chapter  2
33 Pages

Adjustment Policies in Mexico

WithAraceli Damián

In terms of welfare, the growth of the Mexican economy was almost equally impressive. The 1982 debt crisis forced the Mexican government to negotiate policy-based loans with the International Monetary Fund (IMF). Another measure that allowed the government to reduce the public sector deficit was tax reform. Wage controls have been the most controversial part of adjustment policies. The decline in real wages, the increase in the price of public sector goods and services and the reduction of subsidies have been seen as factors, among other changes in the economic policy, which led to an increase in the level of poverty during stabilisation and adjustment. This chapter presents some of the most common arguments concerning the impact of these particular economic reforms on poverty. The effectiveness of poverty reduction programmes has been criticised on the grounds that the programmes are unable to change the economic conditions that affect the level of poverty.