Mexico 2000-2002: Poverty reduction with stability and expansion of social programs By Miguel Székely secretario de Prospectiva, Planeación y Evaluación retaría de Desarrollo Social de México
Dec 14, 2015
Mexico 2000-2002:Poverty reduction with
stability and expansion of social programs
By
Miguel Székely
Subsecretario de Prospectiva, Planeación y EvaluaciónSecretaría de Desarrollo Social de México
Reasons for presenting this
paper1. 1997-1998 IPES: Volatility (Hausmann, Gavin), Counter cyclical fiscal policy (Stein, etc.)
2. 1998-1999 IPES on Inequality (Londoño, Lora, Hausmann)
3. 2003 IPES on labor markets (Pagés, Duryea, etc.)
4. RES work on poverty and inequality (Londoño, Spilimbergo, Panizza)
Contents
1. Historical context of poverty: 5 periods in the past 20 years
2. The 2000-2002 period
3. Poverty decomposition & explanations
4. Conclusions
1. Historical context of poverty:
5 periods in the past 20 years
5 periods of crisis, growth and stagnation
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.019
84
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
GPD growth rate Per capita GDP
1 12 13 14 15
5 periods of stability and instability
0
20
40
60
80
100
120
140
160
198
4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
Real exchange rateInflationCetes % rate
12 13 14 151
5 periods of cyclical and counter-cyclical fiscal policy
0.0
10.0
20.0
30.0
40.0
50.0
60.0
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
De
bt
0
1
2
3
4
5
6
7
8
9
10
11
So
cia
l e
xp
en
dit
ure
s
Externao debt as % of GDP Social expenditures as % of GDP
2 3 4 51
5 periods of structural reforms
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
MéxicoLAC average
2 3 4 51
5 periods of changes in income distribution
I -2.2 37.7 -22.3 12.2 14.6II 1.8 31.0 -20.0 17.0 6.9III 3.4 31.3 -20.3 20.7 5.5IV 2.7 34.1 -21.2 22.1 4.0V 2.6 36.3 -21.9 23.8 1.7VI 1.3 38.9 -23.2 24.5 -0.3VII 0.8 39.5 -23.5 23.4 0.5VIII 1.3 41.7 -24.7 24.8 -0.1IX 3.9 44.3 -25.6 25.0 -1.7X 21.7 39.7 -29.0 33.7 -12.0
1996-00 2000-02Decil 1984-89 1989-94 1994-96
5 periods of changes in poverty
19.522.7 22.5
21.1
37.133.9
24.2
20.3
26.529.3
28.029.4
45.3
40.7
31.9
25.6
50.353.5 52.6
55.6
69.6
63.9
53.751.7
0
10
20
30
40
50
60
70
8019
84
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Year
% o
f to
tal
po
lula
tio
n
Food poverty Moderate poverty
2 3 4 51
5 periods, 5 stories
1984-89
Growth Recession
Stability
Social spending
Reforms
2 3 4 51
1989-94 1994-96 1996-00 2000-02
Instability
Contraction
Deepening
Growth
Stability
Expansion
Deepening
Recession
Instability
Contraction
Slow down
Growth
Stability
Expansion
Slow down
Stagnation
Stability
Expansion
Slow down
Poverty Increase Stable Increase Decline Decline
2. The 2000-2002 period
2000-2002: the food poverty rate declines by 16%
Type of poverty Population share %
2000 2002 Change
Food 24.2 20.3 -16.1
Capabilities 31.9 26.5 -16.9
Moderate 53.7 51.7 -3.7Fuente: Cálculos de la Secretaría de Desarrollo Social con base en la
metodología oficial de medición de la pobreza aplicada a la
ENIGH 2000 y a la ENIGH 2002 del INEGI.
3.4 million individuals “escape” food poverty
3. Poverty decomposition and explanations
44%
40%
72%
48%
33%
2%
2%
12%
6%
4%
10%
-40%
3% -10%
4%
5%
2%
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Food poverty (3.9 points)
Capital rents
ProcampoRemittances
Oportunidades
Wages
Other
36% Relative prices
14%
Capabilitiespoverty
(5.4 points)
Decomposition of changes in Decomposition of changes in povertypoverty
28%
Moderatepoverty
(2 points)
a) Social spending
1. Oportunidades expands by 1.75 million
hounseholds (70% expansion, reaching
4.2 million houeseholds = 22 million
people).
2. Cash benefits increase by 85% (7,600 to
14,206 billion $) –representing 30% of
income of poorest 20%
b) 2 transmission mechanisms by which stability reduces
poverty
1. Relative prices of items of food
poverty basket
2. Increases in real wages
Significant reductions in inflation rates…
Inflation Rate 1996-2002
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Ene
-96
May
-96
Sep
-96
Ene
-97
May
-97
Sep
-97
Ene
-98
May
-98
Sep
-98
Ene
-99
May
-99
Sep
-99
Ene
-00
May
-00
Sep
-00
Ene
-01
May
-01
Sep
-01
Ene
-02
May
-02
Sep
-02
Fuente:Banxico
Relative change in consumer price index by item
About one half of the items in the food porverty basket lower their price relative to the CPI
0
500
1000
1500
2000
2500
1994 1996 1998 2000 2002
Periodo
% I
ncr
ease
Legumbressecas exceptofrijolarroz y cerealespreparados
Pescados yMariscos enconservaaceites ygrasascomestiblestrigo y derivados
carne y viscerasde cerdo
carne de ave
arroz
-12%
-8%
-1%
-3%
-6%
-4%
-2%
-11%
-10
-8
-6
-4
-2
0
2
4
6
8
10
Ene
-97
Abr
-97
Jul-9
7
Oct
-97
Ene
-98
Abr
-98
Jul-9
8
Oct
-98
Ene
-99
Abr
-99
Jul-9
9
Oct
-99
Ene
-00
Abr
-00
Jul-0
0
Oct
-00
Ene
-01
Abr
-01
Jul-0
1
Oct
-01
Ene
-02
Abr
-02
Jul-0
2
Oct
-02
Average5.16
Real increases by 5.16% in contractual wages
Fuente: ENE 2000-2002, INEGI
Average wages in the mexican economy2000-2002
0
500
1000
1500
2000
2500
3000
3500
4000
4500
RURAL URBANA TOTAL
2000
20022.3%
3.7%
3.4%
Lower inflation lead to higher real wages
Fuente: ENE 2000-2002, INEGI
Wage bill expands by 5.7%
Wage bill, 2000-2002
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
RURAL Urban TOTAL
2000
2002
4.2%
6.0%
5.7%
Miles
c) More remittances for the moderately poor
Remittances grow from $840 million to 1
billion between 2000 and 2002
The share of remittances in total income, The share of remittances in total income,
grows between 2000 and 2002grows between 2000 and 2002
Fuente: Cálculos propios con base en la ENIGH
5.0% 5.2%
6.0%
6.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
Food poverty Moderate poverty
2000 2002
Because of improvements in commissions and Because of improvements in commissions and
access to the formal financial system…access to the formal financial system…
Evolución del costo total para enviar $USD 300 de EUA a México en las ciudades con mayor presencia de migrantes mexicanos
$31.76$32.99
$26.08
$29.83
$32.43
$39.03
$15.83 $15.48 $14.61
$17.26$19.19
$17.90
$-
$5
$10
$15
$20
$25
$30
$35
$40
Chicago Los Ángeles Nueva York Dallas Miami Houston
Fuente: PROFECO, 2002.
Ago-99 Ene-02
… … and because of better exchange ratesand because of better exchange ratesTipo de cambio bancario a la venta vs Remesas
0
2
4
6
8
10
12II
1991
IV 1
991
II 1
992
IV 1
992
II 1
993
IV 1
993
II 1
994
IV 1
994
II 1
995
IV 1
995
II 1
996
IV 1
996
II 1
997
IV 1
997
II 1
998
IV 1
998
II 1
999
IV 1
999
II 2
000
IV 2
000
II 2
001
IV 2
001
II 2
002
IV 2
002
0
1
1
2
2
3
3
Miles
de m
illo
nes
dóla
res
Tipo de cambio, venta 24 hrs
Remesas
4. Conclusion
Conclusion
Stability and counter-cyclical social
spending pay for poverty reduction