Mexico's progresa incentive-driven welfare programme

Some economists are urging their governments to take a look at Mexico's Progresa programme if they want to find a model for a foreign aid programme that achieves accountability and results in economic development. Progresa involves government cash payments to the low-income families of youngsters who regularly attend school and visit health-care providers.

The programme has reportedly reduced child labour, increased educational levels and improved health and nutrition among the poor.

The payments extend from grades 3 to 9 and vary from about $10 to $35 a month – with higher rates being paid for girls than for boys because girls have a higher dropout rate in Mexico.

Families are also given grants to buy school supplies and monthly food subsidies if they get medical checkups, immunisations and attend health lectures.

In 2000, some 2.5 million rural families received the benefits – valued at about $1 billion.

Argentina, Brazil, Honduras, Nicaragua and other countries have started similar programmes or are in the process of doing so.

While nearly 90 percent of rural Mexican children attend primary school, 45 percent drop out after the sixth grade. Enrolments also fall steeply after the ninth grade, when 42 percent of students leave.

Progresa increased transitions to secondary school by nearly 20 percent. Educational attainment has been estimated to increase by about two-thirds of a year. Larger effects would probably arise if benefits were extended beyond the ninth grade.

Source: Alan B. Krueger (Princeton University), Economic Scene: A Model for Evaluating the Use of Development Dollars South of the Border, New York Times, May 2, 2002.

For text http://www.nytimes.com/2002/05/02/business/02SCEN.html
For more on International Poverty http://www.ncpa.org/iss/int

FMF Policy Bulletin\6 May 2002