AbstractsEconomics

The increasing frequency and economic losses from natural disasters within the framework of decreasing agricultural prices and trade liberalization is becoming crucial in increasing poverty in the Mexican rural economy. During the past two decades, the governmental withdrawal from supporting the agricultural sector with investments in physical, financial and logistic instruments continues to stress agricultural livelihoods, as current private mechanisms have not replaced them effectively. It has contributed to making the agricultural sector particularly vulnerable to a number of hazards as it has weakened economic agents' response and impeded assets accumulation. This dissertation identifies economic vulnerability to natural and economic hazards in order to assess public and private coping capacity, and provides a conceptual framework and economic theory that supports the overall approach and employed methodologies. It is based on quantitative and qualitative research methods, and makes use of econometric analysis and stakeholders' views aimed at finding feasible solutions. Further, this dissertation offers a spatial model that can support policy-decision-making for the creation of differential investments in productive infrastructure, as well as financial instruments to reduce current vulnerability and poverty throughout the national territory. During the past two decades, over 80% of total economic losses from weather-related disasters occurred in the agricultural sector. In the same period, mean weighted agricultural prices have decreased over 50% in real terms, and since 1996 a trade deficit has persisted in this sector. Currently, the insufficient credit access, low coverage of crop insurance, as well as the near lack of investments to expand irrigation and further productive infrastructure is sharpening the vulnerability of rural livelihoods. These facts explain why this sector produces only 4% of the GDP despite employing over 20% of the national workforce. These facts undermine farmers' expectations of future incomes within the community, stimulating rural-urban out migration, which usually cannot be absorbed by the urban economy in sight of the modest industrial dynamism of the recent years. This leads to the enlargement of the informal sector in large cities and migratory flows to abroad, among others. (author's abstract)