FOUNDATION UNIVERSITY

College of Business Administration

Case Study Analysis 08:

Pathways Out of Poverty: Progresa/Oportunidades in Mexico

Statement of the Problem:

Mexico operated a maze of inefficiently run food subsidy programs managed by as many as 10 different
ministries. These programs were very blunt instruments against poverty and often failed to reach the very poor.

Analysis of the Problem:

Progresa/Oportunidades, an innovative integrated poverty program created by developing countries, has
shown to be one solution. Santiago Levy, a development economist who managed the program's conception and
implementation in the 1990s while serving as the deputy minister of finance.
Progresa/Oportunidades combats child labor, poor education, and health by ensuring that parents can
feed their children, take them to health clinics, and keep them in school while providing financial incentives to
do so. Progresa/Oportunidades builds on the growing understanding that health, nutrition, and education are
complements in the struggle to end poverty. It provides cash transfers to poor families, family clinic visits, in-
kind nutritional supplements, and other health benefits for pregnant and lactating women and their children
under the age of 5.
It has been estimated that more than 21 million people benefit—approximately one-fifth of the Mexican
population—in over 75,000 localities. In 2002, the program distributed 857 million doses of nutritional
supplements and covered 2.4 million medical checkups. Over 4.5 million “scholarships” were provided to
schoolchildren. By the end of Find more at http://www.downloadslide.com 426 2005, the program had covered
5 million families, which contained almost one-quarter of the country’s population and most people living in
extreme poverty.
The budget for even the much-expanded Progresa/ Oportunidades Program in 2005 was still some $2.8
billion—fairly modest, even in Mexico’s economy. This represented less than 0.4% of gross national income.
Only Mexico’s pension (social security) system is a larger social program. Progresa/ Oportunidades is also
organizationally efficient, with operating expenses of only about 6% of total outlays.
Progresa/Oportunidades has been evaluated, and the results show that its comprehensive approach has
greatly improved participants' wellbeing. Malnutrition has significantly decreased; family use of healthcare,
including prenatal care, has increased; child health measures have improved; school attendance has increased
significantly; and the dropout rate has greatly reduced, particularly in the so-called transition grades of six
through nine, when students either start high school or drop out. According to the study,
Progresa/Oportunidades boosted by about 20% the rate of kids who finish school rather than quit right before
high school. A 15% drop in child labor was seen.
In sum, the Progresa/Oportunidades Program is a model of success in many ways. The rigorous program
evaluations show that it has a substantial effect on human welfare. It was designed and implemented in the
developing world with close attention given to local circumstances while making constructive use of what has
been learned in development economics. It placed the crucial complementarities between education, health, and
nutrition at the center of the program’s design while paying close attention to the need for appropriate
incentives for beneficiaries.

Recommendations, Actions, Justifications, and Implementation:

Evaluation results in urban and rural areas of Mexico demonstrated that Oportunidades had a positive
impact on child linear growth; beneficiary children from the poorest families grow.
The conditional cash transfer program Oportunidades—established by the Mexican government in 1997
as PROGRESA—is the largest of its kind, and aims to reduce poverty and develop human capital in poor
households via improvements in child nutrition, health and education.The program provides money to female
household heads or wives of household heads contingent on household compliance with gender- and age-
specific health service utilization requirements, such as prenatal, postpartum and pediatric visits, as well as
nutritional supplementation and school attendance
The goal of the Oportunidades program is to break the intergenerational cycle of poverty by favoring the
development of human capital through providing incentives for families to invest in their own future through
education, health, and nutrition. As of 3rd grade of primary school, families are provided with financial
incentives to keep their children in school as long as they maintain a minimum attendance. In the same manner,
all families are provided with an economic incentive conditional on the use of preventive health services, the
extent of which depends on family demographics.

Trisha Nicole Abejero

JeabiAcabal
ChennyJoiArbas
Michelle Carlos
Mitchie Joy Dela Cruz
Rhea Mae Dela Cruz
JenoVillamor