How is Mexico addressing its poverty?
An examination of poverty in Mexico over many years demonstrates that Mexico has been able to reduce poverty levels significantly since the mid-twentieth century. However, the government's efforts have been uneven. During the years of Mexico's so-called economic miracle, which marked a period of stable economic growth from the late 1950s to the early 1970s, poverty levels declined across all areas of measurement. In the early 1950s, the proportion of Mexicans with inadequate income to purchase basic foodstuffs was 62 percent, that of Mexicans unable to provide for education and health care was 73 percent, and that of Mexicans without adequate housing was 88 percent. By 1982, at the beginning of the Miguel de la Madrid administration, those figures had declined to 22, 30, and 53 percent, respectively. They remained stagnant for the next twelve years, showing no change until the beginning of the Ernesto Zedillo administration (1994-2000). Under Zedillo, and with the advent of the North American Free Trade Agreement (NAFTA), these measures of poverty increased significantly, generally by 15 percent or more during the first years of his administration. By 1996, however, a greater number of Mexicans began to move out of these three poverty categories. By 2005, the figures declined to slightly below 1982 levels.
The recent declines can be attributed largely to Mexican programs designed to alleviate poverty. Social expenditures by the federal government increased nearly 75 percent between 1996 and 2008. In 2015, they accounted for 59 percent of the federal budget. More important, the two major antipoverty programs of the Mexican government during those years, Progresa and Prospera (formerly Oportunidades), increased dramatically, not only in real terms, from 466 million pesos in 1997 to 38.2 billion pesos in 2008, but also as a percentage of the social budget. For example, expenditures for Prospera, a program that pays families a monthly sum for each child attending school, went from two-tenths of a percent of the social budget in 1997 to 43 percent in 2015. It is important to note that, despite Mexico's difficulties in significantly altering the level of poverty, Mexico's Human Development Index rating, reported in the 2015 UN Human Development Report, improved by 26 percent, from 1980 through 2014, on four combined measures: life expectancy at birth, expected years of schooling, mean years of schooling (which doubled), and gross national income per capita.
The Mexican government has devoted resources to Prospera because analysts from the World Bank and the Inter-American Development Bank believe that increasing the level of education is a crucial factor in lowering long-term poverty rates. Despite these efforts, variations in the level of poverty in the past three decades clearly suggest that periodic economic crises, often tied to the health of the US economy, significantly alter the distribution of income in Mexico. During most of these periods, there was little change in the distribution of income. From 1989 to 2000, the bottom 10 percent of the population earned 1.5 percent of the national income, while the top 10 percent of the population accounted for 38 percent of national income. From 2000 to 2014, the lowest group dropped to 1.1 percent in 2005, but reached 1.9 percent in 2014, the highest level since 1984. The highest income group, for the first time since 1989, declined to 34 percent in 2010 but remained at 35 percent in 2014. A significant, unintended consequence of low-i ncome municipalities being adjacent to high-i ncome municipalities is that violence increases in the neighboring high-income community. Despite the proven success of antipoverty programs, critics have argued for years that Mexico has done little to increase the efficiency of tax collection, thus limiting the government's ability to redistribute income through public programs. Indeed, from 2009 through 2013, the tax burden in Mexico averaged 11.5 percent of gross domestic product (GDP), the lowest in Latin America.
By 2014, it had increased to 19.7 percent of GDP, but Mexico remains the lowest-ranking country in this respect of the thirty- four members of the Organization for Economic Development and Co-operation (OECD).