Magazine article SourceMex Economic News & Analysis on Mexico

Economists Urge Government to Develop Economic-Reporting Methods That Take into Account Welfare of Population

Magazine article SourceMex Economic News & Analysis on Mexico

Economists Urge Government to Develop Economic-Reporting Methods That Take into Account Welfare of Population

Article excerpt

Some economists and researchers are recommending that President-elect Vicente Fox develop a new set of economic statistics to better reflect the impact of economic policy on the welfare of the Mexican population.

Speaking at a forum in Mexico City, economic researcher Julio Boltvinik Kalina of the Colegio de Mexico (Colmex), questioned measuring economic performance simply on the basis of GDP growth. Boltvinik, who also publishes a column in the daily newspaper La Jornada, said the government should develop an index that measures economic development, social progress, and poverty reduction.

Some estimates indicate that 75 million Mexicans live in poverty. Of this total, 45 million live in extreme poverty.

"We cannot continue to evaluate development simply by measuring GDP or the stability of macroeconomic variables," said Boltvinik. "Instead, we must develop indexes whose primary purpose is to measure the well-being of people."

Cesar Castro, director of the Centro de Analisis y Proyecciones Economicas para Mexico (CAPEM), said the government would benefit from knowing how macroeconomic policy is affecting businesses and individuals. "The time is right for us to develop these types of indicators," said Castro. "If we don't have them, it is not because of a lack of technical capacity, but a lack of political will."

Boltvinik, one of Mexico's most prominent experts on poverty, said the neoliberal economic model followed during the past three presidential administrations has provided misleading results. "The economic model followed in Mexico has generated growth," said Boltvinik. "But this growth has been accompanied by a growing concentration of earnings in the hands of a few individuals and increased poverty among the poorest segments of the economy."

Boltvinik acknowledged that the government must retain some controls over inflation. But he said the past three administrations have been obsessed with keeping consumer prices low at the expense of other economic factors. He urged the Fox administration to seek a balance between keeping inflation low and placing a higher priority on the needs of the population.

Other economists said the changes in economic reporting will have to begin by redefining the role of the government's statistics agency (Instituto Nacional de Estadisticas, Geografia e Informatica, INEGI) and the Banco de Mexico (central bank).

Pablo Alvarez Icaza, director of economic studies at Bursametrica, said social-development statistics must be presented by credible institutions. "The social indicators will be very useful," said Alvarez Icaza. "But we must have a discussion on which agency will present them and how they will be presented."

In an interview with the daily business newspaper El Economista, INEGI president Antonio Puig said he strongly favors the proposal to give his agency more autonomy. He said this change would convert INEGI into a more credible vehicle to present economic data.

Some economists have proposed that INEGI gather inflation data from the Banco de Mexico. They said this would remove a conflict of interest within the central bank, which executes anti-inflation measures on a daily basis and presents the monthly reports.

Proposals coincide with government's "rosy" GDP report

The comments from the economists came only days after the Secretaria de Hacienda y Credito Publico (SHCP) reported a phenomenal growth rate of 7.8% in the first half of the year. The SHCP said the strong growth in January-June was twice as high as the 3% rate reported for the first half of 1999. Furthermore, said the SHCP report, GDP growth for April-June reached 7.6%, the eighteenth consecutive quarter of economic expansion.

The surge in the GDP reflects an increase in domestic consumption. "We think the economy will continue strong in the second half [of 2000], but not quite as strong," said economist Edgar Camargo of Santander Investment. …

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