Poverty in Mexico

Poverty Headcount Ratio (2010)[1]
Poverty Trend World Bank
Live with less than $1.25 a day 0.7% (0.8 mi)
Live with less than $2.00 a day 4.5% (5.1 million)
Live with less than $2.50 a day 8.8% (10.9 million)
Live with less than $4.00 a day 23.7% (26.9 million)
Live with less than $5.00 a day 33.2% (37.6 million)
Map of world poverty by country, showing percentage of population living on less than $1.25 per day. Based on 2009 UN Human Development Report.

Poverty in Mexico is measured under parameters such as nutrition, clean water, shelter, education, health care, social security, quality and basic services in the household, income and social cohesion as defined by social development laws in the country.[2] It is divided in two categories: Moderate poverty and Extreme poverty.

While less than 2% of Mexico's population lives below the international poverty line set by the World Bank, as of 2013, Mexico's government estimates that 33% of Mexico's population lives in moderate poverty and 9% lives in extreme poverty,[3] which leads to 42% of Mexico's total population living below the national poverty line.[4] The huge gap might be explained by the government's adopting the multidimensional poverty method as a way to measure poverty, so a person who has an income higher than the "international poverty line" or "well being income line" set by the Mexican government might fall in the "moderate poverty" category if he or she has one or more deficiencies related to social rights such as education (did not complete studies), nutrition (malnutrition or obesity), or living standards (including elemental, such as water or electricity, and secondary domestic assets, such as refrigerators). Extreme poverty is defined by the Mexican government as persons who have deficiencies in both social rights and an income lower than the "well being income line".[5] Additional figures from SEDESOL (Mexico's social development agency) estimates that 6% (7.4 millions of people) live in extreme poverty and suffer from food insecurity.[6]

Mexico's positive potential and the result of millions in poverty is always a topic of discussion among opinion-makers.[7][8] Some economists have speculated that in four more decades of continuous economic growth, despite common trends in Mexico, such as emigration and violence, Mexico will be among the five biggest economies in the world, along with China, the United States, Japan, and India.[9]

Recently, extensive changes in government economic policy[10] and attempts at reducing government interference through privatization of several sectors,[11] for better[12] or worse,[13] allowed Mexico to remain the biggest economy in Latin America,[14] until 2005 when it became the second-largest;[15] and a so-called "trillion dollar club" member.[16] Despite theses changes, Mexico continues to suffer great social inequality and lack of opportunities.[17] The current administration has made an attempt at reducing poverty in the country, to provide more opportunities to its citizens such as jobs,[18] education, and the installation of universal healthcare.[19][20]

Background

Mexico's unequal development between the richer urban zones and the considerably poorer rural zones have been attributed to the fast economic growth that took place during the so-called Mexican miracle, the period on which Mexican economy did a transition from an agriculture based to an industry based one, which led many people to relocate in the cities. Even though investments were pouring into urban infrastructure, the government generally couldn't accommodate the rapid influx of people, which led to the development of slums in the outskirts of many cities in Mexico. The constant governmental corruption is another factor to which poverty is frequently attributed.[21] Only in recent years, after various economic setbacks, Mexico has recovered to a level where the middle class, once virtually nonexistent, is beginning to flourish.[22][23]

Social stratification is still greatly present in Mexico can be traced back to the country's origin. In the Colonial Period, before its independence, the upper class was composed of those who owned the land and the lower class was made of those who worked the land. After the Mexican Revolution, the government ceded an estimated 50 percent of the land to the general population, covering a small portion of the gap between the wealthy and the poor.[24] Land ownership continued to be main source of wealth for Mexicans and has dictated the hierarchy of wealth distribution amongst the population. After the country entered its economic industrial transformation, industrialists, businessmen, and politicians have controlled the direction of wealth in Mexico and have remained among the wealthy.[25] The average individual gross annual income in Mexico in 2002 was US$6,879.37 (2010 dollars).[26] 12.3 percent of the Mexican labor force earns the daily minimum wage or MX$1,343.28 per month (approx. US$111.94 November 2010 exchange rates).[27] 20.5 of the labor force earns twice the minimum wage and 21.4 percent earns up to three times the daily minimum wage while 18.6 earn no more than five daily minimum wages.[27] Only 11.8 percent of the working population earn wages equal or above MX$6,716.40 (US$559.70) per month.[27] According to Jaime Saavedra, World Bank Poverty Manager for Latin America, Mexico has made considerable strides in poverty reduction since the late 1990s, with performance above the Latin American average. Saavedra explained that: "Between 2000 and 2004, extreme poverty fell almost seven percentage points, which can be explained by development in rural areas, where extreme poverty fell from 42.4 per cent to 27.9 per cent. The urban poverty rate, however, got stuck at 11.3 per cent."[28]

Government involvements

Social development began to take place in the form of written policy in the early 1900s.[29] The Mexican Constitution, approved in 1917, outlined the basic social protections citizens are entitled to, including the right to property, education, health care, and employment; and it establishes the federal government responsible for the execution and enforcement of these protections.[30]

Map of Mexican states indicating HDI (2004)
   0.80 and higher
   0.750–0.799
   0.70–0.749

The global economic crisis of the late 1920s and forward slowed down any possibility of social development in the country.[31] Between the 1920s and the 1940s the illiteracy levels range between 61.5 and 58 percent, due this the government focused on establishing social protection institutions. By the late 1950s, 59 percent of the population knew how to read and write. In the 2000s only 9.5 percent of the population older than 15 years was illiterated.[29] By the 1960s, individual involvement of some states to increase social development, along with the country's economic growth, as well as employment opportunities and greater income, and the migration of people from the rural states to the urban areas, helped reduced poverty nationwide.[29] The 1970s and 1980s saw the transformation of government and economic policies. The government gave way to flexible foreign trade, deregulation and privatization of several sectors. After the economic crisis of the 1990s, Mexico recovered to become an emerging economic power; however, the number of poor nationwide has remained constant even with the country's overall growth.[32][33]

Regional variation

Historically, southern states like Chiapas, Oaxaca, and Guerrero have remained segregated from the rest of the country.[34] Their implementation of infrastructure, social development, education, and economic growth has been poorly accounted for. These states hold the highest levels of illiteracy, unemployment, lack of basic services such as running water and sanitation, overall urban infrastructure, and government establishment.[35] As citizens of the least fortunate states have noticed growth and improvements in others states, many have simply left seeking better opportunities.[36]

Causes of poverty

The reasons for poverty in Mexico are complex and widely extensive.[37] There is a consensual agreement that a combination of uneven distribution of wealth and resources sponsored by economic and political agendas to favor the rich and powerful is a major contributor to the millions left behind.[38][39]

Individual condition

Marginalized settlement "Colinas del Río", in the municipality Benito Juárez, Nuevo León, 2005.

In the economic sense, access to insufficient monetary means to afford goods and services becomes the immediate reason to be poor. Because a person's personal income dictates what he or she can afford and what he or she will remain deprived of, the first common cause of poverty is the individual condition.[40] This means, a person's individual circumstances and possibilities create their opportunity for access to goods and services. This condition is triggered by a person's income, education, training or work experience, social network, age, health, and other socio-economic factors:

As population has grown, the number of students enrolled in schools throughout the country has grown tremendously since the 1950s.[41] At the same time, government efforts to accommodate the growing student population, improving the quality of instruction and promoting prevalent school attendance has not been enough and therefore education has not remained among priorities for families who must struggle with poverty.[42][43] 700,000 students grades 1-9 dropped out of school in 2009 in all of Mexico.[44] 7.9 percent (almost 9 million) of the population is illiterate.[44] 73% of Mexican households have at least one member without education or education below the 7th grade.[44] 40 percent of people in the states of Chiapas, Veracruz, Hidalgo, Oaxaca and Guerrero have education below the 7th grade.[45]

Getting an education does not immediately translate to landing better paying jobs or overcoming underemployment in Mexico: According to data compiled by the Civic Observatory for Education, fewer than 20% of recent graduates manage to find an appropriate position during their first round of job-hunting. Although the country has made great strides in education and professional training, the absence of a serious employment policy means that economic expansion is sacrificed so that higher prices can be avoided. That exerts a negative impact on the labor market in both the short and medium term, and on new professionals most of all.[46] Situations like this have cause the standard of living among the urban middle class to deteriorate and as a consequence brings on emigration from this sector to other countries, mainly the United States and Canada.[47]

Although Mexico's birth rate has been dropping steadily since the 1968, its population growth still exceeds its ability to pull people out of abject poverty. Contraception is widely used, despite it being a hot-button political and religious issue. Contraception is provided through a government-sponsored program called Mexfam. The average life expectancy has drastically increased from 60.52 years in 1968, to 77.14 years in 2012. Rural areas still have the highest birth rates and poverty rates in Mexico, with indigenous populations topping the list.

Mexico does not promote equal opportunity employment despite established laws forbidding most socially-recognized forms of discrimination.[48] The government doesn't become sufficiently involved to promote opportunities to all citizens; including reducing discrimination against middle-age and elder citizens. Over a million of the unemployed face age discrimination and 55% of all unemployed face some form of discrimination when seeking employment.[49] There are virtually no opportunities for individuals with special requirements such as the disabled.[50] As job seekers become older, it is harder for them to get employed as employers tend to seek candidates within the "younger than 35 range". Social security (IMSS) is insufficient and there is a huge gap in proportion to the entire population (50% covered), the work force (30% covered), and the retired (33% covered).[51] There is no unemployment insurance in Mexico.[52]

Insufficient infrastructure

Mexico is a country where investment on infrastructure has remained as unequally distributed as income, specially in rural areas and in the southern states.[53] Because many people establish in rural areas, without government permission, and without paying property taxes, the government does not make significant efforts to invest in overall infrastructure of the entire country, yet it has started to do so until the 1990s.[54] Communities often face a combination of unpaved roads, lack of electricity and potable water, improper sanitation, poorly maintained schools, vandalism and crime, and lack of social development programs.[55][56] The government did not begin to focus on improving and modernizing the federal highway system up until two decades ago when it was composed of two-lane roads; often deathtraps and the scenarios of head-on collisions between truckers and families on vacation.[57] City and state governments often face challenges providing citizens who live on informal commerce with the basic services of urbanized life.[58] To worsen the problem the housing laws often vary greatly from one state to another, with the state of Hidalgo having no housing laws at all.[59] Because of this, higher income communities will invest in the development of their own communities while lower income communities might be deprived of the basics such as running water and drainage in various cases.

The concentration of poverty and distribution of wealth and opportunities is clearly visible from a geographic perspective.[60] The northern region of the country offers higher development while the southern states are the most impoverished. This is clearly the result of states equipped with better infrastructure that others. The states of Chiapas, Oaxaca, and Guerrero are among the least developed in the country. These states hold the highest numbers of indigenous population. As a result, 75 percent of the indigenous population lives on moderate poverty line and 39 percent of these under extreme poverty.[61]

Map of Mexican states indicating levels of overall poverty (2005)
   62.4-75.7
   35.8-41.9
   9.2-22.5

Unemployment

Unemployment in Mexico has been continuous.[17][46] In 2009, the unemployment rate was estimated at 5.5 percent (over 2.5 million).[62] Although that figure is far below the unemployment indexes in the rest of Latin America, the European Union, the United States and much of Asia, Mexico faces a serious problem generating jobs.[63] In spite of splendid macroeconomic indicators that currently exist: continuing low levels of inflation and stability in the nation’s currency exchange rate; a sufficient number of formal jobs- at least one million every year to keep up with the growing population- have not been created in over ten years.[64] With the abundance of natural resources in the country- as well as its petroleum wealth, these benefits don't seem to reach many of the people of Mexico who lack job opportunities and the means to raise their standards of living out of poverty and marginalization.[65]

In order to improve present day employment opportunities in Mexico, existing laws and regulations must be replaced for efficient instruments with greater legal certainty; encourage private investment; increase the collection of taxes; stimulate the productivity of businesses and the training of workers; and create more and better jobs.[66]

Differences in national income equality around the world as measured by the national Gini coefficient. A higher number means a higher income inequality

Mexico's wealth is unevenly distributed among its people where 10 percent of nation's wealthiest have 42.2 percent of all income and 10 percent of the nation's poorest have 1.3 of the remaining income.[67] Carlos Slim, the richest man in Mexico and one of the richest in the world, has a personal fortune equal to 4 to 6 percent of the country's GDP.[68][69] In spite of efforts by government officials during the past three administrations; transition to globalization,[70] the NAFTA agreement;[71] Mexico has been unable to create efficient public policies in order to compensate for the distortion of its market and the poor distribution of national income.[72]

The absence of basic agreements among Mexico’s main political parties for more than ten years has caused a serious backwardness in needed legislation in a number of areas.[73] The current economic framework needs adjustment on virtually all levels including business development opportunities, fair competition, tax collection and tax law; commerce, trade and finance regulations.[74]

The Mexican economy does not support unprivileged businesses, considering its current standards regarding monopolies, both in the public and private sectors.[75] By law, there are public monopolies: government-owned companies controlling oil and gas, electricity, water, etc.[76] Private sector monopolies and duopolies are found in the media, television, telecommunications, and raw materials.[77] For this reason, clear principles of competitiveness that offer incentives to private investment, both national and foreign, are needed in order for jobs to be created.[78]

Government and politics

Mexico's rampant poverty, lagged social development and general public welfare is strongly tied to its politics.[79] Historically, the political system of Mexico has not favored the general population, mainly because it focused to become and be a single-party system of government, largely dubbed "institutionalized" where those in charge had a one-voice, unquestionable plan of action mainly focused to favor the few elite while ignoring the welfare of the rest of population. From the 1800s to the end of the 20th century, as presidential administration came and went, the forms of government has been described as authoritarian, semi-democracy, centralized government, untouchable presidencies, mass-controlling, corporatist and elite-controlled.[80] As each administration took turn, some changes have occurred, sometimes as to contribute to the welfare of the least fortunate but, overall, the political framework behind the economic and social structure of the country continues to be the greatest contributor to inequality.[81]

While the NAFTA agreement proved effective in increasing Mexico's economic performance, foreign trade policies have been heavily criticized by activists such as Michael Moore (in Awful Truth) as not doing enough to promote social advancement and reducing poverty.[81] To remain competitive in the international market, Mexico has had to offer low wages to its workers while allowing high returns and generous concessions to international corporations.[82] The words "palancas" and "favores" are part of Mexican economic culture where high-ranking policy makers and private entrepreneurs are accused of promoting their own bottom line while ignoring the necessaries of the working class.[83]

Current recessionary trends in the United States have an even greater impact on Mexico because of the great economic dependence on the northern neighbor. After crude oil export sales, remittances sent home by Mexicans working in the United States are Mexico’s second largest source of foreign income.[84][85]

Administration after administration, economic policies and social development programs have been targeted at decreasing poverty and increasing development in the country. Even with the best of intentions, friction between the "special interests" of decision-makers and the general public welfare, makes it difficult for clear goals in the benefit of the public to be accomplished.[86]

Cancun is an example of where the government have failed to promote general welfare and unequal distribution of wealth. While known for its crispy white beaches, fancy hotels of international renown, and spring break; Cancun shows a notorious economical inequality between the touristic urban zones, and its more rural outskirts, where in various cases, the poorest neighborhoods lack one or more basic services.[87][88]

The lack of political transparency in Mexico has led to bureaucratic corruption, market inefficiencies, and income inequalities.[89][90][91] The ability to exercise civil rights has been increasingly displaced by the control of official authorities, including access to vital information that can capture the misappropriation and mis-allocation of funds, and public participation in state and municipal-level decision-making.[92] This opens up a channel for corruption. Evidence of this can be derived from the Corruption Perception Index 2010: Mexico received a low score of 3.1, on a scale of 0 to 10 (lower scores represent higher levels of corruption).[93] The result is a diffusion of corruption, from the state to the municipal level, and even right down to local security.[94][95]

While it can be difficult to quantify the costs of corruption with pinpoint accuracy, a report from the UN estimates that the cost is about 15 percent of Mexico’s GNP, and 9 percent of its GDP.[96][97] Such higher costs have adversely affected the growth of the economy, for instance deterring foreign investments due to uncertainty and risk. A study by Pricewaterhouse Coopers reveals that Mexico had lost $8.5 billion in foreign direct investments in 1999 due to corruption.[98] Business companies admit to spend as much as 10 percent of their revenue in bureaucratic bribes.[97] 39 percent is spent on bribing high-ranking policy makers and 61 percent on lower-ranking bureaucratic-administrative office holders.[99] At least 30 percent of all public spending ends up in the pockets of the corrupt.[99]

Even the domestic impact of corruption is no less severe, incurring additional expenses on firms and households. A family on average pays 109.50 pesos as bribes to authorities; households have also reported paying up to 6.9 percent of their income as bribes. In total, the cost of corruption in terms of GDP was estimated to be about $550bn in 2000.[100]

The situation is still problematic in spite of recent initiatives by the state to become more transparent to the public.[101] Over the years, there has been an effort by the government to reduce opacity, but even so, these initiatives often do not realize their full potential. In June 2003, under Vincente Fox’s presidency, the implementation of the Federal Law of Transparency and Access to Public Government Information (IFAI) offered civic organizations and members of the public to acquire previously undisclosed information. This reform has led to the exposure of previous under-the-radar activities, such as the government’s misappropriation of 200 million pesos that was intended to combat AIDS.[102] And yet, censorship is still prevalent: in 2008, changes were proposed to increase the subjugation of IFAI’s decisions to state control, so that the distribution of information would become more centralized.[103] A number of vertical subversions were also carried out at the time, including the merging of offices that handled information requests with less important agencies.[104] This violated the earlier progressive changes to the constitution, including Article 6, so that transparency was threatened.

Opacity is therefore a major player as a determinant of inequality, especially in effecting the welfare of lower-class households.[37] When resources are misallocated and official funds pocketed by illegitimate parties, the true quality of public services such as healthcare tend to be lower than expected;[105] similarly, the secrecy of the government’s budget allocation prevents public scrutiny, so it is difficult to establish financial accountability.[106] As well, from a broader perspective, vital infrastructure from projects, especially those aimed at facilitating social mobility, will also have to deal with the potential impediments caused by the overpricing effect and unnecessary risks of corruption, thereby reducing the accessibility of infrastructure for the poor, especially in rural areas where such infrastructure is less established than in urban areas.[107]

Reducing poverty

Poverty aid organizations and social development groups have remained active in Mexico. Despite foreign and national aid programs in the country, the overall level of poverty in the country prevails.[108]

Government approach

Transparency Collective

The Transparency Collective, or El Colectivo por la Transparencia in Spanish, is a non-governmental collective organization that advocates transparency in Mexico. It was first formed by six civil society organizations in 2002 to demand for greater transparency from state agencies, and the right to access information. Currently, it consists of eleven civil society groups with the common goal of strengthening democracy and raising accountability and the transparency of the state.[111] The Transparency Collective offers an avenue for locals to seek help in obtaining the right to information by offering manuals and online tutorials teaching the locals how to file a request for information. It also discusses topics like human rights, the legislature and government budgets so that locals will be more informed and aware of their rights.[112] For example, Fundar, an NGO which specializes in government budget analysis, runs workshops to educate the public on disseminating information released by government agencies.[113]

The Transparency Collective has also been working with IFAI (Federal Institute of Access to Information). The civil society was productively engaged in the reform of the constitution. For example, CIDE, an academic focusing on public policy, worked at state level helping states comply with the reform. Fundar also focused on evaluating government responses to information requests, the appeals process and on training groups to analyze information released by the government.[114]

Despite the organizational size of the Transparency Collective, collectivization has nonetheless been an important factor in its effectiveness. The collective call for greater transparency was one of the reasons for the comprehensive reform of Article 6 of the Mexican constitution in 2007, which heralded a new level of progression for Mexico's right-to-know movement.[115] The reforms guaranteed the public's rights to non-confidential information at all levels of the government. State transparency laws also had to be standardized around certain basic principles within a year, and states had to implement electronic information systems.[115]

However, in spite of this, there is still a considerable way to go to achieve full transparency. The 2008 constitutional amendments, and interference of the judiciary branch with the demanded disclosure of tax information, threatened the FOI laws that were previously established. Nevertheless, this movement has been met with fierce protests from civil society groups,[116][117] and the Collective continues to appeal to the government to allow for more civil participation.[118]

Demographics

GDP by State in US Dollars (2008)

World comparison

*The next comparisons are done between national poverty lines, meaning that each country has a different criteria to set its poverty line, for a comparison among countries under the same criteria see International poverty line

Poverty and indigenous communities

Indigenous communities suffer particularly from poverty causing them to be marginalised from society. Although "local and federal governments implemented social protection programs so as to alleviate poverty conditions and interregional disparities, in general, conditions for indigenous people remain unchanged," (Gonzales cited World Bank, 2005). Studies have shown that ethnicity is an important cause for inequality in income distribution, access to basic health care services and education, which in turn explain the significant difference in earnings between indigenous and non-indigenous people. According to the World Bank, about three-quarters of indigenous peoples in Mexico are poor and the gap between indigenous and non-indigenous groups is very high; the difference in poverty has been divided into explained and unexplained components. The explained components are "the amount of the gap attributed to observable characteristics such as education, age, occupation, region of residence and so on," (World Bank, 2005) which account for three quarters of poverty. The unexplained components are related to the level of discrimination and explain a quarter of the poverty. Indigenous people in Mexico are faced to significant disadvantages in economic and social outcomes and although discrimination against them appears to be decreasing, the government needs to improve education and government services to reduce the poverty gap. Based on their research, the World Bank suggests the promotion of equal health care access for indigenous peoples "though the implementation of a head start program that focuses on maternal and child health issues," (World Bank, 2005) as well as improving "data collection efforts related to identifying indigenous populations," (World Bank, 2005) to better monitor progress over time.

See also

References

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  123. ↑ Considering Mexico has the second biggest population in Latin America and 49-50+ million in poverty-- Brazil has over 57 million in poverty-- the result is Mexico with second highest number of poor in the Western Hemisphere.
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  125. ↑ Only China, India and Brazil have a higher amount of people in poverty than Mexico among nations with higher GDP than Mexico.
  126. ↑ By analyzing nations' poverty rates and their populations: Mexico's 2010 estimate at 111,212,000 and 44.2 rate of poverty from 2009 CONEVAL's study.
  127. ↑ By analyzing nations with greater population than Mexico and their poverty rates.
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