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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. Latin America’s Shifting Politics: Mexico’s Party System Under Stress

Author:
Kenneth F. Greene and Mariano Sanchez-Talanquer
Publication Date:
10-2018
Content Type:
Journal Article
Journal:
Journal of Democracy
Institution:
National Endowment for Democracy
Abstract:
On 1 July 2018, leftist Andrés Manuel López Obrador (AMLO) won a decisive victory in Mexico’s presidential election, while a coalition led by AMLO’s National Regeneration Movement (MORENA) claimed majorities in both houses of Congress. AMLO’s calls for change resonated with voters frustrated by chronic poverty and inequality, rising violence, and corruption, and his win has called into question the stability of Mexico’s party system. Yet AMLO, who strove to assemble a “big tent” coalition, is ultimately more a product of the system than a disruptive outsider. Moreover, clear programmatic differences among Mexico’s major parties persist, as do the institutional advantages they enjoy. It is thus most probable that MORENA’s ascent augurs a recomposition of the party system rather than a process of partisan dealignment.
Topic:
Poverty, Elections, Democracy, Inequality, and Political Parties
Political Geography:
Latin America, North America, and Mexico

3. 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

4. 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

5. 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

6. Journal of Public and International Affairs 2014

Author:
Daphne McCurdy, Chikara Onda, Aaron Aitken, Lucia Adriana Baltazar Vazquez, John Paul Bumpus, John Speed Meyers, Pierina Ana Sanchez, Yolaine Frossard de Saugy, Melanie Harris, Steve Moilanen, Stephen Pritchard, Nicolas Collin dit de Montesson, and Naomi Crowther
Publication Date:
05-2014
Content Type:
Journal Article
Journal:
Journal of Public and International Affairs (JPIA)
Institution:
School of Public and International Affairs (SPIA), Princeton University
Abstract:
From pressing foreign policy issues such as territorial disputes in the South China Sea and homicide rates in Honduras to contentious domestic policy debates such as the rights of Mexican immigrants in the United States and the construction of the Keystone pipeline, the topics in this year’s journal are wide-ranging in both functional and geographic focus. However, they all share a strong commitment to seeking solutions to the world’s most serious challenges through sound policy.
Topic:
Crime, Government, Oil, Poverty, Sovereignty, Bilateral Relations, Territorial Disputes, Foreign Aid, Immigration, Governance, Law, Cybersecurity, and Grand Strategy
Political Geography:
Africa, China, Iran, Canada, Philippines, Mexico, Honduras, United States of America, and South China Sea

7. 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