This report presents the results of anassessment of poverty conditions in Mexico, and theGovernment strategies to reduce poverty. It constitutes thefirst phase of a longer-term work program on povertyreduction in Mexico, that the Bank is undertaking, incollaboration with the Government during the period2003-2006. The current situation in the country is mixed,with respect to poverty. In terms of well-being, Mexico hasexperienced major progress in some dimensions - notablyrelated to basic service access - but much weaker progresson others - notably on the income of the poor. Despite thegains between 1996 and 2002,and in particular, for theextreme poor, poverty remains widespread, and is onlyslightly below the levels prevailing before the 1994195crisis. The report relates to government strategy, and itsstrengths. The CONTIGO framework is excellent as aconceptual framework, especially in its attempt to integratethe multiple dimensions of well-being, and public actioninto a life-cycle approach. There are notable successes inspecific programs -with "Oportunidades" (i.e.,"Opportunities") unusual in its combination ofhighly effective targeting, and broad reach amongst theextreme poor. The emphasis on evaluation is commendable,while the recent introduction of the Ley de DesarrolloSocial (Social Development Law) is a potentially valuableattempt to institutionalize the social development strategy,and in particular, provide more continuity across governmentadministrations. But challenges still remain. The quality ofservices is a major issue in many sectors, for althoughsocial policies for the extreme poor are well developed,policies for their income growth are not. There is a broaderpending agenda for the moderate poor, especially withrespect to improving the productivity of the self-employed,and informal enterprises. Most of the extreme and moderatepoor fall outside the formal social protection system, andface significant risks, i.e., health, unemployment or lackof income in old age. And there are a wide range ofinstitutional issues to be tackled - from strengtheningaccountability, especially under decentralized structures,to social incorporation of excluded groups - as well aslinking of rigorous evaluation to results-based management.Section A of the report discusses poverty conditions,Section B reviews government strategy, and, Section Cprovides brief concluding comments on public action, andfuture analysis.
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