In the last five years, thousands of businesses have closed in Mexico and thousands of Mexicans have moved away from the crime and violence brought on by the recent drug wars between cartels. Investment, growth, and development have also been negatively affected. Using a spatial model, this study found that growth in real per capita GDP for states in Mexico was positively related togrowth in neighboring states of Mexico, negatively related to crime in surrounding states, and positively related to crime within the state in the previous year. Policy suggestions to promote stategrowth and development in Mexico include a national effort to resolve the drug war and the establishment of joint projects between states.