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Begin New Search Topic Poverty Political Geography Mexico Content Type Working Paper

1. Tracing the Local Impacts of Exports on Poverty and Inequality: The Case of Mexico

Author:
Hernan Winkler
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
Evidence about the effect of exports on welfare at the local level is scarce. Using a unique dataset of international trade and poverty maps for almost 2,000 Mexican municipalities between 2004 and 2014, the study presented in this paper provides new evidence on the impact of a significant rise in exports on poverty and inequality at the local level. The analysis implements an instrumental variable approach that combines the initial structure of exports across municipalities with global trends in exports from developing to developed countries by sector. The results show that a 10 percent increase in the ratio of exports to workers reduces income inequality measured by the Gini coefficient by 0.17 points (using a 0 to 100 scale), but no significant effects on poverty reduction or average household incomes are identified. The lack of impacts on average incomes is driven by a rise in the supply of labor at the local level because municipalities with higher export growth experienced an increase in labor force participation and attracted more net migration, particularly of unskilled workers. Therefore, while total labor incomes grew in response to an increase in exports, average labor incomes per worker did not change. Declining remittances also blunted the effect of growing exports on household incomes.
Topic:
International Trade and Finance, Migration, Poverty, Inequality, and Local
Political Geography:
North America and Mexico

2. Towards a Prosperous and Productive Chiapas: Institutions, Policies, and Public-Private Dialog to Promote Inclusive Growth

Author:
Ricardo Hausmann, Timothy Cheston, Miguel Angel Santos, and Carlo Pietrobelli
Publication Date:
03-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Since the Zapatista revolution of January 1994, enormous amount of resources coming from the federal government have poured over Chiapas. The gap in years and quality of education has been reduced significantly; and road, port and airport infrastructure have undergone a dramatic transformation. And yet, the income gap between Chiapas and the rest of Mexico has only widened. To understand why, a multi-disciplinary team of twelve experts have devoted significant time and resources to study different aspects of the development dynamic of Chiapas. As a result, 5 base documents have been published analyzing Chiapas: Complexity profile, Growth Diagnostic, Institutional Diagnostic, Poverty profile, and Pilot of productive dialogs and inclusive growth in an indigenous community. This report resumes the findings from these and articulates their corresponding recommendations into a policy plan. According to our hypothesis, Chiapas is wedged in a low productivity trap. A modern production system, responsible for productivity increases, income and development elsewhere in the world, requires a number of complementary inputs or capacities that are absent in Chiapas. As a result, its economy consists of a few primary products of little or no technological sophistication, and a vibrant service industry fueled by public expenditure in its larger cities. In this situation, there are no incentives to acquire additional education or skills because there is no demand for them in the economy. As we have proved, the few that manage to emigrate earn salaries elsewhere in Mexico slightly above other migrants with similar qualifications. As it turns out, it is not about the Chiapanecos, it is about Chiapas. To overcome the current dilemmas and spark the engine of growth, Chiapas needs to resolve its issues of coordination, connectivity and gradually promote economic activities of higher complexity. Yazaki, one of the few manufacturers present in Chiapas, is an example of the role of the state in helping the economy to overcome the chicken-and-egg dilemmas, providing the public goods required - in an initial push – by a more complex economy. Our recommendations are based in identifying the productive capabilities embedded within the current productive structure of Chiapas four largest urban agglomerations, and leveraging on them to board on different potential, more complex industries that use a similar base of knowledge. To conquer those industries and diversify its economy, Chiapas needs a public-private agency empowered to iteratively solve the issues and bottlenecks these potential industries face in each particular place. Public transport and housing policy can be used as means to incorporating the surrounding communities into the increasingly modern economies of urban centers. Special economic zones and agro-industrial parks can be used to spur productivity in those areas where labor and appropriability are the most binding constrains.
Topic:
Development, Poverty, Infrastructure, Income Inequality, Economic Growth, and Institutions
Political Geography:
Central America, Mexico, and Chiapas

3. Why is Chiapas Poor?

Author:
Dan Levy, Ricardo Hausmann, Miguel Angel Santos, Luis Espinoza, and Miguel Flores
Publication Date:
07-2015
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
No matter which way you look at it, Chiapas is the most backward of any state in Mexico. Its per capita income is the lowest of the 32 federal entities, at barely 40% of the national median (Figure 1). Its growth rate for the decade 2003-2013 was also the lowest (0.2%),1 causing the income gap separating Chiapas from the national average to increase from 53% to 60%. That is to say that today the average income for a worker in Mexico is two and a half times greater than the average in Chiapas. The two next poorest states, Oaxaca and Guerrero, are 25% and 30% above Chiapas.2 According to the Instituto Nacional de Estadística y Geografía de México (INEGI, National Institute of Statistics and Geography), Chiapas is also the state with the highest poverty rate (74.7%) as well as extreme poverty (46.7%).3 These major differences in income levels among Mexican federal entities are reproduced as in a fractal within Chiapas. In fact, while the wealthiest entity (Mexico City) is wealthier than the poorest (Chiapas) by a factor of six, the difference within Chiapas between the wealthiest municipality (Tuxtla Gutiérrez) and the poorest (Aldama and Mitontic) is by a factor greater than eight.4 As there are different "Mexicos" within Mexico,5 in Chiapas there are also different sorts of Chiapas (Figure 2). Income per capita in Tuxtla Gutiérrez, to the right of the distribution, is five standard deviations above the state average. Next comes a series of intermediate cities, San Cristóbal de las Casas, Comitán de Domínguez, Tapachula, and Reforma, between two and a half to four standard deviations above the average. The remaining municipalities of Chiapas follow (122 in all), clustered to the far left of the distribution. In addition, both the statistics available at the town level and our visits to various municipalities in Chiapas seem to indicate that significant differences also exist within these municipalities. From this vantage point, questions as to why Chiapas is poor, or what explains its significant backwardness compared to other areas of Mexico, become much more complex. Why do some regions in Chiapas have high income levels, while other regions remain stagnant, fully dependent on federal transfers and deprived from the benefits of modern life?
Topic:
Development, Poverty, Governance, and Economic Inequality
Political Geography:
Central America, Mexico, and Chiapas

4. For Richer or Poorer: The capture of growth and politics in emerging economies

Author:
Alice Krozer
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
The emerging economies Brazil, China, India, Indonesia, Mexico, Russia, South Africa and Turkey - in short, the BRICSAMIT - have come to be considered the economic powerhouses of recent decades. Not only have these countries managed to reduce poverty; most have embarked on a steep economic growth path and play an increasingly influential role on the global scene. But today, all eight BRICSAMIT countries occupy the top ranks as some of the most unequal countries in the world. The price these countries - and millions of their citizens - pay for this is high. Excessive inequality hampers development prospects: negatively impacting growth potential, threatening poverty reduction, leading to mass migration flows and 'brain drain', and reducing opportunities for young people. This report, which was commissioned by civil society networks across the BRICSAMIT countries, aims to increase the urgency to tackle the structural causes of inequality by shedding light on the nature and scope of the issue in the BRICSAMIT, and the economic, political and social consequences these countries are now facing as a result.
Topic:
International Cooperation, Migration, Poverty, and Economic Inequality
Political Geography:
Africa, Russia, China, Europe, Indonesia, Turkey, Asia, South Africa, Brazil, South America, and Mexico

5. From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector

Author:
Oeindrila Dube, Omar Garcia-Ponce, and Kevin Thom
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We examine how commodity price shocks experienced by rural producers affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in U.S. maize-growing regions, as well as export flows of other major maize producers. Using data on over 2,200 municipios spanning 1990-2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize. This increase was accompanied by differentially lower rural wages, suggesting that households planted more drug crops in response to the decreased income generating potential of maize farming.
Topic:
Agriculture, Economics, Poverty, War on Drugs, and Narcotics Trafficking
Political Geography:
Latin America and Mexico

6. Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico.

Author:
Nora Lustig, Luis F. Lopez-Calva, and Eduardo Ortiz-Juarez
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Between 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In-depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.
Topic:
Development, Economics, Emerging Markets, Globalization, International Trade and Finance, Poverty, and Social Stratification
Political Geography:
Brazil, Argentina, Latin America, and Mexico

7. The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, and Peru: A Synthesis of Results

Author:
Nora Lustig
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We apply a standard tax-and-benefit-incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average), especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia, and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers—especially transfers that are progressive in absolute terms—as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third, and even second decile on average, depending on the country. When in-kind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash transfers that are progressive in absolute terms were increased, leakages to the nonpoor reduced, and coverage of the extreme poor by direct transfer programs expanded.
Topic:
Development, Economics, Education, Health, and Poverty
Political Geography:
Brazil, Argentina, Latin America, Mexico, Peru, and Bolivia

8. Scholars Who Became Practitioners

Author:
Nora Lustig
Publication Date:
08-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Celebrated by academics, multilateral organizations, policymakers and the media, Mexico's Progresa/ Oportunidades conditional cash transfers program (CCT) is constantly used as a model of a successful antipoverty program. Here I argue that the transformation of well-trained scholars into influential practitioners played a fundamental role in promoting a new conceptual approach to poverty reduction, ensuring the technical soundness and effectiveness of the program, incorporating rigorous impact evaluation, and persuading politicians to implement and keep the program in place. The involvement of scholar-practitioners also helped disseminate the new CCT “technology” to many countries around the world quite rapidly.
Topic:
Development, Poverty, and Foreign Aid
Political Geography:
Mexico

9. Technologies, Rules, and Progress: The Case for Charter Cities

Author:
Paul Romer
Publication Date:
03-2010
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Non-resident fellow Paul Romer argues that the principal constraint to raising living standards in this century will come neither from scarce resources nor limited technologies. Rather it will come from our limited capacity to discover and implement new rules—new ideas about how to structure interactions among people, such as land titles, patents, and social norms. The central task of reducing global poverty is to find ways for developing countries to adopt new rules that are known to work better than the ones they have. Economists who advise leaders on policy have often overlooked why some good rules get adopted and others do not. But a better understanding of rules-that-change-rules could lead to breakthrough thinking about development policy. The special rules of China's Special Economic Zones, where new cities like Shenzhen could grow up, created small laboratories through which rules from Hong Kong spread to the mainland, helping unleash the largest and fastest reduction of poverty on record. Romer concludes that a new type of development policy would be to voluntarily charter new cities for the purpose of changing rules, using a range of new legal and political structures analogous to the ones that made Hong Kong and Shenzhen possible. The essay is adapted from a talk presented in Mexico City on October 2009, at the conference, “Challenges and Strategies for Promoting Economic Growth,” organized by Banco de México.
Topic:
Development, Poverty, and Science and Technology
Political Geography:
China, Asia, Mexico, Hong Kong, and Shenzhen

10. Remittances and Vulnerability to Poverty in Rural Mexico

Author:
Alejandro de la Fuente
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
International remittances have been portrayed as the human face of globalization given their potential to alleviate poverty by directly increasing household income. Using a panel of rural households in Mexico from October 1998 to November 2000 this study assesses whether this is in fact the case. However, rather than examining whether transfers income would reduce future consumption poverty we asked if transfers are likely to reach people whose conditions are prone to worsen in the future. We used vulnerability to consumption poverty to quantify the extent to which risks and the more permanent disadvantages embedded in most rural livelihoods, can translate into future declines in well-being. We found, contrary to our expectations, a negative and statistically significant relationship between the remittance of transfers, including foreign remittances, and the threat to future poverty that rural households could experience.
Topic:
Globalization and Poverty
Political Geography:
Mexico