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From alternation of power to development

As Mexican President Vicente Fox's term comes to a close, Eduardo Sojo Garza Aldape, a distinguished academic and close advisor to Fox, felt compelled to contribute to the policy debate. He presented his book, published in Spanish by Fondo de Cultura Económica under the title De la alternancia al desarrollo—Políticas públicas del Gobierno de Cambio , at the IDB, in association with the Washington-based Center for Strategic and International Studies (CSIS).

The book is divided into three parts: a detailed picture of Mexico when President Fox took office in 2000, highlighting the main economic and social challenges facing the incoming administration; the public policies pursued during Fox's six-year term, with actual results through 2004 and estimates for 2005-2006; and policy recommendations for Mexico's next president.

The country, said Sojo, was in a “democratic transition,” as well as an economic and social transition. The new administration decided to focus on the future rather than the past, especially since the data needed for diagnostic studies was not available. Jokingly referring to the book as “everything you always wanted to know but were afraid to ask” about Mexico, he cited a number of impressive statistics.

In terms of economic performance, for example, during Fox's term inflation dropped from 226% during the previous administration to 30.5%, and the fiscal deficit has been practically eliminated. Country risk greatly improved as well, from 440 basis points in 2000 down to 105 bps in 2005. Whereas worldwide, foreign direct investment has declined by 27%, in Mexico it has grown by 25%.

Sojo also reported impressive progress in the social sectors, with extreme poverty declining from 24% in 2000 to an estimated 16% in 2006, thanks to a “solid” social policy, not just economic growth and remittances. For example, poor Mexicans enrolled in the Oportunidades (formerly PROGRESA) program doubled from 2000 to 2005 from 2.5 million families to 5 million. Under the program, which is designed to break the cycle of poverty, the poor receive cash subsidies provided their children attend school and get regular medical checkups.

The new book also describes the administration's achievements in improving government efficiency. For instance, government housing agencies such as INFONAVIT lowered their delinquent mortgage portfolios from 21.4% in 2000 to 8.6% in 2004, a figure expected to drop to 5% in 2006. Nacional Financiera , a development bank for small and medium-sized enterprises, had a net worth of –4.25 million pesos in 2000 but is now posting a surplus.

The job isn't finished yet, Sojo cautioned, recommending that public policies for the next presidential term focus on strengthening the democratic, economic and social transitions (presidents in Mexico can serve only a single six-year term of office). The book suggests a number of areas and concrete measures to improve the efficiency and effectiveness.

Among them is electoral reform to make legislators accountable to their constituencies and to consolidate all local elections into a single date so that there is time for consensus building. The president should have certain additional powers, such as priority setting and budget approval when the legislature is deadlocked, and should have an office in charge of liaison with the legislature.

Fiscal reform and pension reform are needed to consolidate economic stability, suggests Sojo in his book, which also recommends maintaining housing growth and developing a secondary market for housing. Suggested measures in the social sectors include surpassing the Millennium Development Goals for poverty as a country and state by state, eliminating regional disparities. It should also target universal health insurance coverage (10 million families in 2010) and promote competition in health care.

Sojo noted that the administration's successes are subject to stability in public policies, which are an ongoing effort. Mexico, he said, is in a position to ensure the “utopia” of sustained growth with democratic governance.

Armand B. Peschard-Sverdrup, the Director of the Mexico Project at the CSIS, described Sojo as a “policy wonk” not a politician, a “thinking man” who lends a “substantive voice” to the discussion on public policies in Mexico. Sojo's presentation drew a large turnout, including Mexican Ambassador Carlos de Icaza.

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