This report describes recent trends in poverty reduction and based on these, identifies three key policy areas necessary to achieve this goal: inclusive growth, efficient social policy, and infrastructure to address vulnerability.
1. Rapid and inclusive growth
Faster economic growth is essential to eradicate poverty in the short and medium term in Mexico, but it is not enough. This growth needs to be inclusive, which implies closing three main gaps in economic participation and productivity:
- Female employment and economic opportunities for women: Promoting gender equality in the workplace is key to energizing the economy.
- Living conditions of rural households: Improving economic opportunities and the quality of life for rural households, especially those engaged in agricultural activities.
- Productivity and social protection for workers in the informal sector: Ensuring better conditions for informal workers through inclusion and support policies.
2. More efficient social policy
Poverty in Mexico is defined not only in monetary terms but also in a multidimensional manner that includes social deficiencies in education, health, housing, social security, and food security. This report highlights that reducing deficiencies in social security is essential to quickly reduce extreme poverty.
The report documents that access to social insurance and social assistance services are asymmetrical in terms of funding and service quality. Social insurance reforms, particularly in health, can aim for total population coverage, a similar package of services for different groups, and a redesign of sources of funding to avoid disincentives to work in the formal sector. On the other hand, social assistance reforms can redesign some programs to increase their progressivity and sufficiency, thereby increasing their impact on poverty eradication.
3. Reducing vulnerability to poverty
This is a third area of public policy action, particularly due to phenomena related to extreme climate events. The report documents studies estimating that at least one-third of the Mexican population is vulnerable to falling into poverty due to extreme climate events. Therefore, public policies must take measures not only to reduce poverty but also to decrease vulnerability to it. If a severe climatic event occurs, it can reverse progress in poverty reduction. This broadens the focus of policies towards the vulnerable and middle-class, groups of the population that are also exposed to the dangers of climatic phenomena. The policy areas to reduce vulnerability are:
- Investment in infrastructure: Improving access to quality sanitation, transportation, and financial services, particularly in rural areas.
- Adaptive social protection: Developing adaptive social protection that responds to increasing climatic risks through insurance and assistance mechanisms to address them before, during, and after catastrophic climatic events.
Conclusion
Mexico has outstanding experience in designing and implementing economic and social policies that can accelerate the eradication of extreme poverty. Although eradicating extreme poverty in the short or medium term is a significant challenge, it is within Mexico's reach. It is a noble goal worth taking the extra effort.