Review of “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty”

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Oct 292019
 

In honor of the award of the 2019 Nobel Prize for Economics to Abhijit Banerjee, Esther Duflo and Michael Kremer for their experimental approach to alleviating global poverty, we republish this post from five years ago in which we highlighted the significance of the pioneering work of Banerjee and Duflo:

Every so often a book comes along that shakes up established wisdom and forces us to rethink our viewpoints and beliefs. The latest such book to cross my desk is Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by Abhijit V. Banerjee and Esther Duflo, published by PublicAffairs in 2011.

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poor-economicsThis is a worthy read for anyone interested in development theory, policy, practice and economics. The authors are professors of Economics at the Massachusetts Institute of Technology (MIT) and co-founded the Abdul Latif Jameel Poverty Action Lab (J-PAL). Their book reports on the effectiveness of solutions to global poverty using an evidence-based randomized control trial approach.

Banerjee and Duflo argue that many anti-poverty policies have failed over the years because of an inadequate understanding of poverty. They conclude that the battle against poverty can be won, but it will take patience, careful thinking and a willingness to learn from evidence.

The authors look at some of the unexpected questions related to poverty that empirical studies have thrown up, such as :

  • Why do the poor (those living on less than 99 cents a day) need to borrow in order to save?
  • Why do the poor miss out on free life-saving immunizations but pay for drugs that they do not need?
  • Why do the poor start many businesses but do not grow any of them?

The book was supported by an outstanding website that included:

  • Introductions to each chapter
  • Maps showing cited studies with links to original sources
  • Data and figures used with interactive data tools
  • A “What Can You Do” page with links to major organizations working in the field or for the problem discussed in the chapter

The website’s links to research papers mentioned in the book included four studies related to Mexico:

1. Do Conditional Cash Transfers Affect Electoral Behavior? Evidence from a Randomized Experiment in Mexico, by Ana L. De La O.

The evidence comes from the pioneering Progresa, the original Mexican conditional cash transfer (CCT) program (since repackaged as Oportunidades).  This CCT program led to a 7% increase in turnout and a 16% increase in the  incumbent vote share, with clear implications for politicians in areas where CCT programs reach a large percentage of voters.

2 School Subsidies for the Poor: Evaluating the Mexican Progresa Poverty Program, by T. Paul Schultz of Yale University (August 2001).

This study considered how a CCT program affected school enrollment. The CCT program increased enrollment in school in grades 3 through 9, with the increase often greater for girls than boys. The cumulative effect was estimated to add 0.66 years to the baseline level of 6.80 years of schooling.

3 Experimental Evidence on Returns to Capital and Access to Finance in Mexico, by David McKenzie and Christopher Woodruff (March 2008)

Microenterprises are often unable to access suitable financing, even though they are responsible for employing a large portion of the total workforce. This experiment, which gave cash and in-kind grants to small retail firms, demonstrated that this additional capital generated large increases in profits, with the effects concentrated on those firms which were more financially constrained. The estimated return to capital was found to be at least 20 to 33 percent per month, three to five times higher than market interest rates.

4 Working for the Future: Female Factory Work and Child Health in Mexico, by David Atkin (April 2009)

Atkins’ paper found that children whose mothers lived in a town where a maquiladora (export factory) opened when the women were sixteen years old were much taller than those children born to mothers who did not have a similar opportunity. The effect was so large that “it can bridge the entire gap in height between a poor Mexican child and the “norm” for a well-fed American child.” (Poor Economics, 229)

The increase in height could not be fully explained by the changes in family income resulting from employment in a maquiladora. As Bannerjee and Duflo suggest, “Perhaps the sense of control over the future that people get from knowing that there will be an income coming in every month -and not just the income itself- is what allows these women to focus on building their own careers and those of their children. Perhaps this idea that there is a future is what makes the difference between the poor and the middle class.” (Poor Economics, 229)

Conclusion

Banerjee and Duflo’s positive message is that poverty can indeed be alleviated, but we need to take one small measurable step at a time with constant evaluation of whether or not particular policies are successful, based on evidence, not just on belief systems.

“Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” deserves its place of honor alongside other such genuine classics as E.F. Schumaker’s “Small Is Beautiful: A Study of Economics As If People Mattered” (1973). It is a must-read for geographers, regardless of your political persuasion.

Note: this is a lightly edited version of a post first published 27 January 2014.

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Instant poverty reduction – just change the baseline

 Mexico's geography in the Press, Updates to Geo-Mexico  Comments Off on Instant poverty reduction – just change the baseline
Jul 282016
 

The latest report on poverty from the National Statistics Agency, INEGI, looks like good news for Mexico’s poorest people but, sadly, this is only a mirage, based on a change in the measurement methods used.

The 2015 edition of INEGI’s Survey of Socioeconomic Conditions showed an overall real increase of 11.9% in household earnings, with an increase of over 30% in some states. According to the report, Mexico’s poor are richer by a third compared to last year, a change that some politicians will no doubt claim is the direct result of their effective policies.

Social activists were stunned by the claims of poverty reduction and Mexico’s National Council for the Evaluation of Social Development Policy (CONEVAL), which measures poverty levels using INEGI’s data, said the changes by the statistics institute were not credible.

According to Jonathan Heath, an independent economic researcher in Mexico City, Inegi is claiming that the previous methods overestimated poverty levels, but the change in methodology, without public consultation, “raises suspicion.”

Quite apart from the misleadingly positive spin on numbers, the change in methodology makes it completely impossible to compare current poverty rates with the rates for previous years.

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The pattern of severe poverty within Mexico

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Jul 142014
 

As presented in a previous post, 2.8% of Mexicans (3.3 million) live in severe poverty based on a June 2014 Multidimensional Poverty Index (MPI) developed by the Oxford (University) Poverty & Human Development Initiative (OPHI)[1]. The previous post explained the MPI measure of poverty and discussed how Mexico compared to the 108 countries in the study. This post looks into the details of MPI poverty within Mexico. Poverty in Mexico is mostly a rural problem. According to the study, roughly 8.5% of rural residents are severely poor (2.3 million) compared to only 1.1% of people in urban areas (1.0 million).

As indicated in the previous post, the MPI is based on ten separate indicators; two for education, two for health and six for standard of living. In all cases, people in urban areas scored better on all the indicators than those in rural areas. In rural areas several key MPI indicators contribute the most to poverty: insufficient schooling (19.3%), malnutrition (14.1%), children not attending school (12.9%), use of an unhealthy cooking fuel (12.9%) and unacceptable sanitation (11.7%) [2].

As expected the poorer more rural southern states had the highest MPI poverty levels. Oaxaca had the most living in poverty (11.1%) followed by Guerrero (10.6%) and Chiapas (8.3). Poverty was also high in San Luis Potosí (6.7%), Puebla (5.3%), Veracruz (4.6%), Campeche (4.2%), and Hidalgo (3.4%). These states all have significant indigenous populations. Though the study did not access severe poverty among indigenous groups, available information suggests that those groups suffer by far the highest levels of severe poverty. States with lowest MPI levels are Nuevo León (0.2%), Federal District (0.4%), Baja California (0.4%), Baja California Sur (0.4%), Durango (0.7%), Morelos (1.0%), Colima (1.0%), and Aguascalientes (1.0%); all states with relatively few indigenous inhabitants.

References:

[1] Oxford Poverty and Human Development Initiative (OPHI), “Global MPI Data Tables for 2014”, Oxford University, June 2014.

[2] Oxford Poverty and Human Development Initiative (OPHI), “OPHI Country Briefing 2014: Mexico,”

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Multidimensional Poverty in Mexico: How severe is poverty in Mexico?

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Jul 072014
 

How severe is poverty in Mexico? How does it compare to poverty in other countries? A new study released in June 2014 suggests that 2.8% of Mexicans live in severe poverty based on a Multidimensional Poverty Index (MPI) developed by the Oxford (University) Poverty & Human Development Initiative (OPHI) [1]. For all 108 countries in the study (representing roughly 78% of the world’s population), 32% live in severe poverty; thus the percentage for Mexico appears rather small in comparison to most places. This post is an update of previous Geo-Mexico posts on this topic:

The MPI in the study discussed here is based on a complicated methodology which relies on three different sets of household survey data. Its approach looks at poverty characteristics of household. This is superior to most other poverty measures that look at incomes in comparison to some type of poverty line, which varies widely from country to country. A household may have adequate income, but if that money is spent frivolously on alcohol, drugs, gambling, entertainment, etc., the children in the household might still be living in severe poverty.

Multi-dimensional Poverty Index

Multi-dimensional Poverty Index. (From Alkire & Santos, 2010)

The MPI uses ten indicators (see graphic) representing three equally weighted dimensions of poverty or deprivation within a household: Education, Health and Standard of Living [2]. Education looks at whether any member of the household has at least five years of schooling and if all school –aged children are attending school. Health focuses on whether a child in the family has died and if any adult or child in the household is malnourished. Standard of Living has six indicators for each household: electricity, safe drinking water, proper sanitation, adequate house flooring (not dirt, sand or dung), clean cooking fuel (not wood, charcoal or dung), and ownership of more than one of the following – radio, TV, telephone, bike, motorbike, refrigerator or ownership of a car or truck. Obviously these indicators reveal far more details about poverty than simple income measures. A complicated formula is used to combine these indicators to identify households in severe poverty. A more detailed description of the methodology is provided in this previous post.

As noted above, according to MPI, 2.8% of Mexicans or 3.3 million people are severely poor [3] compared to 32% or 1.6 billion in the 108 countries analyzed which include most of the countries of Latin American, Africa, Asia and Eastern Europe. Of the 108 countries, 29 have smaller percentages living in severe poverty than Mexico. These include Belarus (0.0%), Russia (1.3%), Ecuador (2.2%) and Brazil (2.7%). It is interesting that Ecuador and Brazil have lower MDI levels of poverty than Mexico because both have lower per capita incomes than Mexico and far more income inequality. For example, 0.7% of Mexicans live on under $1.25 a day and 4.5% live on under $2.00 a day, compared to 4.4% and 13.6% for Ecuador and 3.8% and 9.9% for Brazil. Apparently, in Ecuador and Brazil either survival necessities are cheaper or they spend their incomes more wisely or public safety nets are more effective. This suggests that Mexicans could do a better job of combating severe poverty.

Countries with slightly worse MPI levels than Mexico are Argentina (3.0%), the Czech Republic (3.1%), Hungary (4.6%), Dominican Republic (4.6%), Colombia (5.4%), Egypt (6.0%) and Turkey (6.6%). That the Czech Republic and Hungary are below Mexico is a bit of a surprise. Further down on the list are China (12.5%), South Africa (13.4%), Peru (19.9%), Indonesia (20.8%), and Guatemala (25.9%). The countries with the severest MPI levels include Pakistan (49.4%), India (53.7%), Nigeria (54.1%), the Democratic Republic of the Congo (73.2%), Ethiopia (88.6%), and lastly Niger (92.4%).

According to the study the country with the most people living in severe poverty is India (612 million) followed by China (162m), Bangladesh (83m), Nigeria (82m), Pakistan (81m), Ethiopia (66m), Indonesia (48m), the Democratic Republic of the Congo (44m). Compared to these countries, the 3.3 million in Mexico seems like a rather small number.

Though severe poverty in Mexico is far less than in most other countries, it is still a very serious problem which needs to be addressed. As might be expected, within Mexico severe poverty is worst in rural areas and southern states; we will look more closely at this in a subsequent post.

References:

[1] Oxford Poverty and Human Development Initiative (OPHI), “Global MPI Data Tables for 2014”, Oxford University, June 2014.

[2] Sabine Alkire and Maria Emma Santos, “Acute Multidimensional Poverty: A new Index for Developing Countries”, Oxford Poverty & Human Development Initiative (OPHI), July 2010, Paper No. 38, .

[3] According to the Mexican Government’s Poverty Line, 52% of Mexicans live in poverty. Obviously this is a very different poverty measure than the MPI.

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Is there a connection between farm size and marginalization?

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Mar 132014
 

Having noted in previous posts that farm sizes in southern Mexico are smaller (on average) than in northern Mexico, and that farm size is affected by socio-economic factors, and that farmers of smallholdings are unable to generate a decent profit, it is interesting to consider the relationship between farm size and marginalization.

Mexico’s National Population Commission (Conapo) has formulated a compound indicator of “marginalization” and publishes its “marginalization index” at regular intervals. Data are available at both the state and the municipal level for the entire country. This discussion relies on the state level data.

Scatter graph showing average farm size and marginalization index

Scatter graph showing average farm size and marginalization index. Data: INEGI, Conapo. Credit: Geo-Mexico

Each dot on this scatter plot represents a state. For the 32 points, the statistical correlation (Spearman’s Rank Correlation Coefficient) is –0.483. This negative correlation (significant at the 95% level) means that marginalization is inversely associated with farm size  (i.e. the greater the marginalization, the smaller the likely farm size).

In short, the north-south divide that we found when looking at the pattern of farm sizes in Mexico is closely linked to the north-south economic divide that characterizes the country.

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Geo-Mexico has many other agriculture-related posts (easily found via our tag system). They include posts about the geography of growing/producing Christmas trees, cacao, honey, sugarcane, coffee, chiles, floriculture, tomatoes, tequila, horticultural crops and oranges. Also worth reading are:

The number of small farms in Mexico is growing

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Mar 032014
 

The uneven distribution of farmland in Mexico was one of the fundamental causes of the Mexican Revolution in 1910, but by no means the only one. Landless campesinos (peasant farmers) lacked any way to control their own supplies of food. Revolutionary leaders called for the expropriation of the large estates or haciendas, which had been the principal means of agricultural production since colonial times, and the redistribution of land among the rural poor. A law governing this radical change in the land tenure system came into force in 1917 and the process has continued, albeit sporadically, into modern times.

About half of all cultivated land in Mexico was converted from large estates into ejidos, a form of collective farming. In most ejidos, each individual ejidatario has the rights to use between 4 and 20 hectares (10-50 acres) of land, depending on soil quality and whether or not it is irrigated. In addition, members of the ejido share collective rights over the use of local pasture and woodland.

By 1970 land redistribution had been more or less completed. Even so, most farming land still remained in the hands of a very small minority of farmers (Figure 15.2). Only 1% of farms were larger than 5000 hectares (12,355 acres) but between them they shared 47% of all farm land. Meanwhile, 66% of farms were smaller than 10 hectares (25 acres) yet they shared only 2% of all farm land.

Have things improved since then?

The 2007 farm census (see graphic) revealed that two-thirds (66.4%) of all farms are under 5 hectares (12.4 acres) in area; this percentage has remained roughly the same over the past 40 years. Between them, they farm just 6.2% of Mexico’s total farmland.

The number and size of farms, 2007

The number and size of farms, 2007 (updated Figure 15.2 of Geo-Mexico). Data: INEGI. Credit: Tony Burton / Geo-Mexico

The number of small farms has increased since 1970, but so has the total number of farms. Between 1991 and 2007, there was a 55.2% increase in the number of farms under 2 hectares in area, and a 45.4% increase in the total area they worked.

There is no solid data for why the number of microfarms has increased, but it may be partially explained by larger farms being split into smaller pieces (one for each family member) following the death of their original owner.

Most tiny farms are likely to be family-run, producing crops largely for subsistence, rather than for market. Small plots of land are likely to prove uneconomic and unsustainable to farm; it is impossible to generate sufficient profit from them for a family to enjoy a decent livelihood.

In one study, Enrique de la Madrid Cordero, writing for Financiera Rural, calculated that a typical smallholding of 5 hectares, planted with corn (maize) could generate a profit for the owner of about $4000 pesos. This profit represents 6 months work. At the time of his study, someone earning minimum wage for the same six months would have received a total of almost $10,000 pesos. The precise numbers vary, depending on average yields and the crops planted, but cultivating a smallholding is obviously not an easy way to make a living.

These same farmers are unable to advance since they have no means of accessing credit, having no suitable assets to offer as collateral, even if they could ever afford to pay the interest! Similarly, they do not have the savings to invest in improved equipment, higher cost seeds or to introduce new techniques or technology. They are, essentially, trapped in a cycle of poverty.

At the other end of the scale, a very small percentage of farms in Mexico are very large indeed. Nationwide, 2.2% of farms account for 65.1% of the total area farmed in the country. Larger farms are commercial operations, sometimes multinational operations. Their size and profitability ensures they have ready access to credit, and can adopt new technologies and methods relatively quickly.

The uneven distribution of land in Mexico clearly remains an issue, one that is likely to impact social justice agricultural output and productivity for decades to come.

Related posts:

Geo-Mexico has many other agriculture-related posts (easily found via our tag system). They include posts about the geography of growing/producing Christmas trees, cacao, honey, sugarcane, coffee, chiles, floriculture, tomatoes, tequila, horticultural crops and oranges. Also worth reading are:

Extreme poverty declined between 2010 and 2012

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Feb 012014
 

As we saw in an earlier post – Poverty on the rise in some states in Mexico – the total number of people living in poverty in Mexico continues to rise, though the poverty rate (as a percentage) remains roughly the same.

The measures of poverty used by Mexico’s National Political and Social Development Commission (Coneval) are multidimensional, and not simply based on household or personal income. This map shows the changes in “extreme multidimensional poverty” (a category that includes “the poorest of the poor”)  that occurred in Mexico between 2010 and 2012.

Changes in levels of extreme poverty in Mexico, 2010-2012.

Changes in levels of extreme poverty in Mexico, 2010-2012. Credit: Geo-Mexico; all rights reserved. Data: Coneval

In areas shaded red, a higher percentage of the population experienced “extreme poverty” in 2012 than in 2010; their personal situations and opportunities have presumably become significantly worse. Interestingly, this category includes the prosperous states of Nuevo León (economy based on manufacturing and services) and Quintana Roo (tourism).

The reverse is true for areas shaded blue where the extreme poverty rate has fallen: many of the people living in those areas have moved out of the most extreme category and presumably have seen their fortunes and opportunities improve, even if, in most cases, not sufficiently to have escaped the “poverty” category completely. This category includes more than half of Mexico’s 32 administrative divisions.

The fact that “extreme poverty” has declined in more than half of Mexico is encouraging, and suggests that government policies aimed at poverty reduction, such as Oportunidades are gradually making a difference. It remains to be seen whether or not this trend continues over the next few years.

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Poverty on the rise in some states in Mexico

 Updates to Geo-Mexico  2 Responses »
Jan 022014
 

The total number of people living in poverty in Mexico continues to rise, though the poverty rate (as a percentage) remains roughly the same. According to Mexico’s National Political and Social Development Commission (Spanish language acronym: Coneval), the number of people in poverty has risen steadily for several years, much in line with Mexico’s rising total population. Coneval’s figures are based on a simple multidimensional poverty index, which considers the following criteria:

  • household income
  • access to education
  • access to food
  • access to health care
  • access to social services
  • housing quality
  • access to basic household services (electricity, water, drainage)

According to Coneval, 53.3 million Mexicans (45.5% of the total population) were living in poverty in 2012, compared to 52.8 million (46.1% of the then population) in 2010 and 48.8 million Mexicans (44.5%of the population) in 2008.

Note that poverty statistics prior to 2008 in Mexico were generally based purely on income levels. From 2008, this method was replaced by a multidimensional index. The precise details of the index have been modified slightly since that time, making exact comparisons between 2012 and 2008 more problematic.

While the precise numbers are subject to debate, mainly due to differing definitions of what constitutes “poverty” and how it can be measured, the trend revealed by the Coneval numbers is supported by the Economic Commission for Latin America and the Caribbean (ECLAC) in its “Social Panorama of Latin America 2013“, published in December 2013. The ECLAC report found that Mexico is one of a very few countries where poverty levels rose between 2011 and 2012, from 36.3% of the population to 37.1%, according to its definition.

The dire situation in Mexico compares to a slight decrease in poverty in most larger Latin American countries, including Venezuela, Ecuador, Brazil, Peru, Argentina and Colombia.

In absolute terms, according to ECLAC, 164 million people were found to be living in poverty in Latin America, about 57.4 million (35%) of them in Mexico.

Change in poverty rates in Mexico, 2010-2012.

Change in poverty rates in Mexico, 2010-2012. Credit: Geo-Mexico; all rights reserved. Data: Coneval

The map shows the Coneval data for changes in the poverty rate between 2010 and 2012 by state. It appears that poverty levels increased in many of Mexico’s more prosperous areas and in the longer established industrial areas, as well as in almost all areas where tourism is important. Poverty decreased in some of Mexico’s more rural, and generally poorer, states.

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Update on Mexico and the UN Millennium Development Goals (MDGs)

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Dec 302013
 

More than 190 countries signed up to the 2015 UN Millennium Development Goals (MDGs), agreed in 2000. There are 8 major goals:

  1. eradicate extreme poverty and hunger
  2. achieve universal primary education
  3. promote gender equality and empower women
  4. reduce child mortality
  5. improve maternal health
  6. combat HIV/AIDS, malaria and other diseases
  7. ensure environmental sustainability
  8. develop a global partnership for development

millenium-development-goalsMexico is well on its way to meeting most of the eight goals, according to the technical committee established to monitor the country’s progress. The technical committee includes representatives from various government departments, as well as INEGI (the National Geography and Statistics Institute) and CONAPO (the National Population Council).

The committee reports that Mexico has already met the targets for 38 (74.5%) of the 51 quantitative indicators used to assess progress towards the 8 goals, and is continuing work towards meeting the remaining targets by 2015 (the deadline for the Millennium Development Goals).

Satisfactory or good progress is being made on 5 of the remaining 13 indicators; all five are expected to be met sometime in 2015.  Progress on the other 8 indicators has been slower than needed, and it now seems highly unlikely that goal 7 (environmental sustainability) can possibly be met.

Specific targets that Mexico has not yet reached and where progress has either stagnated, or deterioration has occurred, include:

  • Decrease in mortality rate per 100,000 inhabitants due to HIV/AIDS  (part of goal 6)
  • Total carbon dioxide emissions (part of goal 7)
  • Proportion of total water resources already in use (part of goal 7)
  • Percentage of inhabitants with private dwellings using charcoal or wood for cooking (part of goal 7)

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Mexico receives $280m in international funding to fight urban poverty

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Oct 172011
 

Today (17 October 2011) is International Day for the Eradication of Poverty. A few weeks ago, the Inter-American Development Bank (IDB) approved a $280 million loan to help fight urban poverty in Mexico through a comprehensive approach that combines efforts targeting both physical needs — increased access to urban services and infrastructure — as well as social needs of people living in marginal areas.

Co-financed with counterpart funds from the Mexican government totaling $280 million, the program will improve urban infrastructure and access to basic services as well as strengthen social integration, benefiting at least 2.2 million homes a year. A special focus will be placed on populations suffering high poverty rates.

The loan will be used to pave roads, and improve water supply, sanitation, electrification and public lighting, waste collection and disposal, among other actions.

On the social side, the program will foster individual and collective skills and promote social inclusion and community participation and organization. This component includes services delivered in Community Development Centers (CDC), such as training workshops targeting different skills, spare time activities promoting civic integration, prevention of risk behaviors in adolescents, and assistance to female victims of violence and support for senior citizens.

This strategy is complemented by a pilot scheme which seeks to expand and improve interventions in selected districts in order to reduce vulnerability to violence with the help of community-based interventions.

The program includes paving or repaving of 17 million square meters of road surface and the laying of 1,000 km of water pipes, 1,350 km of drainage and sewer pipes, and 168 km of electrical wiring. It also provides for the installation of 57,000 street lights, construction and improvement of a total of 300 centers for victims of violence, construction and/or equipping of 840 Community Development Centers.

[This post is the text of a press release from the Inter-American Development Bank. ]

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Update on Mexico and the UN Millennium Development Goals (MDGs)

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Sep 222011
 

In a previous post, we looked at Mexico and the UN Millennium Development Goals. This post is the text of a press release issued by the President’s Office in September 2011:

As part of the celebrations of the 50th Anniversary of the United Nations Development Program (UNDP), President Felipe Calderón gave the General Administrator of the Program, Helen Clark, Mexico’s report on the progress achieved in the Millennium Development Goals.

He highlighted the influence of UNDP in Mexico which, throughout its existence, has contributed to the alleviation of poverty and inequality, sustainable human development, the prevention of risks from natural disasters, the implementation of environmental policies and the promotion of democracy.

The main achievements highlighted by the president, regarding the fulfillment of the Millennium Goals, were: achieving universal coverage in primary education, eliminating the education gap between men and women, which eradicated the gender gap in education and increased female empowerment, improvements in the population’s living conditions, through the reduction of mortality and child malnutrition, the sustained increase in life expectancy and specialized care for expectant mothers, the expansion of access to the population’s health services, in which he declared that by the end of this year, universal coverage will be achieved, and the expansion of access to basic services such as safe drinking water, information technologies, communication and decent housing.

The main challenges to be met, said the president, were the alleviation of poverty, improvements in the per capita income and the reduction of the inequality gap. However, he also expressed confidence that they would be fully met in a timely fashion, since he confirmed the fact that the authorities are working continuously to achieve the universalization of pre-school and secondary education, improve the quality of education and improve the Human Development Index through successful programs such as Opportunities and the Popular Insurance Scheme.

The president ended by confirming his commitment to enabling Mexico to fully achieve the values, ideals and agenda set by UN in a timely fashion.

[This post is the text of a press release issued by the President’s Office in September 2011)

The Ethos Foundation’s Multidimensional Poverty Index

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Sep 202011
 

We looked in a previous post at the Multidimensional Poverty Index (MPI), originally presented in an Oxford Poverty & Human Development Initiative (OPHI) working paper, and explained its advantages over earlier poverty measures, especially the relatively crude single-factor approaches like “a dollar a day”.

Earlier this year (2011), the Ethos Foundation, a Mexican NGO, presented its own Ethos 2011 Multidimensional Poverty Index, using the expertise of the authors of the MPI as its starting point.

The Ethos Foundation believes that poverty is comprised of both household poverty, an inability to satisfy basic household needs, and by aspects of ambient poverty that make it impossible for people to achieve well-being given the existing political, social and economic conditions. As a result, their index gives a more “Latin American” perspective on poverty.

In applying its Multidimensional Poverty Index to an analysis of poverty in the eight largest economies in Latin America, the Ethos Foundation concluded that Chile is the country with the least poverty, followed by Brazil and Mexico.

Ethos Poverty Index applied to Latin America's largest economies. (Ethos Foundation, 2011)

The graph shows how the 8 countries rated, with the axes of the graph being household poverty and ambient poverty respectively. Overall, Brazil and Mexico are almost equal. While Brazil has less “ambient poverty” than Mexico, Mexico has less “household poverty”. Both countries have a long way to go to reduce poverty levels to match those in Chile.

What factors are included in the Ethos Foundation Poverty Index?

A. Household Poverty:

  1. Income per person (under $60 a day)
  2. Education (head of household uneducated? One child or more aged 7-15 not attending school?)
  3. Provision of drinking water and drainage
  4. Building materials (solid walls? three or more people sleeping in same room?)
  5. Cooking fuel used
  6. Availability of electricity

B. Ambient Poverty (21 variables in 7 categories, but not all equally weighted):

  1. Public Health (life expectancy, infant mortality, public health access)
  2. Institutions (government effectiveness; corruption; political stability)
  3. Economy (unemployment rate; competitiveness; access to micro-loans)
  4. Democracy (civil liberties; political rights and freedom)
  5. Public safety (homicide rate, vehicle theft rate, confidence in police)
  6. Gender (salary parity, educational parity, women in government)
  7. Environment (CO2 emissions/person; species in danger of extinction; rate of deforestation)

The Ethos 2011 Multidimensional Poverty Index is an interesting and valuable addition to the literature on poverty measurement. It is a salutary reminder to geographers that the world is often too complex a place for the same methods of study and quantification to work well everywhere. The great strength of the Ethos Foundation’s index is that it adopts a Latin American viewpoint on poverty, one that is more localized but of far greater relevance to Mexico than previous alternatives.

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The measurement of poverty: the Multidimensional Poverty Index (MPI)

 Other  Comments Off on The measurement of poverty: the Multidimensional Poverty Index (MPI)
Sep 132011
 

Measuring poverty sounds easy but is surprisingly difficult. What exactly constitutes poverty? What is “extreme poverty”? Simple poverty measures are often uni-dimensional. For example, many poverty figures quoted in the past were based on the proportion of the population having to survive on less than a dollar a day (later revised upwards to $1.25 a day). Such indices are simple and appealing, but inherently misleading. One of the more serious flaws of such indices (whatever the dollar figure used) is that $30 a month may be sufficient to purchase far more goods and services in some countries than in others. $30 in a European city like Geneva will not go anywhere near as far as $30 in the Mexican city of Oaxaca which in turn will not go anywhere near as far as in a mid-sized Chinese city.

The “Human Poverty Index” (HPI) was a vast improvement, since it combined the proportion of the population facing serious shortfalls in life expectancy, with measures of literacy and of living standards. HPI calculations are based on:

  • the percentage of population expected to die before the age of 40 years
  • the illiteracy rate among adults
  • the standard of living, worked out by combining the percentage of population lacking access to health services, the percentage lacking access to safe water, and the percentage of children under 5 years of age suffering from malnutrition.

Even this multi-criteria approach to defining poverty had its critics, with most arguments centering on which criteria should be included, or on their relative weighting within the index.

Another approach, adopted by Mexico’s National Political and Social Development Commission (Coneval) is (as we saw here) to combine income limits (about three dollars a day in this case) with social indicators in a multidimensional system. People in poverty have incomes below the limit and lack access to at least one of the list of social rights.

In 2010, an alternative multi-dimensional index, the Multidimensional Poverty Index (MPI) was published. This has quickly gained international acceptance and is rapidly becoming the preferred way of measuring poverty. The Multidimensional Poverty Index (MPI) was originally presented in an Oxford  Poverty & Human Development Initiative (OPHI) working paper by Sabina Alkire and Maria Emma Santos: OPHI WORKING PAPER NO. 38: Acute Multidimensional Poverty: A New Index for Developing Countries (July 2010).

The MPI recognizes that poverty is a very complex phenomenon and seeks to identify the “deprivations that batter a person at the same time.” In the original paper, the index was calculated for 104 countries, with a combined population of 5.2 billion. The index consists of ten indicators corresponding to the three dimensions that are used to calculate the widely-used Human Development Index (HDI): Education, Health and Standard of Living. Each of the three dimensions is given equal weighting in the final index. Each of the indicators within each dimension is also given equal weighting.

Multi-dimensional Poverty Index

Multidimensional Poverty Index (MPI) (From Alkire & Santos, 2010)

Dimension One: Health [weighting 1/3 of total] Indicators:

  • Child Mortality: has any child in the family died?
  • Nutrition: Are any adult or children in the family malnourished?

Dimension Two: Education [weighting 1/3 of total] Indicators:

  • Years of Schooling: Have all household members completed 5 years of schooling?
  • Child Enrollment:  Were any school-aged children out of school in years 1 to 8?

Dimension Three: Standard of Living [weighting 1/3 of total] Indicators:

  • Electricity: Does the household lack electricity?
  • Drinking water: Does the household fail to meet Millennium Development Goal (MDG) targets, or is it more than 30 minutes walk to water
  • Sanitation: Does the home fail to meet MDG targets, or is the toilet shared?
  • Flooring: Is the floor of the home dirt, sand, or dung?
  • Cooking Fuel: Is cooking fueled by wood, charcoal, or dung?
  • Assets: Does the household own only one or none of the following: radio,TV, telephone, bike, motorbike?

From these values, the MPI can be calculated as the product of two numbers:

  • the percentage of people involved and
  • the “average intensity of deprivation” which reflects the number of dimensions in which households are deprived.

Many of these indicators overlap with indicators used to evaluate the Millennium Development Goals (MDGs). This means that analyzing MPI should help countries check their progress towards meeting several Millennium Development Goals (MDGs), while focusing on their most vulnerable people. (For details see the original paper). By looking at the simultaneous deprivations of households, it should help policy makers decide where they need to develop new strategies and where they need to refocus their efforts.

How does Mexico stack up on the Multidimensional Poverty Index (MPI)?

Mexico had an MPI rank of 29 out of the 104 countries surveyed (where the #1 rank means the least poverty), with 10.1% of the population deprived in terms of education, 9.2% deprived in terms of health and 6.7% deprived in terms of living standards.

A cautionary note is needed since any index is only as good as the data used in its calculations, but the MPI does seem to be a far more robust measure of poverty and personal deprivation than any of its predecessors.

Related posts:

Geo-Mexico: the geography and dynamics of modern Mexico is an excellent resource for courses in geography, economics, sociology and development studies, designed to be relevant to both general and academic readers. It provides an up-to-date account of Mexico suitable for students taking initial university or college courses related to geography, economics and Mexican or Latin American studies.  Buy your copy today!

Education professionals are invited to contact us if they would like to request a review copy. In addition, the entire book is searchable via the “Look Inside” feature of amazon.com

Is poverty in Mexico on the rise?

 Mexico's geography in the Press  Comments Off on Is poverty in Mexico on the rise?
Sep 062011
 

According to a recent government study, almost half of Mexico’s population now lives in poverty. The report came from the National Political and Social Development Commission (Spanish language acronym: Coneval). Poverty rates had been falling for several years, so this is clear evidence that Mexico’s economy has been struggling in the wake of the economic recession in North America.

How does Coneval define poverty?

Coneval uses a simple multidimensional poverty index, which considers the following criteria:

  • household income
  • access to education
  • access to food
  • access to health care
  • access to social services
  • housing quality
  • access to basic household services (electricity, water, drainage)

According to Coneval, people living on less than 2,114 pesos (about $180) a month in urban areas (or 1329 pesos in rural areas) and who lack at least one of the basic social rights in the list are living in poverty.

Extreme poverty (see map)  is applied to people living on less than 978 pesos ($85) a month in urban areas (684 pesos in rural areas) and lacking at least one social right.

Map of extreme poverty in Mexico 2010By these definitions, 46.2% of Mexico’s population (or about 52 million people) are currently living in poverty. This has risen from 44.5% in 2008. However, the percentage living in extreme poverty has dropped slightly since 2008 from 10.6% to 10.4%.

The distribution of poverty shown on the map above is not a surprise; we have seen many times in previous posts that the southern half of Mexico (excluding the Yucatán Peninsula) is much less wealthy in economic terms and social indicators than the north, even if it has a wealth of indigenous groups and cultural traditions.

The map below is perhaps more interesting since it highlights the areas where the incidence of poverty has changed significantly between 2008 and 2010. The green areas have experienced a significant decrease in poverty and the red areas a significant increase in poverty. It is clear that the effects of the economic recession are being felt much harder in northern Mexico, where export-led manufacturing is prominent, than in the south.

map of changes in poverty in Mexico, 2008-2010Poverty in Mexico is on the rise, and it is on the rise faster in northern Mexico than the already poverty-stricken south. Only time will tell whether this increase in poverty is a temporary and short-lived trend or whether it heralds the start of tough times for many people in Mexico, especially those living in the rural areas, where the incidence of poverty and extreme poverty are far higher than in urban areas.

Given that the income levels used to define poverty in urban areas are more generous than those used for rural areas, the true level of poverty in the Mexican countryside is almost certainly much higher than this study suggests, something for politicians to bear in mind as they gear up for national elections next year.

Related posts:

Resistance to government-sponsored change in Chiapas, Mexico

 Mexico's geography in the Press  Comments Off on Resistance to government-sponsored change in Chiapas, Mexico
Oct 292010
 

Kudos to the the New Mexico-based Grassroots Press, for the enticing title “Weaving Webs of Resistance in Chiapas” on an article by Crystal Massey and Rebecca Wiggins. The article reports on a visit to Chiapas earlier this year by a small group from the Las Cruces-Chiapas Connection (since renamed Weaving for Justice), which helps weaving cooperatives in Chiapas market their products through fair trade.

maya-weavers

One of the groups they visited was Tsobol Antzetik (Women United). They describe how these villagers have to carry fresh water (for cooking, washing, drinking) across the village from near the local school. Despite being in one of the wettest regions of the country, they have no easily accessible potable water source.

Some of the women of Tsobol Antzetik belong to Abejas, a Catholic social justice organization founded in 1992, while others are active supporters of the Zapatistas (EZLN). None of the women accepts handouts from the “corrupt” federal government. This means that they refuse any of the possible benefits from Oportunidades, Mexico’s flagship poverty-fighting program, which helps about 60% of all families in Chiapas. The women believe that Oportunidades “hand outs” are a way for the federal government to control the  rural population, and prefer to avoid being politically compromised.

The article quotes sociologist Molly Talcott, who describes Oportunidades as “…essentially sterilizing women and attempting to contain women’s resistances [sic] by enlisting them in a small cash assistance program, which in these times, is badly needed.” Critics of Oportunidades claim that its health care workers are asked to meet sterilization quotas.

The marketing of woven items from Chiapas is an alternative way for women such as those in Tsobol Antzetik and their families to boost household incomes. This is where the Las Cruces-Chiapas Connection comes in. They help market the items in the USA and hope their help will offer an alternative to migration in search of employment to rapidly-growing cities such as Cancún or even into the USA.

The article goes on to examine another much publicized development project aimed at improving the situation in Chiapas, the Mesoamerica Project (formerly known as Plan Puebla Panamá). A side effect of this project has been to force some indigenous people off their traditional land to clear the way for major high-budget, capitalist construction projects.

One of the many strategies bandied about as part of the Mesoamerica Project is the forced relocation of rural Chiapas Indians into what the government calls “sustainable rural cities”, a phrase which suggests a less-than-clear grasp of geography! These would enable easier provision of modern services such as education and health care. In turn, they would “free up” potentially productive land that could then be used for agro-industrial plantations (flowers, tropical fruits, specialist timber, coffee). The major downside of such a proposal would be the demise of an ancient subsistence lifestyle, and an end to the food security previously enjoyed by thousands of Maya families.

Opposition to the Mesoamerica Project has already led to unrest and violent reprisals. It is still far from clear what the eventual outcome of the Mesoamerica Project will be.

Related news: Up to now, Oportunidades has focused almost entirely on rural areas. However, the Interamerican Development Bank recently approved a loan of 800 million dollars to extend the program to marginalized families in urban areas.

To learn more about the evolution of PPP and the idea of “rural cities”, see the three-part article by Dr. Japhy Wilson, who lectures in international politics at the University of Manchester in the UK:

  • The New Phase of the Plan Puebla Panama in Chiapas, Part One
  • Part Two
  • Part Three

Mexico’s indigenous groups, social geography and development issues are analyzed in various chapters of Geo-Mexico: the geography and dynamics of modern Mexico. Buy your copy today, and learn more about Mexico’s fascinating geography. Additional knowledge will greatly enhance the pleasures you derive during your next trip to Mexico.

A small village in Mexico won a 2004 UN Development Prize

 Excerpts from Geo-Mexico  Comments Off on A small village in Mexico won a 2004 UN Development Prize
Jun 142010
 

Every two years, the United Nations Development Programme (UNDP) awards the Equator prize (worth 30,000 dollars) to communities that have shown “outstanding achievement in the reduction of poverty through the conservation and sustainable use of biodiversity.”

One of the winners of the 2004 Equator prize was the indigenous community of Nuevo San Juan Parangaricutiro, in the state of Michoacán. More than 340 communities, from 65 countries, were nominated for consideration by the Equator Prize jury. The seven winning communities were honored at a prize-giving ceremony held in conjunction with an international Biological Diversity Conference in Kuala Lumpur, in Malaysia.

The success of Nuevo San Juan Parangaricutiro (hereafter referred to simply as Nuevo SJP) is all the more remarkable since their community did not even exist prior to 1944.

That is the year when all the founding residents of Nuevo (New) SJP fled their homes in “viejo” (Old) SJP as the sizeable town was overwhelmed by the lava erupting from Paricutín volcano. Paricutín first erupted, completely unexpectedly, in the middle of a farmer’s field, on February 20, 1943. It is a sobering thought that only 61 years to the day before the prize-giving, the volcano literally did not exist.

A remarkable account of those early days is given by Simón Lázaro Jiménez, who recounts in his book, Paricutín: 50 Years After Its Birth, his adventures as a young boy as he fled with his parents for safety as their small village of Angahuan was bombarded with red-hot rocks and ash. Don Simón’s is the only first-hand account of any substance written by a native P’urépecha speaker.

The volcano finally stopped erupting in 1952, but only after completely destroying the village of Parícutin (note that the position of the accent has changed over the years) and the town of viejo SJP. All that is left of the latter today are a few broken-down walls and parts of the huge, old church that did a brave job of withstanding the compelling force of the lava as it overran the rest of the town.

The people who fled the volcano (many initially refused to leave, but were escorted to safety by armed soldiers) stayed with friends and relatives and in makeshift camps before finding permanent accommodation, but later in 1944, founded Nuevo SJP after a presidential decree gave them land formerly belonging to the hacienda of Los Conejos.

The new town had to be completely planned from scratch. A gigantic church was built to commemorate the miraculous survival of part of the Old San Juan church which formed a partial barrier to the lava flow. Little by little a new community evolved, fostered in part by the high degree of cooperation required for building a new town and working virgin land.

In 1977, motivated by the abuse of local forest lands by private concession holders, the campesinos of Nuevo SJP organized their own union for farming and forestry workers. In 1981, they began their own forestry industry, and now collectively own and manage more than 11,000 hectares of pine, oak and fir forest. Over the years, their business activities have diversified to include a saw mill, a furniture factory (which has won export orders from Belgium and Ireland), a plant making wooden moldings for export to the USA, avocado and peach orchards, a packing plant which makes its own cases, a Christmas tree plantation, eco-tourism cabins and a resin distillation plant, as well as a store for the bulk purchase and resale of fertilizers. A water bottling plant, to bottle spring water, is one of the community’s latest proposals.

The community’s website gives details of all these activities and includes a link to a furniture catalog for those interested in buying direct. All the wood used is certified as “Smart Wood” (coming from well-managed forests) by the Forest Stewardship Council.

Community decisions in Nuevo SJP are made on behalf of the 8,000 or so residents by a General Assembly of the 1,300 Comuneros (community representatives), which has met at least once a month since 1983.

The Equator Prize was awarded because the forest policies adopted by the community “have provided a boost to local incomes while ensuring that the resource base upon which the community depends is sustained for future generations.” In addition, “the community’s successes have spread well beyond their origins as these novel conservation and business practices have been widely adopted by other indigenous communities in Mexico.”

Nuevo SJP may not be very old, or very large, but it certainly has a really big heart!

For a more detailed account of the history of the volcano, and of the considerable architectural attractions of the village of Angahuan, including its superb church, read chapter 35 of Western Mexico: A Traveler’s Treasury (Sombrero Books 2013).

Original article, as published on MexConnect

Mexico’s Volcanic Axis is discussed in chapter 2 of Geo-Mexico: the geography and dynamics of modern Mexico. The sustainable forestry project of San Juan Parangaricutiro is examined in chapter 15.

Mexico’s richest individuals in 2010

 Mexico's geography in the Press, Updates to Geo-Mexico  Comments Off on Mexico’s richest individuals in 2010
Mar 122010
 

The Forbes magazine list of the world’s richest individuals in 2010 consists of 1011 individuals, each with a wealth of one billion dollars or more. Nine Mexicans (all men this year) made the list. The nine richest Mexicans are:

World rank / Name / Estimated wealth according to Forbes / Main business interests

#1 Carlos Slim Helú, 53.5 billion dollars, making him the richest man in the world. Fixed line telephone provider Telmex, cell phone provider América Móvil, Grupo Carso, Inbursa

#63 Ricardo Salinas Pliego, 10.1 billion dollars. Television company Televisón Azteca, domestic appliance store Elektra, bank Banco Azteca,
and cell phone company Iusacell

#72 Germán Larrea, 9.7 billion dollars. Grupo México – mining for copper and other minerals

#82 Alberto Bailleres, 8.3 billion dollars. Mining giant Peñoles, department store El Palacio de Hierro and Grupo Profuturo

#212 Jerónimo Arango, 4 billion dollars. Founder of Aurrerá supermarket chain and Grupo Cifra which controlled VIPS and El Portón restaurant chains, Suburbia department stores and tourist developments in Baja California Peninsula and Acapulco

#655 Emilio Azcárraga, 1.5 billion dollars. Television and media conglomerate Televisa,and Nextel cell phones

#828 Roberto Hernández, 1.2 billion dollars. Banker, one of main shareholders of Citigroup, and tourist developments in the Yucatán Peninsula

#937 (equal) Alfredo Harp Helú, 1 billion dollars. Shareholder in Citibank, telecommunications firm Avantel

#937 (equal) Joaquín Guzmán Loera (aka “El Chapo”), 1 billion dollars. Mexico’s most wanted man, head of the Sinaloa drugs cartel, the main supplier of cocaine to the US market

The combined total wealth of these 9 individuals is a staggering 90.3 billion dollars, equivalent to almost 6% of Mexico’s GDP.

The average earnings of Mexican workers registered in IMSS (Mexico’s Social Security Institute) is about 220 pesos a day or $6,300 (dollars) a year. The combined wealth of Mexico’s nine richest individuals is therefore equivalent to the total annual salaries of 14.3 million Mexicans earning this average salary!

Clearly, there are a handful of extremely wealthy individuals living in Mexico, alongside millions of Mexicans who are living at or below the poverty line. These income disparities have existed for a very long time, and are examined in detail in chapter 14 of Geo-Mexico: the geography and dynamics of modern Mexico. That chapter also analyzes the spatial patterns of wealth in Mexico, and discusses whether the gap between rich and poor has widened or narrowed in recent years.

Chapter 29 discusses Gender inequities in Mexico and  Oportunidades, a poverty reduction program (both links are to excerpts from that chapter).

Flagship social development program – Oportunidades

 Mexico's geography in the Press  Comments Off on Flagship social development program – Oportunidades
Jan 022010
 

Mexico’s flagship social development program featured in a recent (29 Dec 2009) PBS Newshour segment.

Maybe they read an advance copy of Geo-Mexico (chapter 29)?

Oportunidades (Opportunities) is a government social assistance program to help families overcome poverty. Begun in 2002, it is an extension of Progresa, a program which started in 1997. Oportunidades provides conditional cash transfers every two months to families which meet specific geographic and economic criteria of poverty. The transfers only continue if family members meet a series of goals including children’s regular attendance at school and family visits to the nearest clinic for regular nutrition and health advice. Additional economic incentives are offered for the completion of each grade of school with special emphasis on ensuring that girls complete high school. The payment recipients are usually mothers, who make most child and family health decisions.
In 2008, Oportunidades managed a budget of $3.6 billion. This budget is managed very efficiently with only 4% going towards administrative expenses and on-going research. It helps 5 million families, about one-quarter of all families in Mexico. These families tend to live in the most marginal communities. Oportunidades operates in 93,000 different localities throughout the country, 86% of which are in rural areas. In Chiapas the program helps 61% of all families. The corresponding figures for two other poor states—Oaxaca and Guerrero—are 53% and 52% respectively.

Geo-Mexico goes on to evaluate the success of the program, before concluding that,

Oportunidades is one of the most-studied social programs on the planet. It has been very positively received by international agencies and is a model for similar conditioned payment programs in some 30 other countries. A pilot program called Opportunity NYC is being evaluated in New York City.