April 1, 2002—Despite rapid economic growth and macroeconomic stability, Mexico's poor face daunting barriers in their climb out of misery, civil society representatives told World Bank staff at meetings held this month to gather perspectives for the Bank's new Country Assistance Strategy (CAS).

At a day-long dialogue March 18 in the southern city of Oaxaca, the major themes that emerged included the breakdown of community life, poverty on the countryside and migration—to the cities, maquiladoras and "los Estados". Many invitees, who included community organizers, youth workers, women's groups, academics and NGO leaders, urged the World Bank to focus efforts on addressing these social ills.

"Development has not reached us," said one participant, a leader of a women's organization. "Macroeconomic stability is not delivering gains to the poor. We need infrastructure, and we need fiscal discipline in the state governments so that they can assist micro-enterprise."

Although deeply-felt convictions and some forceful opinions were expressed at the three consultation meetings, they were characterized by mutual respect and recognition of the importance of dialogue in arriving at development approaches that work. In Oaxaca and similar roundtables in Mexico City on March 6, and Monterrey on March 8, over 120 civil society representatives presented their points of view to senior members of the Bank's Mexico team. The team members participating in some or all the consultations were Olivier Lafourcade, director of the Mexico-Colombia-Venezuela Management Unit, lead economist Marcelo Giugale, human development sector leader Eduardo Velez, FPSI sector leader Krishna Challa, ESSD sector leader Adolfo Brizzi, environmental specialist Ricardo Hernandez, senior economist Jozef Draaisma, civil society specialist Jorge Franco, and senior country officer Connie Luff.

In Oaxaca, many participants noted the gap between Mexico's rich and poor, and the lack of participation of small-scale farmers in Mexico's strategy of seeking prosperity through closer economic integration with the U.S. While Mexico's exports to the U.S. have doubled since the country signed the North American Free Trade Agreement in 1994, rural areas producing mostly food crops for local markets have fallen on hard times, as their economic growth and productivity has not kept pace with population increases, or outside competition. One in two Mexicans living in rural areas lives in extreme poverty, even though the country's per-capita gross national income is $5,080.

Marcelo Giugale expressed agreement with civil society representatives' assessments of challenges facing Mexico. For example, he said, macroeconomic stability is essential to the success of sustained poverty reduction, but it is not sufficient by itself. He also explained the Bank's support for a government fiscal reform initiative in Mexico, saying it was based on the need to correct a system that provided de facto subsidies to the better-off. "I think most of us would agree," he said, "that rich people do not need subsidies. The World Bank is opposed to subsidies for the rich, but it is not opposed to subsidies for the poor."

A summary of input received will soon be released, and be considered as the Mexico team drafts a new Country Assistance Strategy. The last one dates back to 1999, before the administration led by President Vicente Fox was elected. The new strategy will be discussed by the Bank's Board in May, after which the Mexican government has invited the Bank to make it public.

Many participants expressed their appreciation for the Bank's initiative to reach out to civil society for views on assistance strategy, the first such effort since the Bank's involvement in Mexico began in the late 1940s. At all three meetings, participants underlined the importance of the Bank's continuing role in Mexico. The Bank currently supports 22 projects in Mexico, with an undisbursed balance of about $3 billion. Projects include support for health services expansion and reform, education, rural agriculture, decentralization, financial sector reform and environmental management, among others.

Although the Bank's principal relationship in all countries is with the governments who are its shareholders, Olivier Lafourcade said in opening the discussions that, "we have learned that we cannot know what is going on in a country without listening to civil society. This is new for us, so we hope you will be patient. It is also new for you, to be in dialogue with an organization like the World Bank, about which you may know perhaps very much, or perhaps very little."

By day's end, Lafourcade noted the common ground that had emerged in the discussion, citing the following:

• Development is our central, shared concern, and it includes economic, social, cultural and environmental dimensions;
• Development must be an inclusive process;
• Training is needed at all levels: public, private, federal, state, municipal, among indigenous people, women and youth;
• Job creation is urgent and critical;
• Empowerment, especially of the most vulnerable groups, including women, indigenous people and youths, is essential to development;
• Relations between government and civil society need to be strengthened;
• Corruption must be addressed on an urgent basis.

With these challenges in mind, Lafourcade suggested that the World Bank, in addition to its program and investment loans, can serve as a catalyst for dialogue, an analytical center, and an independent observer.

Useful links: Click here for more information on the World Bank's work in Mexico.

Country director Olivier Lafourcade (center) opened the discussion, accompanied by Felipe Zardain Borbolla, Executive Secretary of the Oaxaca State Government (at microphone), and Jaime Bolanos, president of the Oaxaca Community Foundation (left)

The Bank's Mexico team, met with civil society organizations in Oaxaca