus on this research is: investment in small and medium enterprises (SMEs);
investment in infrastructure development; and investment in improving the
institutions that govern and coordinate production methods.
2.1 Small and medium enterprises.

The oil sector requires a relatively low production compared to other economic
sectors. The insertion of smaller companies as providers is limited by their
lack of technical, economic and networking resources. Only a few large
corporations that already had these capabilities can supply the demands
of the oil industry (Guriev, Plekhanov and Sonin, 2009). This causes a lack
of investment in capacity-building and technological transfer for fostering
innovation from native enterprises.
Development requires a form of high-value-added manufacturing, as in the
automotive or electronic sectors where the linkages to other potential exports
make it easier to diversify in later stages, thereby increasing the products
value. By enhancing the rural-urban flows and allowing a proximity of the
markets (regional, national, or global) that make agricultural and consumer
goods to the people, its possible to increase demand and production of
agricultural goods, boosting rural incomes. This will also lead to the creation
of non-farm jobs and employment diversification, especially in small towns
(Tacoli, 1998).
Competitiveness of countries, regions or cities is defined as the difference
between the sets of institutions, policies, and factors that determine the level
of productivity (Schwab, 2009). The pre-existing lag in capacity for innovation
and knowledge generation as well as the poor associative culture of productive
sectors with markets, creates a low level of competitiveness in most of the
municipalities and regions. Stimulus to the youths creativity and awareness
about the chain-reaction in value creation of most strategic sectors is needed
for an improvement of local supply in all sectors, including oil.
Productive reactivation of rural areas, can be achieved through participation
and entrepreneurship of people developing their own capacities. If training
programmes for technical and commercial development are established, a
suitable business-minded model will transform and add value to the products
of the primary sector, therefore supporting the consolidation and growth of
diverse industrial corporations (Cumbers, Mackinnon, and Chapman, 2003).
There is a need to have programs with different levels of government
involvement to develop local markets in underserved areas and promote
commercialization of surpluses to bring down poverty rates. It is necessary
to increase the production value of the primary sector through integrated
agro-industrial processes in production chains that guarantee access to local,
national and international markets (Op. Cit.).
Establishing campaigns to maximize local production and increase the value

of products produced in settlements close to urban areas can begin to reduce
imports and increase revenue for small businesses. The use of local products
and products for secondary industries help increase local value in a broader
spectrum.
Using diversification of industries as a way to expand the productive base and
support small and medium enterprises in order to allow vulnerable population
to increase their income and learning by doing and learning by using dynamics
is a way to foster the creation and improvement of local enterprises.
2.2 Infrastructure investment

The use and allocation of infrastructure can be a game-changer in the
geography of a region (Martin, 1995). Financing focused mainly on transport,
communication infrastructure and trade-service sectors is the most significant
driver of urban-growth in developing economies. Better domestic infrastructure
implies a lower price and a higher relative demand for locally-produced goods.
Better infrastructure policies can be used to attract foreign investment if its
integrated into the local producers, thus taking advantage of the economies
of scale. Investment in a regional level must be guided by national plans and
strategies but propelled by local authorities and civil society.
The generation of benefits from public investment in infrastructure occurs only
when services respond efficiently to the effective demands from communities
(World Bank, 1994). But, there is also a need in the improvement of life-quality
at a regional level. Beyond basic services, the implementation of proper
transport, leisure spaces, public amenities, and service sectors, there should
be a need for an equity in life quality. This will contribute to reduce the rural to
urban migration while also improving the peri urban interface (Allen, Brown,
Dvila and Hofmann, 2015).
Better domestic infrastructure allows different corporations to locate in
regions with low-industrial concentration (Rodrguez-Oreggia and RodrguezPose, 2004). 40% of the worlds fastest-growing cities have benefitted from the
improvement of regional transport by reducing socioeconomic disparities across
space and people (UN-Habitat, 2008). Connecting small and intermediate
urban settlements along a rural network allows the population to exploit better
employment opportunities and have better access to amenities, cultural, and
recreational services. At the same time, there will be an exchange of housing
and land availability, labour opportunities, and hopefully an improvement in
the quality of life.
In many countries the manufacturing periphery has been an opportunity area
for development, where industrial growth can develop through regional links,
creating new economic structures bypassing the obsolete ones (Norton and
Rees, 1979). This process of industrialization at a regional level is emphasised
on the peripheral locations of industries in order to increase the development
of suburban areas and reduce cost of land in the core cities. However, the
larger ecological footprint might be affected if there isnt proper emissionscontrol for transport and industrial locations.
8
Improving connections and reducing accessibility constraints allows people

to increase job opportunities, business networking, services provision and
proximity to institutions (Farrington and Farrington, 2005). Updating the
territorial planning system to regulate urban and rural growth in a balanced and
sustainable way will allow infrastructure network provision. This will promote
equity in service provision for inhabitants regarding their geographical location.
The politicization of connecting different socioeconomic groups will bring
balance at the regional level and reduce social inequalities by understanding
which interests are ignored and which prevail within the urban scale (Allen,
Brown, Dvila and Hofmann, 2015).
2.3 Urbanization and institutions.

The role of central government determines the prosperity and growth of cities
using their geographic advantages. The growth in cities is neither random
nor entirely organic (UN-habitat, 2008). The integration of national policies,
corporate strategies, and resource-management of local governments to
expand the market determines the economic, political and even physical
growth of cities.
Governments rarely rule off the dangers that come from natural resource
abundance. Then, the lack of policies for proper management of commodity
wealth becomes an unambiguous blessing (Gylfason, 2001:851).
Overconfidence and the shortcoming for adjustments in economic or fiscal
policies will lead to financial distress when unanticipated reductions in oil
revenues happen beyond the governments control (Op. Cit.).
Promotion of diversification policies depends greatly on the quality of the
institutions. The importance of overcoming the struggle between public needs
and market forces will help create intermediate institutions that can negotiate
between both. By stressing the relationship between public and private
developers its possible to create better systems that meet the populations
interests (Florida, 1995).
Theres a need to mobilize political support and improve governance of primary
products in order to find the best-suited policies and decision processes in
each countrys economic and social conditions (World Bank, 2007). This is
intended for giving accountability in decision-making to people in broader
areas than just the central governments. The regional development needs to
expand and localize policies that attend to the most vulnerable populations.
Decentralization of institutions and service provision involving small scale
actors have proven to be the most adequate ways of delivering basic services to
the inhabitants of the hinterlands between urban and rural jurisdictions (Allen,
2010). Giving accountability to civil societies and private investors under local
government jurisdiction helps to alleviate problem solving situations on peri
urban interfaces.
Education, skills, and entrepreneurship can be fostered by providing incentives
for parents to better educate their children, improving the quality of schools,
and providing educational opportunities relevant to emerging job markets.
Learning regions are important to promote knowledge-economic organization

to flourish. A social infrastructure that produce knowledge for workers and
promote development learning networks. This facilitates constant sharing
of information, integration to the global economy, and industrial governance
systems attuned to the needs of knowledge-intensive organisations (Cumbers,
Mackinnon and Chapman, 2003).
Strong institutions exercise better policies for social improvement and economic
equity. Institutions may be governmental, private and civil associations working
in the overall structure of any region, but mainly seeking to help vulnerable
populations.
10
Chapter 3. Urban expansion and its relation

with the rural areas.
The process of urbanization is defined as the concentration and intensification
of human life and activity in a physical environment that is mostly uneven
(Iaquinta and Drescher, 2000). The cultural, socioeconomic and political
choices of which areas are occupied by the activities determine if the
environment is identified as Urban, Rural or Peri-urban. However, assuming
that the main categories of livelihood are related to agriculture being based in
rural areas and manufacturing and services in the urban centres is to simplify
the complexity of the human activities, economic organization, technological
changes and globalisation (Douglass, 1998).
There is much uncertainty about the pace of global urbanization and the
capacity of national and local governments to deal with it. Urban areas are
generally defined as the settled areas that are more populous and dense than
rural settlements, and more suitable for locating administrative facilities and
functions (Tacoli, McGranahan, and Satterthwaite, 2015:6). Urban expansion
then relates in intensity to the hierarchy of cities. Thus, bigger cities present
more intense and dynamic processes, both in growth and in demand of new
living structures and services.
The fringes of cities where urban and rural areas are mixed allows space
exploration for new development alternatives for urban expansion. Therefore,
the relationship between rural and urban especially in developing countries is
linked. The dependence that exists between both and the increasing regional
improvement that is needed should help bring support for the most vulnerable
populations of these areas.
3.1 Peri-Urban Interface.

The Peri urban interface (PUI) goes beyond the fringe of the city, its an
entanglement where urban and rural coexist and linkages of people, goods
and wastes, money and information shares spaces between cities and
countryside (Tacoli, 1998). The interaction of cities with their surroundings,
the movement of natural resources in the regional space for maintaining the
activities developed in the city, and the different patterns of migration and
mobility, create different settlements within the PUI (Iaquinta and Drescher,
2000).
French literature coined the term peri-urbanisation in the European context
to describe every zone external to the city that surrounds it while damaging
the urban tissue through a dispersal of different activities (Adell, 1999).
The analysis of the phnomne priurbain within cities in developing
countries included the research with the poor or informal fringes of the
city, the appropriation of the spaces and the strategies for land, housing and
improvement of economic activities.
Its necessary to identify different approaches for defining the PUI. Starting
from an emphasis on physical attributes in which the peri urban interfaces
interact mostly through three subsystems: Socio-economic where the multiple
forms of interrelations and different levels of organization among individuals;
territorial as physical transformation of natural components; and artificial
where components as infrastructure and built environment is considered
(UCL-DPU, 1993).
11
The interactions between rural and urban that give shape to the PUI have
different layers of conditions that give it shape or transform it. The local-level
deals of conditions of land management, and demands of activities to supply
urban needs. The second level is driven by national and regional conditions
such as political development and industrialisation. Finally, the international
conditions as exporting prices, migration and globalisation (Op. Cit.).
The patterns of urbanization in many cities from developing countries reveals
the lack of a plan that goes along with the fast expansion of cities. As a
consequence, urban planning ends up doing corrective actions instead of
prevention or actual planning (Viera and Larrazabal, 2014), coming always
behind of the cities realities. The PUI in Latin America constitutes a mixture
of poor households, wealthy residents, and producers. It brings environmental
services and natural resources consumed in urban areas, and the new pockets
of expansion for middle high income development that spread outside the
urban densification in search of cheaper land (Allen, Dvila and Hofmann,
2006).
The term peri-urban evolves through the dichotomy between rural and
urban processes that are dependent of each other (Madaleno and Gurovich,
2004). These ecosystems are interacting and competing, both socially and
environmentally, with dynamic processes that need to be adapted in order to
become sustainable (Vieyra and Larrazabal, 2014).
The structure of the PUI can be understood through two main dynamics (Vieyra
and Larrazabal, 2014): The land use / cover change (LUCC) (Mas, Velazquez,
Diaz-Gallegos, Mayorga-Saucedo, Alcantara, Bocco, Perez-Vega, 2004), and
the fragmentation of the landscape (Forman, 1995). The first one describes
the way land use can be observed and described by those who interpret the
activities happening, according to the material and energy flows demanded
by the urban or rural settlement. The socio-economic description in the pure
functional dimension of the space is what creates the complexity in the periurban with the LUCC. The land speculation, the shifting of activities and the
increment of economic productivity makes uneven processes of urbanization.
Fragmentation, on the other side, is the dynamic partitioning of the habitat,
ecosystem or land use into smaller pieces. This fragmentation affects the
rural and urban landscapes through the expansion of settlement and the road
connection, factors that directly affect the productivity of farming areas, the
natural environment and the increasing pollution. In addition, the institutional
fragmentation in the peri-urban areas creates limitations within the political
and administrative sectors. The weaker links in the greater metropolitan areas
fall into uncertainty of utilities management, governance and institutional
services. (Allen, Brown, Dvila and Hofmann, 2015)
Considering the LUCC and the fragmentation of the rural areas changing
for the expansion of the urban areas is recommended in order to identify
areas of rural reserve to keep the levels of food security and access to rural
products (Vieyra and Larrazabal 2014). The lack of urban planning makes it
harder to control urban growth, which in many cities of Latin America is not
only desirable but even encouraged by the government. One of the biggest
challenges of cities is to limit the spaces taken from rural areas and their
impact in the long-term. In most cases, its considered that PUI are places of
12
social compression and dynamic change. They cannot be considered as fixed

states and require an interdisciplinary understanding in order to incorporate
the policy interventions that they require effectively (Op. Cit.). Acknowledging
the dynamics of the PUI and the limitations that come with the rural-urban
spatial analysis helps understand how these areas change along, because,
and despite of the city.
Land tenure systems and the regulatory framework for environmental
changes in the PUI are another major concern caused by urban disparities and
institutional weakness in many cities. This specific form of disparity directly
affects the peri-urban poor creating a disadvantage against other investors
and private developers.
Infrastructure then plays an important role by reducing or reinforcing social and
spatial inequalities by enabling speculation and capital accumulation in landfor-housing markets (Allen, Brown, Dvila, and Hofmann, 2015). Therefore,
more effective infrastructure planning systems that consider the needs,
priorities and affordability requirements of the peri-urban poor are needed.
3.2 Reciprocal Urbanization
Urban expansion does not just involve more people living in towns and cities, it
also means increasing movement of services, resources, and people between
urban and rural areas. Rethinking this new form of urbanization, that seems to
be enhanced by modern communications and transport technologies, makes
the flow of information and people easier than before. The urban future of
countries (...) is likely to be intimately tied to rural systems and the two will
operate in direct symbiosis. This symbiosis will have political, social, economic
and environmental dimensions. This idea of reciprocal urbanization
(Frayne, 2005:43), makes an emphasis in the holistic relation between all
the components of a region connected through an accessible network that
reduces inequality in both rural and urban areas.
An urban realm is neither urban settlement nor territory, but heterogeneous
groups of people communicating with each other through space (Webber,
1964:116). Cities are not isolated from their contexts and thus do not exist by
themselves without the rural areas. There must be a need to stop the growth
pole development (Rondinelli, 1985; Unwin, 1989), understanding that not
only will the free-market forces provide the conditions for development in the
urban areas, and the urban benefits will not spread through a trickle-down
effect to the rural. Its important to be aware of how the spatial links between
agricultural activities in rural areas and industrial activities in urban areas
conflict, contradict each other and overlap.
The importance of rural-urban linkages and the planning of the PUI relies
on understanding the importance of the farmlands for food security and the
economic income for the rural villages. A healthy exchange of goods and
information needs to acknowledge the complex dynamics of the constant
transformation, the informality in commodity production and the different land
market conditions that apply in a wider system of the region (Rakodi, 1998).
13
Improving the regional connectivity and networking schemes for changing PUI
will allow knowledge transfer and will ease the economic diversification that
will help increase new businesses and create different sources of revenue
among the regions.
Small towns often have stronger links with their hinterlands and other PUI
than large cities. These links also help in supporting the livelihoods of the
poorest groups including those lacking the means to migrate to larger cities.
They provide basic infrastructure and services to their own populations and to
that of surrounding areas (Satterthwaite and Tacoli, 2003).
At a regional level, its possible to see how a dilution of the urban composition
happens in larger zones, where density decreases the further they are from
urban centres and transportation networks play a crucial role in commute
times for PUI residents. However, the administrative integration of the rural
areas into the jurisdiction of the urban settlements should be very careful, in
order to avoid an urban-biased policy transforming rural into urban. A better
option would be to search for an integration of the territory as a heterogeneous
collage of activities, upgrading the connectivity and infrastructure, but at the
same time balancing the regional development in order to not force urban
settlement into the rural areas. Managing the land uses by incorporating local
knowledge into the planning and giving a strong emphasis in the quality of the
regional lifestyle will allow a more effective expansion of network connectivity
with minimum resources while still giving a boost to PUI relations (Adell, 1999).
Regional industrialization does not depend only on physical infrastructure,
neither only implementing new infrastructure guarantee the increase of the
livelihood for either urban or rural areas. Infrastructure works alongside with
different other needs such as social justices, equality and education. In order
to increase the opportunities for income and better use of the resources of
a region local government working in coordination with civil societies could
acknowledge these needs to create systems that works parallel for the
improvement of the PUI built environment and the Institutional social systems.
14
Chapter 4. Context in Mxico

The geographical-historical context of resource-dependent countries
generates very particular characteristics for each location. Mexico is rich in
natural resources and has a wide range of industries which has diversified
its development. However, in a more detailed analysis, we can see many
inequalities within different regions. In the southeast region (Figure 1), the
state of Tabasco has been one of the most affected areas by oil dependency,
but the current changes in the way national industries are administered could
be the first step to change the current situation.
4.1 National government

Mexico has experienced profound transformations in its economic model
since the early 1970s. It has moved from a closed to trade and public led
economy to a really open economy (Rodrguez-Oreggia and Rodrguez-Pose,
2004). This transformation emphasized the highly centralized government
where investment decisions are geared towards fostering national growth,
despite the dimension of economic disparities among the regions (Op. Cit.).
On a national scale, Mexico has established high-tech manufacturing sectors
based primarily on Foreign Direct Investment by US firms in the north and
center of the country. Due to the distance between Mexico City and the US
border, its easy to understand why there is a priority to establish factories
there. (Figure 2). However, on the regional level, the southeast lacks the
institutional input to diversify further. Despite being a resource-rich region,
there is very little investment in human capital and infrastructure.
Another problem that exists is the lack of support for small and medium
enterprises. Manufacturing companies that could encourage the use of local
primary products, and take advantage of the growth of commercial products
are missing. Establishing new industrial centers could be a way to encourage
the creation of agro-industrial manufacturing companies, therefore diversifying
the products and increasing demand for commodities.
Urban and rural size conceptualization change in every country according to its
activity, density, services, and population. According to the National Statistics
Institute (INEGI), in Mexico, a settlement is considered rural when it has fewer
than 2,500 inhabitants, and urban when it has more than that. Historically,
its assumed that agriculture is the principal activity of the rural population
while urban residents are considered to enroll mainly in industrial production
services (Tacoli, 1998). However, in the countryside of Mexico these activities
are mixed and rural-urban populations flow beyond the arbitrary density.
During the last few decades, the strategies from the central government in
the southeast of Mexico has been focusing on a assistance-based scheme,
instead of implementing programmes that encourage investment or job
creation in the region (Bazdresch and Levy,1991). The lack of public investment
decreased the governments rate of return and discouraged private investors
to open up new areas within the region. This, in turn, slowed down the growth
of new industries.
15
Figure 2: Map of main economic sector per state in Mexico
Mexico only considers agriculture, animal breeding, forest harvesting, fishing,

and hunting as primary activities. Mining activities are considered secondary
activities despite them being an extractive activity. In many cases, oil mining
is measured separately from regular mining to avoid confusion in how these
activities are measured. Oil mining is of great national importance, with the
Southeast region (Veracruz, Tabasco, Chiapas and Campeche) being the main
center of oil extraction.
Democratization of productivity means channeling entrepreneurship and
management, in order to increase job creation, attract better investment, and
taking advantage of mexican human capital. All of this so as to have sustainable
methods of income generation. This will reduce the uncertainty of financing
beyond the political cycles or government periods, keeping in mind that these
plans and strategies will need longer periods for their consolidation.
16
4.2 Oil Reform

The national oil industry has been administered by the federal government
ever since 1938. This is done through the national oil company, Petroleos
Mexicanos (PEMEX). Before 1977, the development in the southeast area had
focused mainly on the agricultural sectors. Ever since the biggest discoveries
of oil reserves, first on land (Reforma in 1972), and then on the waters of the
Gulf of Mexico (Cantarell in 1979), the national approach has been to support
these industries.
Nonetheless, corruption and graft are historical characteristics of Mexican
politics, and PEMEX has not been exempt of this. Without the correct institutional
framework, the oil monopoly has almost complete control over petroleum
production, and therefore the control over the production-transaction capital
involved (von Lazar, Duersten, and Dickinson, 1979). As a result, oil wealth by
itself has not meant an economic improvement for the larger population, but
rather an opportunity to increase corruption and the personal wealth of a few
people (Goldstein, 1981).
Mexico created its oil policy around the postwar emphasis on import
substitution, reducing its foreign dependency through the local production of
industrialized products and an overly inward-oriented trade policy (Auty, 1991).
The fatal flaw when the oil boom came was the imprudent macroeconomic
management in over-rapid absorption of the windfall, without a priority for a
competitive economic diversification (Op. Cit.).
Figure 3: Mexicos oil provinces
9
1
11
10
2
8
12
1- Sabinas - Buro - Picachos

2- Burgos
3- Tampico - Misantla
4- Veracruz
5- Sureste
6- Plataforma de Yucatan
7- Fold belt of Chiapas
8- Fold belt of Sierra madre oriental
9- Chihuahua
10- Gulf of California
11- Vizcaino - La purisima - Iray
12- Gulf of Mexico
3
6
8
5
7
Own elaboration with information of PEMEX 2016

17
The Sureste Oil Province is the basins most important oil producer in the
country (Figure 3). The more relevant fields are Cantarell (Gulf of Mexico),
Ku-Maloob-Zaap (Gulf of Mexico), A.J. Bermudez (Veracruz-Tabasco), JujoTecominoacn (Tabasco), Reforma (Chiapas) and Ciudad Pemex (Tabasco)
(Figure 4) (Figure 5). The province reached a record high of more than 4.0
million barrels of oil equivalent per day in 2004. The prospective cumulative
production in the province is 45.4 billion barrels of crude oil (PEMEX, 2013)
Figure 4: Sureste oil province
1- Cantarell
2- Ku-Maloob-Zaap
3- A.J. Bermudez
4- Jujo- Tecominoacn
5- Reforma
6- Cd. Pemex
1
2
5
4
Own elaboration with info from PEMEX 2016
Figure 5: Southeast Oil Province location industry.
18
Figure 6: Oil production in Mexico (barrels per day)
3.5k
3.25k
3.0k
2.75k
2.5k
2.25k
1st trimester
2016
2.0k
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
From 2000 to 2012, the country had a historically high oil production (Figure
6). However, the great opportunity represented by this capture disappeared
due to wastefulness, lack of accountability, and the fact that Mexico has never
had a comprehensive energy policy (Olvera and Barragn, 2016).
Cantarell stands out among the others, it has been the most important financial
resource for economic growth during the last decade in the region, but its
management was inefficient. A series of decisions privileged exploitation over
a creating a long-term plan. This caused its rapid decline and the challenges
now facing the oil production at the national level, particularly the southeast
region. (Romo, 2015).
During the 2006-2012 period, the Mexican President, Felipe Caldern Hinojosa,
tried to implement the first major energy reform which aimed to promote the
exploitation of oil fields in the deepwater Gulf of Mexico. Unfortunately, PEMEX
did not have the technology for deep wells exploration and could not access
this resources without external aid. For this, participation of foreign companies
with more advanced technology was needed. This was seen as a disguised
privatization. The reform was rejected by arguing PEMEXs loss of sovereignty
(Op. Cit.).
According to Article 27 of the Mexican Constitution 5, Mexico owns the oil and
its byproducts, while PEMEX as an state-owned enterprise that administrate
the exploration, exploitation, and refinement processes. Before 2013, the
constitution forbid any foreign investment in the oil industry. Because of this
few companies wanted to be outsourced or give subcontract services under
PEMEX (Reyes-Loya, and Blanco, 2008).
In 2013, the Mexican government proposed a new energy reform that
would open the oil and gas industries to private investment. The new reform
attempted to compensate the lack of innovation and investment that had
been an ongoing deterrent for the oil extraction industry by arguing that oil is
a Mexican resource and therefore no foreign investor should supply or profit
from it.
_____________________________
5.- Article 27. The ownership of land
and waters within the boundaries
of the national territory is vested
originally in the nation, which has
had and has the right to transmit
title thereof to private persons,
thereby
constituting
private
property. (...) In the case of oil and
solid or gaseous hydrocarbons,
liquid, in the basement, the property
of the nation is inalienable and
imprescriptible and no concessions
will be awarded. In order to raise
revenue for the state to contribute
to long-term development of the
nation, it carried out activities of
exploration and extraction of oil
and other hydrocarbons through
allocations to productive state
enterprises or through contracts
with them or particular, in terms of
regulatory law. To meet the object
of such assignments or contracts
productive state enterprises may
contract with individuals. In any case,
the hydrocarbons in the subsurface
are the property of the nation and
thus should be stated in assignments
or contracts. (Added by decree
published in the official journal of
the Federation on December 20,
2013)
19
The new oil reform consisted on five principles: 1) The Mexican state will keep
control and property over hydrocarbons (oil and gas). 2) The participation of
third parties (private investors) in hydrocarbons should only be through different
types of contracts and a new tax regime. 3) PEMEX becomes a productive
enterprise of the State. 4) There will be a restructuring of the energy sector
with new institutions, new definition of roles and strengthening of regulatory
agencies. 5) Substantially promotes the development of national industry and
ensure transparency and accountability (Merchant, 2015).
Although those principles encompass what is actually needed within the
management of commodity resources, the concerns about the effectiveness
of institutions in implementing them correctly and maintaining a proper
collection of revenues along the integration of private investors, remain.
Part of new reforms initiatives is that the National Hydrocarbons Commission
(CNH) allow an open-surface exploration to private industry through a new legal
framework. This new regulation allows industries to market the oil for a period
of 12 years paying revenues to the state. There are 12 new exploration areas
on land in the Southeast Oil Province, of which 5 are directly in Tabascos
territory but the other 7 are in nearby areas where development is closely
linked to the territory and infrastructure of the state (CNH, 2015) (Figure 7).
These new exploration fields open to public investment are meant to give a
growth boost to the oil industry. This will strengthen existing infrastructure and
increase the number of workers in the region. Undoubtedly, this will have an
urban impact which might will be limited to people with technical and economic
access to investment. However, it will also serve as an opportunity to promote
growth in peri-urban areas of Tabasco.
There is reluctance from some academics to fully support this new energy
reform. They argue that it relies on the fact that greater extraction of
hydrocarbons thanks to private investment will increase revenues for the
federal government and this will eventually trickle down and help the eonomy
grow. Assuming an increase in economic abundance without indicating precise
figures, and without the right justification, does not set specific targets for the
energy reform to permeate into other sectors of the region. (Gmez, Alejo,
Navarrete, and Torres, 2014)
Figure 7: Map of new contractual zones for private investment.
20
Chapter 5. Case study: Tabasco

In the southeast region, the state of Tabasco has several oil reserves. It also
has geographical features that ease communication between the Yucatan
peninsula and the Caribbean with the rest of the country. Villahermosa, its
capital city, is located at the center of the state.
Tabasco ranks 25 of 32 in competitiveness nationally (ICE, 2016) and has
low levels of transparency (INAI, 2016), security, and efficiency in waste
management. It also has the lowest percentage of tourism revenue compared
with other states with similar sized shores (INEGI-b, 2016), and has the highest
unemployment index in the country.
Creating dependence on oil has been the main problem for diversification of
production on other industries in the state. Primary activities, like agriculture
and livestock farming were reduced to only 1.13% of the state GDP (Figure 8).
According to the INEGI, population in the state of Tabasco is 57% urban and
43% rural; compared to the national distribution where the figure is 78% urban
and 22% rural (INEGI, 2016c). Contrary to national trends, urban development
in the Southeast region has been slow and poorly organized focusing mainly
on supplying the bare minimum of the oil industrys needs and with little
development in transport networks to connect further rural areas (Figure 9).
The development of primary sectors in the state has been
minimal, as theres a global tendency towards gradual reduction
in agricultural development. Tabasco still ranks among the
largest producers of plantain and is the biggest producer of
cocoa in the country (Tabasco, 2013).
Economic Activities
Figure 8: GDP by sector in Tabasco
1.13%
29.38%
The secondary sector is the one that has had better development
through the years, mainly on the oil, mining, and construction
industries. The oil extraction sector, represented by PEMEX, is
the sector that employs the fewest people, while generating the
most resources for the state (66.55%). Therefore, the budget has
been more focused on this in order for it to expand (Figure 10).
69.49%
Primary
Secondary
Tertiary
Own generated. INEGI-GDP. 2016.
Figure 9: Map of urban settlements in Tabasco according to INEGI.
INEGI-GDP per Economics Sector per State 2016
Population
Occupied by income
No income
Less than 1 minimum wage*
1-2 M.W.
2-5 M.W.
5-10 M.W.
> 10 M.W.
Not specified
Total
*Minimum wage $3.8 USD/day (01/01/2016)
39,417
146,881
243,205
341,965
46,003
10,022
79,300
906,793
4.3
16.2
26.8
37.7
5.1
1.1
8.8
100.00
Own elaboration with information of INEGI. 2016
21
The tertiary sector, Trade and Services, has been in constant growth over the
past decade. Employment in trade and commerce has been increasing within
the municipalities of Tabasco. Unfortunately, this is also linked to various
sectors of informality and the distribution of goods not produced in the region.
The service sectors are located mainly in Villahermosa.
ECONOMIC
SECTOR
PRIMARY
SECONDARY
TERTIARY
N/E
Tabasco have a great national participation on national oil exports (Figure

11). But due to the high dependence on oil exports, Tabasco also has been
the victim of various international crises. The most recent one being the
commodity crisis due to the slowdown in world trade in 2015 (Constantinescu,
Mattoo and Ruta, 2016).
ECONOMIC ACTIVITY
POPULATION
The lack of investment in public works

due(%)
to lack
Totalhas been made
(%) visible
Sector
of improvement
on services provision
at a regional level.
provoked
Agricultural
activities
101,353
11.2 This has 11.2
a decrease
and private
Manufacture
industry in investment from government
73,466
8.1 investors that are
reluctant
to
spend
on
places
with
little
or
bad
domestic
Extractive industry and electricity
30,650
3.4 infrastructure
21.4 that
cannot guarantee better productivity.
Construction
89,614There is a lack
9.9 of support for the
storage
and
movement
of
agricultural
products
(Tabasco,
Commerce
183,631
20.2 2013). The most
Transportprofitable
and communication
5.4 requires extensive
sector in the region is the48,579
secondary sector which
Other Services
314,050
34.6
67.2
investment on infrastructure, and the sectors that employ the most
people
Government
international
are and
commerce
and other services63,817
like market goods,7.0
wholesale, and retail
organisms
which require transport infrastructure (Figure 11). Based on this evidence, we
Not specified
1,633 should be a
0.2priority for the
0.2state.
can infer that the development of mobility
TOTAL
906,793
100
100
Investments should be made not only in infrastructure, but in accessibility and
transportation, all of which allow a permeability of resources and assets.
Figure 10: Percentage of GDP participation by economic activity in Tabasco.
ECONOMIC
SECTOR
PRIMARY
SECONDARY
TERTIARY
ECONOMIC ACTIVITY
Agricultural activities
Manufacture industry
Non-oil mining and electricity
Oil mining
Construction
Commerce
Transport and communication
Other Services
Government and
international organisms
TOTAL
2004
2.1
7.3
0.9
53.5
4.9
7.8
3.1
17.6
PARTICIPATION IN GDP (%)

2006
2008
2010
2012
1.7
1.4
1.2
1.2
5.9
5.0
4.3
4.5
0.6
0.6
0.6
0.6
55.9
57.1
61.8
60.1
5.6
5.6
4.8
5.7
7.9
7.4
6.5
7.3
3.1
3.4
3.3
3.4
16.7
16.7
15.2
15.2
2.8
2.6
2.8
2.3
100
100
100
100
2.0
100
2014
1.1
4.6
0.9
58.9
5.1
8.4
3.7
15.3
2.0
100
Own elaboration INEGI-GDP. 2016
Figure 11: Percentage of occupied people by economic activity in Tabasco
ECONOMIC
SECTOR
PRIMARY
SECONDARY
350
300
250
TERTIARY
200
150
N/E
100
ECONOMIC ACTIVITY
Economic activities
Agricultural activities
Manufacture industry
Primary
Secondary
Extractive industry and electricity
Construction
Commerce
Transport and communication
Other Services
Government and international
organisms
Not specified
TOTAL
1,633
906,793
Sector (%)
11.2
21.4
67.2
0.2
100
0.2
100
Own elaboration National survey of occupation and employment. 2016
50
22
POPULATION
Total
(%)
101,353
11.2
73,466
8.1
Tertiary
30,650
3.4
89,614
9.9
183,631
20.2
48,579
5.4
314,050
34.6
63,817
7.0
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
5.1 Peri Urban areas in Tabasco

Unplanned growth of the urban sprawl has led to the PUI in Tabasco becoming
the common space outside the urban centres. Services, industries, and
agriculture are mixed within the same geographical area but in an unplanned
way. Lack of rural-urban planning and commodity dependence have caused
many of the current problems in the southeast region of Mexico. These
problems include: migration in the search of jobs, lack of investment for job
creation, traffic congestion in the few available highways that connect urban
centres, increasing importation of basic products, and slow growth of new
industries.
However, little individual planning has been done in each of the different
cities, ignoring the complementary integration that exists along the different
small and intermediate urban settlements of the rural areas. Tabascos PUI
is made by a continuous amalgamation of rural centers that connect several
cities and belong to a regional development. The lack of perspective for the
development made has made pockets of poverty with growth expectations
that do not correspond to the needs of the people or the area.
According to the INEGI, in 2010 57.38% of the population in Tabasco live
in urban areas (Figure 12). But if we analyze with more scrutiny, further
information given by the Ministry of Population (CONAPO), we can see that big
cities have hardly grown in comparison with the rural areas. Instead, we have
growth of medium size settlements where the biggest part of the population
lives (Figure 13).
Figure 12: Population living on Rural and Urban areas in Figure 13: Population living on different size settlements in
Tabasco according to INEGI
Tabasco according to CONAPO
Population by town size

<2500
0%
1990
1995
10%
20%
30%
50.34%
47.89%
40%
Population by town size
>2500
50%
< 999
60%
70%
80%
90%
0%
100%
49.66%
52.11%
1990
27.72%
53.74%
2000
2005
45.01%
54.99%
2005
57.38%
Own elaboration with information of INEGI. 2016
30.61%
28.19%
46.26%
42.62%
20%
1995
2000
2010
10%
2010
25.51%
22.87%
30%
1,000-4,999
40%
26.92%
29.09%
28.38%
30.27%
30.78%
5,000-9,999
50%
> 10,0000
60%
70%
80%
7.22%
35.25%
6.40%
36.32%
7.10%
36.80%
7.18%
37.04%
9.71%
90%
100%
36.64%
Own elaboration with information of CONAPO. 2016
In the next map (Figure 14), we can see that the settlements where most
people live are outside the so-called urban areas, and rely only on roads for
their daily commute and services provision. There is an expansion of the
PUI connecting cities in a mosaic of rural and urban spaces. Unfortunately,
the growth of this PUI in Tabasco has been faster than the investment for
infrastructure and services, which directly affect the livelihood of people both
living in urban areas that have an overflow of people in search of jobs and
services, and in rural areas lacking non-farming jobs and services without
commuting to the cities.
23
Rural productive regions of Tabasco are linked with different urban areas, but
the infrastructure that makes this connection does not match their needs.
In the meantime, the oil industry dominates over other forms of economic
production. The asymmetric means of income also relate to the infrastructure
investment and drawback to a small group of people. People working in oilrelated industries retain most of the profit, thus creating social disparity.
Figure 14: Map of population settlements by size.
Economic Activities
Own elaboration with information from 1.13%
Ministry of ecological Management. 2016
29.38%
As showed in the table above (Figure
15), a big percentage of the population
has low income, which creates great disparities among the entire population
and lowers the expectation for innovation due to the need for income security
within the largest percentage of the population. Taking risks on the creation of
new small and medium enterprises is reduced to a small number of people,
69.49%
perpetuating disparities and inequalities on the region.
For years the state and municipal governments failed on their obligation to
provide, in terms of applicable law, the land reserves necessary to support the
orderly operation of the centers of population
Great Tertiary
demand for, and
Primary growth.
Secondary
the poor quality of the supply provided in suburban areas generated serious
problems of irregularity in land ownership.
INEGI-GDP per Economics Sector per State 2016
Figure 15: Populations income in Tabasco.
Occupied by income
No income
Less than 1 minimum wage*
1-2 M.W.
2-5 M.W.
5-10 M.W.
> 10 M.W.
Not specified
Total
*Minimum wage $3.8 USD/day (01/01/2016)
24
Population
39,417
146,881
243,205
341,965
46,003
10,022
79,300
906,793
4.3
16.2
26.8
37.7
5.1
1.1
8.8
100.00
Own elaboration National survey of occupation and employment. 2016
5.2 Fostering SMEs in Tabasco.
The mining and extraction industry in Tabasco generates 58.34% of the states
GDP (INEGI, 2016), but only 3.38% of the jobs (STPS, 2016). While this equates
to great productivity, just as one small sector concentrates a lot of resources
within the state, income is concentrated on a small section of the population.
Empirical research has determined factors that have led to limited access
and participation of SMEs in the oil production chain as suppliers are diverse;
however, there is a consensus that points several factors as the low level of
technological content and capitalization ratio which are major drawbacks for
small scale potential suppliers of the enterprises in Tabasco. This is due to low
quality product material and badly supplied networking. For PEMEX, having a
complex regulatory framework in the shopping areas, hindered buying from
small local manufacturing companies. Therefore, allocation of resources for
development of native supply companies and further technological innovation
was discouraged. There was little investment in human capital formation
both from the Government and from private investors to either to educate,
capacitate, or help with new technologies (Tabasco, 2013). This is supposed
to change with the new energy reform, but there is concern about excluding
small companies from making new frameworks for monopoly corruption or
actually opening the market for new development enterprises.
The scarce motivation for risk investment in the financing, generation, and
exploitation of business opportunities creates technological lags in various
sectors, limiting quality products at competitive prices (Op. Cit.).
The traditional sectors of the economy Tabasco is linked to, like agricultural
activities, have not been linked directly with regional, national, and international
markets with effective support mechanisms. This can be seen in the decline
they have had when compared with other more prosperous sectors like
livestock, cocoa farming, and fishing, just to name a few. Consolidation of a
modern and productive agricultural industry that generates wealth and raise
living standards is one of the most effective ways to reduce the gap in income
levels linked to the primary activity when compared to other sectors like oil or
services. This is a priority not only for economic, but for social justice as well.
The states agricultural activities and the products imported from other regions
require adequate space, so modernizing the commercial infrastructure of
basic foodstuffs, allocation of warehouses, local and complementary services
is necessary. This must also include new action points to unify traders and
coalesce them into a permanent body, with the aim of achieving better
economic progress and achieve stable security and welfare.
Many small societies from artistic, cultural, tourism, and handcrafting
communities in Tabasco are not aware of basic business practices. They work
individually, without access to the benefits provided by the group forms of
organization in terms of funding, training, equipment workshops, and other
essential support systems. Preserving handcrafting and linking it to tourism,
therefore making it attractive to investors, directly benefits the industry
and improves the wellbeing of families engaged in these forms of life and
production.
25
A new economy should be encouraged to convert Villahermosa into a city of

knowledge and health through developing businesses related to renewable
energy, or through the use of technology and links with academic and research
institutions. Another way would be through designing and implementing
public policies, programs, and projects related to the labor market to balance
supply and demand for labor. Also, attracting new financial intermediaries
to the state, promoting the intensive use of information and communication
technology (ICT) should be a top priority. All in all, any activity that would help
Tabascos manufacturing to consolidate sustainable competitive advantages
in the regional and national levels needs to be looked into.
This integration and added value for SMEs in Tabasco that operate around the
main production chains in the region is low. This is due to the lack of agreement
between local SMEs and unions or co-op societies, the low innovative capacity,
and the deficient competitiveness schemes at a regional level, which inhibit
the competitiveness of enterprises, and the inadequacy of access to financing
by businesses.
5.3 Infrastructure investment in Tabascos context.

Tabasco is in a strategic geographical position, being the main gateway to the
southeast, and joining the Yucatan Peninsula with the Centre and North of the
country. These strengths indicate an opportunity to use the road network as
a main asset and develop communications between strategic points such as
the ports of Dos Bocas and the border of El Ceibo. That would link the state
directly with Central America through Guatemala.
Establish productive links between the towns and micro-regions of the state to
facilitate integration with other states in the Southeast mesoregion
Tabascos two main ports, Dos Bocas, whose administration is in the hands of
the National Government; and Frontera, in the municipality of Centla, whose
administration is in charge of a parastatal of the Government of Tabasco
(Tabasco, 2013) are ranked last in the national productivity index. Their main
function is the embarkation and disembarkation of passengers to floating
oil platforms and ships in the Gulf of Mexico and deep-water offshore. Even
though there is a big push to attract international investment, there is some
reluctance because of the lack of networking inland of the area.
The road network in Tabasco has 10,498 kilometers, including federal, state
and municipal networks as well as rural roads (which do not include road
access to the facilities of PEMEX). This places the state first in the SouthSoutheast region in this area. Reconstruction of about 6,485 km, or about
62% of the total, has been deemed necessary (INEGI, 2015).
Intensify the conservation program and ongoing maintenance of the state
road network to increase their safety.
Some problems of infrastructure development arise due to several factors,
specifically the vulnerability of the territory to hydro-meteorological phenomena,
anthropogenic and climate change associated with improper handling of
the flooding rivers, and the difficulty to connect dispersed rural settlements,
inability of municipalities in urban matters, and poor mobility system.
26
Promote the development of rail and river infrastructure as alternatives for

transporting people and goods cheaply and safely should be a priority for both
the government and the private sector. Increasing infrastructure networks
means promoting Tabasco as a strategic communication center to the southeast, through the improvement for transport of people and cargo.
The organization of rural development, through actions in infrastructure and
equipment, should facilitate access of the rural population and production
services in urban centers through territorial integration of sectoral programs
and projects.
5.4 Empirical assumptions.

Any strategy for reciprocal urbanization must articulate public policy actions
through different perspectives, looking for the productive use of natural
resources and ecosystems. They must be based on the sustainable use of
diversified rural production in the medium and long-term. Supporting the
local economy that is now facing consumption and promoting local and microregional trade should be included.
The PUI in Tabasco are subjected to various contested interests without an
adequate institutional framework to balance them, in order to alleviate poverty
and protect the environment. These challenges can only be surmounted if
there is an understanding of how the processes of change and affect the
peoples livelihood as well as how the use of natural resources shifts whatever
opinion different kind of organizations have of them (UCL-DPU,1993).
Tabascos institutional framework for development has been disconnected
from the peoples needs. Growth pole policies for development and top
down decisions had led to uneven development of areas that are further away
from the urban centers.
In the state of Tabasco, the five oil fields available for development will cause
an economic spillover in the municipalities of Paraiso, Huimanguillo, and
Macuspana. The increase of workers will increment mobility between the
municipalities of Cardenas, Villahermosa, and Comalcalco, which are mediumsized cities where there are more services available. Also, the proximity to
others like Coatzacoalcos in Veracruz to the West, and Reforma in Chiapas
to the south, will give Tabasco more opportunities to push the regions
infrastructure development forward.
Establishing learning regions (Florida, 1995; Morgan, 2007), will help the
state organise and use the on-site knowledge that is disconnected in Tabasco.
Team orientation and physical communication will support the sharing and
exchanging of data beyond the urban-rural linkages and help push small
settlements into a national and global network. People, and not places, are
the main drivers for creating flows between rural and urban areas (Unwin,
1989).
The mismanagement of oil resources has so far focused only on increasing
revenues by taxation. This generated a dependency to welfare systems not
only from the poorer segments of both the urban and rural population, but
from every socioeconomic level. A paternalistic model that eliminated the
capacity of decision-making processes was thus born.
27
Measures taken by the federal government to try to eliminate corruption

have been shortsighted and ineffective. Theyve relied on their corrupt
selves to reduce corruption instead of increasing transparency and creating
accountability tools for decentralization in local governments. Lack of
networking and communication systems between different services and
institutions has decreased trust between people and their government. This
fostered disoriented growth outside the regulatory frameworks, which then
expanded into the urban-rural settlements.
28
Conclusion and recommendations.

The Mexican economy is still vulnerable to global economic pressures like the
reduction of external demand for raw products, the rising interest rates, and
low oil prices. Even if Mexicos dependence had been reduced significantly
due to the hydrocarbon reforms, there has been very little traction gained on
diversification and expansion of local enterprises. This would make Mexico
strong enough to be competitive at an international level.
The creation of better infrastructure networks for diversification and promotion
of a closer relationship between rural-urban areas in Tabasco is not the only
answer to solve all of the regions problems. Understanding the territory is
important in order to get a grasp on how improving this relationship would
allow the developments momentum to be used by the federal government.
Its not only about regional urbanization, the idea of developing the peri-urban
interfaces does not only depend on transforming the rural zones into cities,
but rather to let the cities understand rural areas as a source of inputs. Due to
the specific characteristics of Tabasco, helping the development of rural areas
seems to be the best possible practice. This can be done by improving the
networks, strengthening institutions, and supporting SMEs. All of this in order
to break the dependency to oil and help reduce poverty within both the rural
and urban settlements.
This doesnt disregard the need for improving citizen building policies, health,
security, crime reduction, education at every level, environmental protection,
and risk management. These are equally important for the regions future
development. However, this cannot be achieved if trust between people and
institutions isnt there. Nor will this be possible if there arent enough inputs to
provide the basic needs to all the inhabitants regarding their location.
Strong investment in the oil industry will bring a more effective economic
revenue on paper (oil refining industry, secondary petrochemicals and auto
parts, among other), but if we want to benefit a broader population, its
necessary to think of an approach closer to peoples needs.
Figure 14: Peri urban area and future expansion.
29
Infrastructure network improvement is a fundamental part of any development.

Its needed not only to sustain the more productive areas, but to distribute the
resources revenue and add value to the region. By having better means of
communication and access to services, education, jobs, and leisure activities,
its possible to reduce both poverty and crime. Securing rural linkages through
infrastructure development will allow for better mobility for people in the most
far-away areas of the region, and improve the livelihood of both rural and
urban citizens.
Taking advantage of the economic potential that exists in new exploration
areas and the momentum from government and private investors to urbanize
those regions (Figure 12), urban development will happen. Taking into account
Tabascos historical data, urban expansion will not happen as growth-pole
development. PUI will be the norm and urban expansion will develop across
the new oil exploration sites. However, its important to create other options
for productive infrastructure networks in order to close the gaps of economic
inequality. This will help bring an improvement to peoples standard of living in
both urban and rural areas.
According to the business portfolio developed by the Ministry of Economic
Development and Tourism of Tabasco (SDET, 2016), for the month July,
2016, there is a proposal to develop a Special Economic Zone in the port of
Frontera, which aims to serve the corridor between Coatzacoalcos and Ciudad
del Carmen. Its aim is to attract investment from private companies through
services and tax incentives in the area. However, this proposal still intends to
prioritize oil supply over other manufacturing sectors that could potentially
diversify the states production.
Some other projects presented in the same business portfolio include: the
water and chocolate Circuit, which intends to increase tourism by taking
advantage of the hydrological situation in Tabasco and using cocoa as the
regions flagship product, technological studies for energy generation based
on natural gas, and investments in technology and road transportation, among
others.
Nevertheless the complexity of the problem presented for reducing commodity
dependency and improving the diversification of industries does not has
been completely acknowledged by the local government. The apparent lack
of accountability from the local actors as well of many layers of institutional
corruption makes harder to accomplish any investment on an effective way.
But if its increased the transparency of the resource distributions and giving
more equal opportunities to the broader base of population, looking more
open to international markets and allowing an inclusive regional development
for people in urban and rural areas, there will be a positive change in the near
future for industrial innovation and livelihood improvement.
30
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Bartlett - Development Planning Unit

University College of London

Industrialization of peri urban interfaces in

Luis Felipe Hernandez Ventura

A dissertation submitted in partial fulfilment of

I want to thanks to my mother Marbella, my brother Edgar and my Father Jesus

Chapter 2. Investment for opportunities. 7

Figure 1: Map of Mexico and the southeast region

BOX 1. Aberdeen: a city made of oil.

Figure 1: Map of Mexico and the southeast region.

Own elaboration. 2016

Acknowledging the limitations for processes and policies of planning, is

Chapter 1. Economic development and commodity

1.1 Development based on commodity revenues

Industry condensation and peoples knowledge in urban settlements in which

BOX 1. Aberdeen: a city made of oil.

Aberdeens example (BOX 1) helps illustrate the importance of using the

1.2 Economic diversification

Chapter 2. Investment for opportunities.

2.1 Small and medium enterprises.

Establishing campaigns to maximize local production and increase the value

2.2 Infrastructure investment

Improving connections and reducing accessibility constraints allows people

2.3 Urbanization and institutions.

Learning regions are important to promote knowledge-economic organization

Chapter 3. Urban expansion and its relation

3.1 Peri-Urban Interface.

social compression and dynamic change. They cannot be considered as fixed

3.2 Reciprocal Urbanization

Chapter 4. Context in Mxico

4.1 National government

Figure 2: Map of main economic sector per state in Mexico

Own elaboration. 2016

Mexico only considers agriculture, animal breeding, forest harvesting, fishing,

4.2 Oil Reform

Figure 3: Mexicos oil provinces

1- Sabinas - Buro - Picachos

Own elaboration with information of PEMEX 2016

Figure 4: Sureste oil province

Own elaboration with info from PEMEX 2016

Figure 5: Southeast Oil Province location industry.

Own elaboration with information of PEMEX 2016

Figure 6: Oil production in Mexico (barrels per day)

Own elaboration with information of PEMEX 2016

Own elaboration with information of PEMEX 2016

Chapter 5. Case study: Tabasco

Figure 8: GDP by sector in Tabasco

Own generated. INEGI-GDP. 2016.

Figure 9: Map of urban settlements in Tabasco according to INEGI.

INEGI-GDP per Economics Sector per State 2016

*Minimum wage $3.8 USD/day (01/01/2016)

Own elaboration with information of INEGI. 2016

Tabasco have a great national participation on national oil exports (Figure

The lack of investment in public works

Figure 10: Percentage of GDP participation by economic activity in Tabasco.

PARTICIPATION IN GDP (%)

Own elaboration INEGI-GDP. 2016

Figure 11: Percentage of occupied people by economic activity in Tabasco

Own elaboration National survey of occupation and employment. 2016

5.1 Peri Urban areas in Tabasco

Population by town size

Population by town size

Own elaboration with information of INEGI. 2016