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Social services

Commentary

“Middle-income country”? Over half live in poverty

26 July 2004

In April the World Bank announced the Country Assistance Strategy (CAS) elaborated in partnership with the Mexican government. The strategy will be implemented between July 2004 and June 2008. Funds available are from $1.2 to $1.8 billion annually. Isabel Guerrero, the Bank country director for Colombia and Mexico, said: “we developed an assistance strategy for Mexico in partnership with the government and the civil society to make sure that the CAS addresses the key development issues of the country”.

There are many problems with both the CAS and Ms. Guerrero’s assertion. Firstly, the document categorises Mexico as a middle-income country because of its GNP per capita, at the same time recognising that 50% of Mexicans live in poverty. The Bank’s strategy is to focus on fighting “poverty and inequality, and increasing competitiveness, strengthening institutions, and promoting environmental sustainability in the country”. But what does the Bank mean by ‘competitiveness’? And why was this strategy chosen for “the major Middle Income Country”?

The strategy consists of a programme of operations based on funds from the International Bank for Reconstruction and Development, the Bank’s non-concessional lending window, and the International Finance Corporation (IFC), the Bank’s private sector arm. The participation of the IFC not just in operating, but in planning the strategy, signals the deeper participation of the private sector. This is the entry point for the privatisation of services in those areas where it has not yet been accomplished in Mexico.

The analysis of the causes of poverty is the same as that in previous World Development Reports, namely inequality in access to health, education and public utilities, and the absence of ‘human capital’. Governments, unable to satisfy the needs of citizens, must therefore turn to the private sector. The increase in competitiveness will be achieved through the strengthening of financial markets among other elements. Strengthened institutions will be achieved through deepening decentralisation.

From the point of view of the Bank, the causes of poverty are unrelated to the development model promoted by the IFIs themselves. Poverty is reduced to the absence of ‘human capital’ and the disparities between the north and south of Mexico. Some analysts in Mexico say that we do not have a strong economy, and that the government must take pro-active measures to bring down unemployment. But by affirming Mexico’s status as a “major Middle Income Country”, the Bank endorses the status quo. Neither the Bank nor the government ever focuses on structural changes – not structural adjustment – but structural changes planned in a genuinely participatory way, with the main sectors represented.

It is important to point out that the Bank and the Mexican government did not develop the CAS in “partnership with the civil society”. They invited some groups of civil society to a consultation about the CAS. Civil society was not prepared to commit to sign the draft, nor was the Bank committed to accepting the proposals of the civil society groups. In that meeting, some of the invited organisations asked about under-represented sectors like trade unions (there were just three leaders in attendance). Most of the people there had no idea what the CAS was, how the Bank functions in Mexico, or what kind of programmes it has.

Ms. Guerrero’s description of a “partnership” with civil society is simply untrue. As in the past, Bank staff distort the participation of the civil society groups that want a real say in Bank policies. Equipo Pueblo filed a public complaint about the ‘manipulation of participation’ which has not been answered.

What we want is less, not more loans from the Bank. Mexico is walking towards developed country status with 50% of its inhabitants in poverty.

Susana Cruickshank is Action Researcher on Multilateral Development Banks in the Citizen Diplomacy Program at Equipo Pueblo, Mexico.