Fernanda Sayavedra and Dr. Bret Mackay, Economics
Poverty alleviation is one of the greatest policy challenges for Mexico. In the aftermath of the Mexican crisis of 1994/95, real per capita GDP fell sharply; employment in the formal sector declined as well as real wages. This led to a drastic increase in poverty at a national level, reversing most achievements of poverty alleviation policies of the late 1980s and early 1990s. However, since 1996 there has been a notable turnaround, and the share of the population in poverty has declined. According to the World Bank, the share of Mexico’s population living in extreme poverty1 declined from 16.2 per cent in 1989 to 13.2 per cent in 2000. The reduction in poverty can be attributed to several factors: net job creation in the formal sector, the slight increase in real wages, the increase in migrant remittances, and the expansion of social programs in the recent years.
Despite this progress, the poverty levels in Mexico are still high. Over 45 million Mexicans live on less than US$2 a day, while 10 million of them “survive” under extreme poverty, having limited access to basic services2. In 2000, 27.8 per cent of the population over 15 had not completed primary education, almost 15 per cent lived in homes with dirt floors, and about 12 per cent did not have access to water supply or drainage3. An international comparison is given in Table 1.
For this project I worked with several economists and Mexican government officials in analysing and evaluating the wide range of public programs that have been implemented to reduce poverty in Mexico.4 We researched each of the existing poverty alleviation programs including the ones focused on education, health, and nutrition. Using statistics provided by the Mexican government we were able to determine the efficiency of the programs.
Over the last years, the resources channelled to combat extreme poverty in Mexico have increased regularly. Transparency has improved; the operation rules for all these programs are now published in a Federal Register of Rules. Moreover, anti-poverty programs in place have been shown to have a positive impact. In particular, the program PROGRESA/Oportunidades has had a net positive impact on the welfare of the families covered by it, in terms of improved children’s school attendance rates, higher spending on food and children’s clothes, better nutritional status of under-five year-olds and increased use of health services.
Despite this progress, much remains to be done and Mexico still faces the challenge of further widening coverage of basic services and improving their quality. For instance, although the situation in the health sector has improved, but there is still a large number of Mexicans that lack access to proper health care. The demand for health services has increased, thanks to programs
1 defined as earning less than US$1 per day.
2 World Bank. Country Brief: Mexico (2002). http://lnweb18.worldbank.org/external/lac/lac.nsf/
3 SEDESOL 2000, CONAPO and Censo General de Población 2000.
4 The main findings will be published in the OECD Economic Review of Mexico 2003.
such as Oportunidades, but the supply has not been keeping up. Because of the lack of medicine and doctors in some areas the quality of some health services has deteriorated.
Regarding education, the programs implemented by the government have been rather successful in increasing enrolment rates for the poor, especially in primary education and reducing failing and repetition rates. But, the quality of education service has not increased at the same pace as the coverage. Moreover social programs have not been able to reach many of the small isolated communities, as a result of the high costs involved and the lack of infrastructure. For instance, a program like Oportunidades requires the existence of a health center and a school as a condition of operation, so that some communities might be excluded. During the last decade, policies have been focused towards poverty in rural areas, where extreme poverty is found, but there is a large proportion of population in poverty in urban areas, and efforts will also need to be directed to the urban poor.
A better coordination of the social programs is needed to make sure that some targeted families do not benefit from overlapping programs, while others are totally excluded from all of them. For instance, now that PROGRESA/Oportunidades targets semi-urban and urban population, there might be some overlapping with LICONSA and the Tortilla program and some rationalization is needed, and discontinuation of LICONSA and Tortilla program might even be considered. It would also be helpful to undertake regular evaluation of the programs. When the methodology of poverty measurement undertaken by the newly created “Technical Committee” is fully developed, it should be used to conduct an overall study on the achievements of the poverty reduction strategy conducted in recent years, as well as cost-benefit analysis of some of its components.
Finally, the programs by themselves will not be sufficient to eliminate poverty. Mexico needs economic growth and expansion of employment opportunities in the formal sector to ensure that families who see their welfare rise as a result of some of these actions do come out of the programs, avoiding poverty traps, and once out do not fall back into poverty.