Absolute and Realative Poverty. The Case of Mexico (1992-2004)

This paper advocates that although an absolute notion of poverty should remain an essential ingredient in the evaluation of the standard of living in developing and transition economics, it is time that relative poverty begins to be systematically estimated for those same economies. This prescription is applied to Mexico for the 1992-2004 period, where the Fox Administration had officially determined for the first time an absolute poverty line for 2000. As in the Second European Poverty Programme at the end of the 1980s, the relative poverty line is fixed at 50% of mean equivalent expenditures. Absolute and relative poverty behave in opposite ways during the 1992-2000 business cycle, but both decline significantly during the 2000-2004 stagnation period. Relative poverty is above absolute poverty from 1992 to 1994, below it during 1996-1998, and above it again in 2000-2004. In any case, relative poverty in Mexico is well above relative poverty in developed countries.