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Confronted with rising poverty after the economic crisis of 1995, the Mexican government progressively changed its poverty reduction strategy, ending universal tortilla subsidies and instead funding new investment in human capital through PROGRESA.

PROGRESA (Programa de Educacion, Salud y Alimentacion) is an innovative Mexican program that provides Conditional Cash Transfers to poor rural households. Conditional cash transfer (CCT) programs are designed to incentivise parents to invest in their children’s health and wellbeing, while providing cash transfers to improve their current welfare.

PROGRESA involves a cash transfer that is conditional on the recipient household engaging in a set of behaviors designed to improve health and nutrition. The family only receives the cash transfer if:

(i) every family member accepts preventive medical care;

(ii) children age 0-5 and lactating mothers attend nutrition monitoring clinics where growth is measured, nutrition supplements are distributed, and they are provided education on nutrition and hygiene; and

(iii) pregnant women visit clinics to obtain prenatal care, nutritional supplements, and health education.

The size of the cash transfer is large, corresponding on average to one third of household income for the beneficiary families. Another unique feature of the program is that the cash transfers are given to the mother of the family.

Researchers evaluated the impact of Mexico’s national CCT program (PROGRESA) on a wide range of health outcomes. Preventive care utilisation increased by more than half, and both children and adults experienced significant improvements in health. Children experienced fewer illnesses, a reduction in anemia, and an increase in height.

Founded in 1997, PROGRESA grew to cover around 2.6 million families by the end of 1999, the equivalent of 40 percent of all rural families, and one in nine families nationally. Operating in 31 of the 32 states, in 50,000 localities and 2,000 municipalities, its 1999 budget of US$777 million equaled 0.2 percent of Mexico’s gross domestic product.

The high level of funding for PROGRESA, and reduced funding for other programs, was based on a deliberate policy decision – to favour programs that are better targeted to the poor, which involve co-responsibility by beneficiaries, and which promote long-term behavioural change.

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