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Cablegate: Mexico Broadens and Modernizes Poverty Indicators

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OO RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
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ZNR UUUUU ZZH
O R 082224Z JAN 10
FM AMEMBASSY MEXICO
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INFO ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS SECTION 01 OF 03 MEXICO 000046

SIPDIS

E.O. 12958: N/A
TAGS: ECON PGOV SOCI UNDP AID MX
SUBJECT: MEXICO BROADENS AND MODERNIZES POVERTY INDICATORS

1. (U) Summary. Mexico has revised how it officially measures
poverty, in collaboration with the UN Development Program (UNDP).
The new set of indicators reduces Mexico's overall poverty rate
from 47.4% to 44.2%, a change explained by the new measurements'
focus on factors other than income. The indicators, prepared by
Mexico's public but independent National Council for the Evaluation
of Social Development Policy (CONEVAL), will permit a broader,
multidimensional understanding of Mexican poverty. This improved
understanding should help the government better target conditional
cash transfer programs to the neediest recipients. Furthermore, the
new indicators will help Mexico and the UNDP track Mexico's
progress on Millennium Development Goal #1, the eradication of
extreme poverty and hunger. Mexico is among the first countries to
implement a multidimensional poverty measurement based on eight
indicators. The change in indicators and results has sparked some
vocal objections from scholars, but the GOM and international
bodies are optimistic. End summary.

CONEVAL AND INEGI

-----------------

2. (U) CONEVAL was founded in May 2006 under the Fox
Administration, as provided for in the Social Development Law
enacted on January 20, 2004. CONEVAL is an independent public
organization under the coordination of the Secretariat of Social
Development, and its role is to study and measure the impact of
Mexico's social development programs. Laboff contact at CONEVAL
stressed the importance of directing scarce resources towards
progressive rather than regressive programs and suggested that
CONEVAL's research and reports have begun to inform policymakers'
decisions. Thanks to the participation of six independent
researchers on its board, who join through a transparent public
invitation, CONEVAL has managed to stay independent in spite of
depending on an executive secretariat for its budget. CONEVAL gets
its data from the Households Income and Expenditures Survey
(ENIGH), conducted every two years and every five years for
municipalities, by the National Institute on Statistics and
Geography Information (INEGI). For the new poverty measurements,
CONEVAL, in coordination with INEGI, conducted a new survey on
socio-economic conditions within the ENIGH. The UNDP performed the
same tests on the data presented and achieved the same results as
CONEVAL, lending credibility to the process.

NEW DATA AND RESULTS

--------------------

3. (U) Mexico's Social Development Law requires the
Secretariat of Social Development to implement a multidimensional
system to measure poverty, and this new framework responds to that
requirement. Previously Mexico measured poverty at three levels,
all related to income: 1) food-based poverty, 2) capabilities-based
poverty, and 3) asset-based poverty. Those poverty measurements
were based purely on income: a person needed to earn 64 (urban) or
40.10 (rural) pesos per day to live above the poverty line. The new
poverty measurements are based on eight indicators, which allows
analysts to see not only numbers and percentages reflecting
Mexicans' living standards, but also the number and the nature of
the shortages they face. CONEVAL determined that lacking three of
the eight basic needs puts a person in extreme poverty. The eight
indicators include seven income-related and one social cohesion
related factors. They are:

- Income

- Access to health care

- Access to social security programs

- Quality and space in housing

- Basic services in the home

- Access to sufficient food

- School drop-out rates

- Degree of social cohesion

4. Some scholars and civil society leaders criticize Mexico's

MEXICO 00000046 002 OF 003


new measurements for "erasing" 3.6 million poor people by changing
definitions of what Mexicans need in order to survive. While an
expanded list of indicators would normally suggest a larger
population, Mexico's numbers have actually gone down from 47.4% to
44.2%, making several leaders nervous about the statistics, the
real situation of Mexican poverty, and the social policy
ramifications of the news. Others, however, applaud Mexico for
implementing a very advanced poverty measurement system: Mexico is
among the first countries in the world to adopt a multidimensional
poverty measurement framework. The UNDP will help measure Mexico's
progress on the Millennium Development Goals, and eradication of
extreme poverty is the first goal.

DATA

----

5. (U) Under the new measurements, on average, Mexico's poor
lack 2.7 of the eight basic needs described by the indicators
listed above. CONEVAL considers extreme poverty the lack of three
or more basic needs. Over 82 million Mexicans (77.2%) experience at
least one form poverty, and 47 million Mexicans (44.2%) experience
some form of multidimensional poverty (lacking two or more of the
eight basic needs). Of the 47 million Mexicans who lack two or more
basic needs, 36 million people (33.7% of the entire population)
experience moderate poverty, lacking on average 2.3 of the eight
basic needs identified by the new indicators. The other 11.2
million people (10.5% of the entire population) live in extreme
poverty, lacking an average of 3.9 basic needs.

The following are 2008's lack of basic needs broken down by the
first six indicators:

- Lack access to basic health services: 40.7% (43.9 million
people)

- Lack access to social security programs: 64.7% (68.9 million
people)

- Have insufficient quality of and space in home: 17.5% (18.62
million

- Lack basic services in the home: 18.9% (18.9 million people)

- Lack sufficient access to food: 21.6% (23.06 million people)

- School drop-out rates: 21.7% (23.2 million people)

6. Degree of social cohesion is measured by four factors: 1)
economic inequality, 2) social polarization, 3) social networks,
and 4) income equality. Mexico's Gini coefficient (World Bank
data), currently 48.1, has floated between 46 and 53 since the
early 1990s and shows a "high concentration" of wealth.

7. (U) CONEVAL has also ranked Mexican states based on their
percentage of poverty and the average number of basic needs that
are not met.

Poorest states:

- Chiapas, 76.7% in poverty, average lack of basic needs is 3.1

- Guerrero, 68.1%, average lack is 3.4

- Puebla, 64%, average lack is 3.0

- Oaxaca, 62%, average lack is 3.5

Richest states:

- Baja California Sur, 21.1%, average lack is 2.3

- Nuevo Leon, 21.5%, average lack is 2.3

- Baja California Norte, 26.3%, average lack is 2.2

- Sonora, 26.7%, average lack is 2.4

MEXICO 00000046 003 OF 003


SHINING THE LIGHT, BUT ON WHAT?

-------------------------------

8. (U) Comment. The newly released indicators signal the
urgency of poverty alleviation and redistributive policies. They
also suggest that many moderately poor Mexicans are closer to
extreme poverty (lacking three of the eight basic needs) than they
are to economic security. CONEVAL's mandate is to show the GOM how
successful its social development programs are in meeting its
stated goals. This year, the GOM acknowledged that some of its
programs were not achieving the expected results, and those
programs are expected to be eliminated or redesigned. The GOM's
star program, Oportunidades, appears to accomplish its mission to
help the rural poor, and may be expanded to urban areas, probably
with significant changes. If the new measurements prove robust and
more clearly define the situation, the GOM may choose to rethink
its existing cash transfer programs, including Oportunidades, and
incorporate them more effectively into a holistic social, economic,
and political framework. The GOM has thus far not found the formula
for job creation and greater economic growth, elements that are
vital to alleviating poverty in a more sustainable way. End
comment.
PASCUAL

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