Mexico - Port Development Preparation Project

Document of The World Bank FILE, COPY FOR OFFICIAL USE ONLY Report No. P-2982-ME REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO BANCO NACIONAL PESQUERO Y PORTUARIO, S.A. WITH THE GUARANTEE OF UNITED MEXICAN STATES FOR PORT DEVELOPMENT PREPARATION March 5, 1981 This document has a restricted distribution and may be used by recipients only in the performnce of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Unit - Peso (Mex$) Since September 1, 1976 the Mexican peso has been floating; it fluctuated around Mex$22.60 to the US dollar from mid 1977 to the end of 1980. On February 20, 1981, the peso traded at 23.20 per US dollar. Fiscal Year January 1 to December 31 Abbreviations BANPESCA - National Bank for Fisheries and Ports (Banco Nacional Pesquero y Portuario, S.A.) CECADE - Development Training Center (Centro de Capacitacion para el Desarrollo) CPD - Coordinating Office for Development Projects (Coordinacion de Proyectos de Desarrollo) FONDEPORT - Trust Fund for Land Management in Industrial Ports (Fondo de Desarrollo Portuario) IDB - Inter-American Development Bank OM - Department of Port Construction, SCT (Obras Maritimas) OP - Department of Port Operations, SCT (Operaciones Portuarias) PEMEX - Mexican Petroleum Company (Petroleos Mexicanos) SAHOP - Secretariat of Human Settlements and Public Works (Secretaria de Asentamientos Humanos y Obras Publicas) SCT - Secretariat of Communications and Transport (Secretaria de Comunicaciones y Transporte)  FOR OFFICIAL USE ONLY MEXICO PORT DEVELOPMENT PREPARATION LOAN AND PROJECT SUMMARY Borrower: Banco Nacional Pesquero y Portuario, S.A. (BANPESCA) Guarantor: United Mexican States Amount: US$14 million equivalent Terms: Fifteen years, including three years of grace, and interest at 9.6 percent per annum. Project Description: Consulting services for the planning, study and design of industrial port development at Altamira, Lazaro Cardenas, Laguna de Ostion and Salina Cruz. Development of these ports would support the Government's objectives of decentralizing economic activity and growth to areas outside the central plateau and providing domestic industries with direct access to international maritime transport. The risks are that there may be disagreement among the various agencies concerned with the industrial port program on the timing and scope of investments or the proposed developments at each port. The Bank could play a useful role in helping reconcile differences, should they occur. Cost of Project: Local Foreign Total 1/ (in millions of US$ equivalent) 10.0 14.0 24.0 (Annex IV presents a breakdown of the cost of studies envisaged under the project). Sources of Financing: Local Foreign Total (in millions of US$ equivalent) Government Resources 10.0 - 10.0 IBkD - 14.0 14.0 Total 10.0 14.0 24.0 1/ Net of Mexican taxes on consultant services. | This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Disbursements: IBRD Fiscal Year 1981 1982 1983 (in millions of US$ equivalent) Annual 2.0 6.0 6.0 Cumulative - 8.0 14.0 Economic Rate of Return: Not applicable. Staff Appraisal Report: None prepared since the proposed loan is for preinvest- ment costs.  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO BANCO NACIONAL PESQUERO Y PORTUARIO, S.A. WITH THE GUARANTEE OF UNITED MEXICAN STATES FOR PORT DEVELOPMENT PREPARATION 1. I submit the following report and recommendation on a proposed loan to Banco Nacional Pesquero y Portuario, S.A. (BANPESCA), as financial agent for the Government with the guarantee of United Mexican States, for the equivalent of US$14 million for Port Development Preparation. The loan would bear interest at 9.6 percent per annum and would have a repayment period of 15 years, including 3 years of grace. PART I: THE ECONOMY 1/ 2. The Mexican economic situation and major issues of economic policy were analyzed in "Special Study of the Mexican Economy: Major Policy Issues and Prospects" (2307-ME), distributed to the Executive Directors on May 30, 1979. The most recent economic mission visited Mexico in February 1980 and is now completing its report. Country data sheets are attached as Annex I. Past Performance 3. For the three decades preceding the mid-seventies, Mexico was successful in achieving rapid economic growth while also maintaining stability in prices and equilibrium in the balance of payments. From 1940 to 1970, GDP growth exceeded 6 percent per year in real terms, inflation averaged less than 5 percent per year from the mid-1960s to 1972, and the dollar value of the peso, fixed in 1954, was maintained until 1976. The Government's role in this achievement was to carry out direct investments in infrastructure and in key industries such as power, steel and petroleum, while creating a stable regula- tory and institutional framework, as well as good profit prospects, to induce private sector growth. 4. This strategy produced considerable progress and better living standards for many Mexicans. However, the incomes of poor farmers and marginal urban dwellers, whose productivity was low and has not been increasing, have been lagging behind. There was, therefore, little reduction in contrasts within the Mexican economy. The land reform was largely implemented in the late thirties and while further land redistribution has continued, most of the peasants who received land could not significantly improve their economic status as the parcels of land allocated were small, the soil often quite arid and benefits from infrastructure, credit and technical assistance scant. 1/ This section is substantially unchanged from the President's Report for the Rainfed Agriculture Development Project, P-2941-ME of December 30, 1980.  - 2 - Rapid population growth, which reached a peak of almost 3.5 percent per year by the mid-1970s, also made social equity difficult to achieve. Even Mexico's sustained economic growth was not sufficient to absorb the rapidly growing labor force in productive employment, and by the 1970s some 50 percent of the labor force was either relatively unproductive and poorly paid, or openly unemployed. 5. Policies to remedy this situation, undertaken in the first half of the seventies, were somewhat self-defeating. As a result, by the mid-1970s Mexico experienced increasing public sector deficits, inflation, large balance of payments deficits, capital flight and a marked slowdown in the real rate of growth of GDP, which dropped to 2 percent in 1976--the lowest rate experienced since the mid-thirties. On September 1, 1976 the authorities abandoned the fixed exchange rate and let the peso float. Following the devaluation by 80 percent, and a related plan of economic stabilization, Mexico obtained major support from the IMF. The new Government ratified a three-year extended facility agreement with the Fund shortly after taking office on December 1, 1976, and was generally successful in adhering to it. Recent and Current Situation 6. The present Administration which took over in December 1976 inherited a difficult situation. High inflation, large public sector deficits, increasing foreign indebtedness and lack of confidence in economic management indicated a need for economic stabilization. However, the situation also called for more expansionary policies; economic activity had slowed down, net private investment was virtually nil, and the gap between new job creation and growth of the labor force was increasing. Rich new petroleum discoveries and high world prices offered profitable investment opportunities in the petroleum sector; indeed, increased production for export of these products seemed by far the only way to meet a large part of Mexico's high debt service requirements in the coming years. 7. Faced with these conflicting needs and opportunities, the Mexican authorities adopted a mixed strategy aimed at reducing lower-priority public expenditures and increasing public revenues, while proceeding with petroleum and other high-priority investments. The objectives of the Government's program included control of inflation to be followed by a return to high rates of economic growth. Better management of public sector expenditures, tax reform, more rational pricing and cost control in public sector enter- prises, promotion of private savings, limiting wage increases, and more effective cooperation with the private sector were important parts of the Government's economic strategy. 8. This approach succeeded in bringing inflation down to 17 and 18 per- cent in 1978 and 1979, respectively, as against an annual rate of almost 29 percent in 1977. The deficit in the current account of the balance of payments peaked at US$4.2 billion (or 5.3 percent of GDP) in 1975 and declined to US$1.9 billion (equivalent to 2.5 percent of GDP) in 1977. Favorable oil prospects and increasing capital inflows brought about a rapid increase in imports reflecting both a decisive reduction in protectionism and the growing demand for capital and intermediate goods upon which the expansion of the economy depended. The current account deficit increased to US$2.9 billion (or 3.2 percent of GDP) in 1978 and further to US$5.2 billion (about 4.3 percent  - 3 - of GDP) in 1979. The public sector deficit peaked at about 9 percent of GDP in 1975 and declined to about 7 percent in 1979. Mobilization of savings by the banking system has recovered. GDP growth was about 7 percent in 1978 and 8 percent in 1979 as compared to 2 percent in 1976. 9. The growth record for 1980 continued to be favorable and GDP is estimated to have increased at almost 8 percent. The current account deficit of the balance of payments was much higher than anticipated due to continued expansion of imports (mostly capital and intermediate goods and foodstuff) and is estimated to be US$6.6 billion (about 4 percent of GDP). Despite the substantial inflow of imported goods, strict domestic credit restrictions, generally adequate lending rates, modest increases in real wages, coupled with substantial productivity increases, inflation has been higher than anticipated. This is essentially because of expansionary policies, with investments increas- ing at a rate of more than 15 percent a year in real terms. A shortage of essential consumer goods and construction materials, aggravated by the inade- quacy of the transport system to handle distribution of domestically produced goods along with increasing imports, has contributed to the price increases. The increase in the consumer price index in 1980 is estimated to have been around 28 percent. 10. Another threat to the efforts of the Government in controlling inflation may come from the wage area. The agreed increase in the minimum wage for 1980 was about 21 percent and came after three consecutive years of decline in real wages. The fact that in the course of 1980 inflation increased more rapidly than the expected 20 percent has caused serious concern among the trade unions. Bargaining of new wage contracts has been based on substantially higher percentage increases than the one implied in the minimum wage adjustment, and the increase in the minimum wage for 1981 will likely assume an inflation rate for the year of at least 25 percent. 11. The Government will not have an easy task in maintaining price increases within acceptable limits during 1981. The need to expand public investment in the key infrastructure sectors and to maintain the present level of programs in the energy sector, leave relatively little scope for signifi- cant adjustments in the size or structure of public expenditure. At the same time, the intention of the Government to implement much needed increases in prices of public goods like gasoline will imply a temporary push upwards to the price index. Economic Problems and Prospects 12. Mexico has the organizational and natural resources necessary to attain its ambitious goals of rapid growth and alleviation of poverty. The acute short-run disequilibria that affected the country during the mid-70s have been brought under ontrol; the new petroleum riches will greatly relax the financial constraints on growth. The proven oil and gas reserves are estimated at about 60 billion barrels. Exploitation of these reserves should allow Mexico to substantially increase production of crude oil and natural gas from the equivalent of about 1.2 million bbl/day in 1976. The recently stated goal of the Government is to reach a production level of about 3.0 million bbl/ day in 1981, and to more or less maintain it at a level that will accommodate  - 4 - exports of 1.5 million bbl/day (compared to the 1.1 million bbI/day target up to September, 1980). The Mexican Government continues to indicate its unwillingness to exceed this limit for fear of increasingly becoming a classi- cal "oil producing country" with the economic and social tensions that would ensue. But even at this production level, the challenge for Mexico is how to mobilize its resources--its human skills, its institutions, and its experience-- to help resolve its long term development problems. The most serious of these relate to poverty, unemployment, inadequate growth of agricultural production in non-irrigated lands, and urban-regional imbalances. 13. Poverty: Mexicans have participated unevenly in the remarkable economic growth of the last several decades. According to preliminary esti- mates for 1977, at least 2.8 million households (25 percent of the total), had incomes of less than one-third the national average, of which at least 2.4 million (22 percent of the total) lived in absolute poverty. The root causes of this persistent problem are three: rapid population growth, past neglect of non-irrigated agriculture (where some two-thirds of the poor are principally employed), and slow absorption of labor in high-productivity jobs (mostly in industry). 14. The Government is acting on all three fronts. A family planning program, started in 1972, has already helped reduce population growth from 3.5 percent per year to an estimated 2.9 percent in 1980. The program is being further strengthened by the present administration, with the ambitious goal of reducing population growth to 2.5 percent per year by 1982 and to 1 percent by the year 2000. New approaches are also taking hold in regard to rainfed agriculture (see para. 17). On the employment front, new tax incen- tives have reduced the anti-employment bias and additional efforts to stimulate employment will have to be continued. The expected rapid growth of output should also create jobs more rapidly. In spite of this progress, however, the still rapid growth of population and the staggering increase of the labor force (at 3.7 percent p.a.) made unavoidable by the high percentage of young people in today's population, renders the eradication of absolute poverty a difficult goal to attain in the near future. The Government has under its consideration several types of subsidies for the poor. These could prove to be short-term palliatives and preempt resources which would otherwise be available for investment in employment-creating activities or for improving educational or health standards of the poor on a more permanent basis. 15. Open and hidden unemployment, which are now respectively at 6-7 percent and 40 percent of the labor force, will remain major problems in the years to come. With the expected GDP growth rate of 8 percent p.a., the economy should be able to absorb the additional labor force, assuming no significant change in the participation rate (now at about 29 percent) and some increase in labor productivity. In absolute terms, however the present levels of underemployment and unemployment are likely to remain. 16. A National Employment Plan was published in early 1979. It calls for a number of measures to strengthen the so-called informal sector in both urban and rural areas. To increase the productivity of those employed outside the modern sector, and their employment opportunities, a major effort will be required in the area of vocational training. Technical assistance programs are also needed to stimulate more organized and structured forms of activities,  - 5 especially in the services sector. While there is no doubt that the authorities are concerned about unemployment, and underemployment, and while the institu- tional structure to carry out some important programs already exists, a concen- trated effort will be required to take effective action and to make better use of human resources by substantially reducing the level of hidden and open unemployment. 17. In agriculture, crop and livestock production has shown inadequate growth since the mid-1960s and, of late, demand has outstripped domestic supplies of grains. Faced with diminishing returns to expensive new large- scale irrigation works, as well as the continuing low productivity (and income per capita) in the non-irrigated ("rainfed") sector, the present administration has re-organized the parts of the Government that deal with agriculture in order to design and implement a new strategy. This strategy emphasizes increased production through a widespread program of development of foodstuff production. Greater emphasis is being placed on technical assistance, demonstration, and credit to develop the underutilized rainfed agricultural potential. Programs to rehabilitate existing irrigation serving nearly one million ha are underway. Small-scale irrigation development is being promoted. Construction of new large-scale irrigation units continues, but with a smaller proportion of budget resources than in the past. The banking system is being encouraged to provide greater support to agricultural production and processing programs. These initiatives should lead to an acceleration of production growth, more equal development opportunities for Mexico's farmers, and an improvement in the living conditions of the rural poor. 18. The main urban-regional problems are two-fold: (a) growing conges- tion, pollution, high-cost of services (especially water) and other manage- ment problems that stem from continued rapid growth of Mexico City (already the third most populous metropolitan area in the world moving rapidly to become the first) and other areas in the dry, densely populated central plateau, and (b) retarded development, poverty and great difficulty in pro- viding either better jobs or adequate public services for the one-third of all Mexicans who live in towns of less than 2,500 inhabitants. The present Government has taken many positive steps to confront these problems, including an administrative re-organization, elaboration of a comprehensive plan, and introduction of a strong package of incentives to promote growth in a few well-selected growth poles. 19. The expected high growth rate of the economy in the years to come is the country's strongest weapon with which to reduce poverty and unemployment. Industry has moved to the leading position and is expected to play a major role in expanding domestic production and exports. A National Industrial Development Plan was published last year and it reflects the preoccupation of the present Administration with the long-term prospects of the industrial sector and their implications for employment. Industry has the potential for considerable expansion in many areas, including efficient import substitution in chemicals, petrochemicals and capital goods as well as exports of a variety of manufactured products. While most of the above industries are known for their capital intensity, they are expected to promote secondary industries with considerable employment opportunities. These will be enterprises producing secondary petrochemicals, finished plastic goods, metal parts and components for capital goods. Tourism export earnings are also expected to increase substantially.  -6- 20. The main problem for the Mexican economy in the years to come remain the reconciliation of a high growth rate with a relative price stability and a larger participation of the low income groups in the expanding wealth of the nation. The National Development Plan, published last April, marks the final step in the planning activities carried out by the present Administration and places in a consistent framework the specific targets indicated in a number of sectoral plans prepared in the previous two years. In addition to presenting a macroeconomic picture of the development prospects, the National Development Plan dwells in great detail on the policies required to achieve the various economic and social targets. These policies are essentially sound but call for a major implementation effort on the part of the Administration. Growth with low inflation poses difficult challenges of adjusting prices of public goods and services without undermining the existing consensus of the country, and improving income distribution would call for policies that encourage labor intensive technologies in industry and agriculture without slowing down modernization of the economy. 21. Mexico's public and publicly guaranteed debt service ratio has been increasing over the recent past and peaked above 60 percent in 1979. This high ratio reflects the still relatively low level of exports relative to GNP and the high proportion of Mexican borrowing from commercial banks; the ratio of external public debt to GNP (24 percent in 1979) is average for middle- income countries. The public debt service ratio declined to around 30 percent in 1980, not only as a result of rapid increases in petroleum exports but also because some of the debt contracted on the least favorable terms had been prepaid. Debt service on Bank loans amounted to about 3.2 percent of public debt service in 1980; this ratio is projected to remain about the same during the early and mid-1980s. The Bank currently holds about 5.7 percent of Mexico's total medium and long-term public debt, and this ratio is not likely to change significantly over the next few years. Mexico is creditworthy for borrowing on conventional terms. PART II - BANK GROUP OPERATIONS IN MEXICO I/ Bank Operations 22. As of January 31, 1981, Mexico had received 69 loans from the Bank amounting to US$4,798.9 million net of cancellations and terminations; of these, 38 loans totaling US$1,870.4 million were fully disbursed. The Bank presently holds US$4,117.3 million of which US$2,049.1 million have not yet been disbursed. Some 45 percent of Bank lending has been for agriculture and rural development (24 loans for US$2,144.7 million), 16 percent for industry (12 loans for US$747.5 million), 15 percent for power (12 loans for US$704.8 million), and 17 percent for transportation (14 loans for US$816.4 million); the remaining 7 percent has been for water supply (US$255 million), tourism (US$114 million), and urban development (US$16.5 million) projects. Annex II contains a summary statement of Bank loans as of January 31, 1981 and notes on the execution of ongoing projects. 1/ This section is substantially unchanged from the President's Report for the Rainfed Agriculture Development Project (P-2941-ME of December 30, 1980).  23. Implementation of most Bank-financed projects was delayed during the period of economic difficulties in the mid-1970s and during the period of adjustment and stabilization that followed the September 1976 devaluation of the peso. Since then, the Government has taken important actions to accelerate implementation of the projects. Adequate budget financing has been provided. Projects which had important structural constraints were moditied and rephased to account for changed circumstances. Government and Bank officials have periodically met to review project implementation, and greater attention in Mexico has been focused on monitoring project implementation and disbursements. As a result of these measures, most of the Bank-assisted projects are proceed- ing satisfactorily and plans have been formulated to strengthen execution of those projects where improvement is still needed. The effectiveness of these actions is reflected in disbursement totals. In FY78 US$91 million was disbursed to Mexico, in FY79 disbursements totalled US$233 million and in FY80 disbursements further increased to US$404 million, or 38 percent of the undisbursed balance at the beginning of the year. IFC Operations 24. As of January 31, 1981, IFC had made investment commitments in 22 companies in Mexico, for a total of US$536.0 million, of which US$394.6 million had been sold, repaid or cancelled. A summary statement of IFC investments is presented in Annex II. Bank Strategy 25. The main objectives of Bank lending in Mexico have been to: (i) support policies and programs leading to a wider distribution of the benefits of economic growth; (ii) help finance projects that make, directly or indirectly, significant contributions to output and employment; (iii) help reduce Mexico's urban-regional imbalances; and (iv) help break bottlenecks preventing more rapid growth. Therefore, the Bank is preferentially support- ing projects of high social priority that help the rural or urban poor, projects that promote higher levels of employment and production, and those that help to decentralize economic activity. Through the proposed loan the Bank would also help to structure large investments in port development which are likely to influence Mexican development in the long-term. 26. Because of the difficult structural problems of Mexico's agricul- ture and the sector's crucial importance to the country's further development, the Bank has made agriculture the leading sector for its lending. The Bank's agricultural lending program for Mexico has four goals: first, to increase productivity of presently cultivated lands through selected programs of irri- gation and on-farm improvements; second, to improve the productivity of small farmers through programs for (a) rural development, (b) rainfed agricultural development, and (c) bringing new areas in the humid tropics under cultivation; third, to complement infrastructure investments with general support services, including agricultural extension and marketing programs and provision of medium-term credit; and fourth, to promote employment opportunities in rural areas through programs of agro- and rural-industries. The Bank has made thirteen loans in FY74-80 totalling US$1,497 million for irrigation, rural development and agriculture, agro-industries and livestock credit programs. Several projects for water control and irrigation, rainfed agriculture,  -8 rural development, and support services are in preparation; a rainfed agri- cultural development project has been approved by the Executive Directors and an integrated rural development project is expected to be ready for presentation to the Executive Directors in the coming months. 27. Past Bank lending for industry has been aimed at (a) assisting the Government's efforts to reduce the balance of payments deficit, (b) decentralizing industrial activities away from the major and increasingly congested urban areas, and (c) promoting greater employment in the sector by supporting medium- and small-scale industry. A steel project which the Bank helped structure and finance is now operating in a previously under- developed area on the west coast of Mexico (Lazaro Cardenas) and the city in which it is located is developing into a new growth pole. The fertilizer sector has been strengthened by two Bank assisted projects which the State-owned fertilizer company (FERTIMEX) is carrying out. Loans for projects to promote the development of small- and medium-scale industrial enterprises and to support an industrial equipment fund (FONEI) were approved by the Executive Directors in FYs78-79; they offer support to the private sector at a time of rapid expansion. The Executive Directors also approved in FY80 a second small and medium scale industries project and a project for the mining sector, which up to now has received insufficient resources from the financial system. Two capital goods industry projects are under discussion for possible Bank support; their aim would be to assist the transfer of high technology to Mexico so that employment might be increased in the engineering subsector, strengthening the base for manufacturing industry. 28. As regards infrastructure, the Bank's operations have been focused on investments in key areas of the country as well as on institutional reforms and sector policies aiming, inter alia, at suitable pricing mechanisms to help generate additional resources for investment financing. The Airports Development Project (FY74) was designed to support the Government's policy of regional integration; the Fourth Railway Project (FY81) supports improve- ments of institutional aspects and financial management of the sector. The Mexico City (FY73) and Medium Cities (FY76) Water Supply projects have been instrumental in the establishment of specialized institutions for efficient provision of drinking water and in the pricing of water at levels more closely related to costs. A Highway Sector Project was approved by the Executive Directors in FY79. A loan for a Medium-Size Cities Water Supply Project was approved by the Executive Directors in November 1980. 29. The Government and the Bank have long recognized the regional economic disparities prevailing in Mexico. In June 1976 the Government enacted a law of human settlements to provide a new institutional framework to deal with the pressing problems of over-concentration of economic activi- ties in the larger metropolitan areas. The Government has adopted a National Urban Development Plan that spells out its regional development priorities in operational terms, and several projects are now being prepared to meet the needs for basic urban services for poor families and to provide key regional infrastructure in selected priority cities. One such project, to assist in the development of the Lazaro Cardenas conurbation area on the West Coast, was approved by the Executive Directors in FY78, and a second project for oil producing southeastern Mexico is being negotiated.  -9 30. The Economic Development Institute (EDI) is assisting CECADE (a similar institute under the Ministry of Programming and Budgeting) in training Government staff in several aspects of project preparation, monitoring and evaluation. A course on urban and regional development has recently been concluded and several courses for agriculture, rural development, and agro- industries are programmed for the near-term. 31. The Inter-American Development Bank (IDB) is the second largest source of multilateral aid to Mexico. The IDB has made loans totaling US$2,428 million to December 31, 1980. Over sixty percent of this lending has gone for agricultural and rural development projects, and the balance for transportation, industry, water supply, and tourism infrastructure. In 1980, the IDB approved three loans totaling US$280 million for water supply, fisheries and pre-investment study projects. The IDB and the Bank have worked in parallel on several projects; most recently the IDB and the Bank have each made loans for the National Program for Small-Scale Agricultural Infrastructure, the Integrated Program for Rural Development (PIDER), agricultural and livestock credit, small- and medium-scale industries, and hotel development. The International Fund for Agricultural Development (IFAD) has approved a loan of US$22 million for a rural development project in the State of Oaxaca which was appraised by the Bank's staff. PART III - REGIONAL DEVELOPMENT AND TRANSPORT Background 32. Mexico's principal spatial problems are a heavy concentration of economic activity, wealth and people in Mexico City, the lack of integration between urban and rural areas and imbalanced inter-regional development. In 1978 almost 65 percent of the 65.4 million people of the country lived in urban centers of more than 2,500 inhabitants. The Mexico City Metropolitan Area held almost 32 percent of the total urban population and was already suffering from serious congestion and environmental problems. The Guadalajara and Monterrey metropolitan areas contained another 10 percent of the total population between them. The same year, over 40 percent of the GDP was contributed by the Federal District and the State of Mexico, while at the other extreme seven States contributed less than 1 percent each. National Spatial Development Policies 33. The Government is aware of the serious degree of economic concentra- tion in the country; its main spatial policy goals in recent years have been to curb the growth of Mexico City andto a lesser degree, that of the two other main metropolitan areas (Guadalajara and Monterrey). The Law of Human Settlements (1976) provides the legal basis for planning and implementing a spatial development strategy. Its objectives are to promote new growth poles and medium-sized cities as alternatives to the largest urban centers.  - 10 - 34. In May 1978, the Secretariat of Human Settlements and Public Works, (SAHOP) published a National Urban Development Plan, which outlines a spatial strategy. The policies presented aim at achieving a national urban system which, by the year 2000, would consist of three cities of more than three million people (Mexico City with 20 million inhabitants and Guadalajara and Monterrey with 3 to 5 million each), plus 11 cities with more than one million people and 17 with over half a million each. 35. Such a national urban system would require measures to reduce the rate of growth of the three largest metropolitan areas (such as adjustments in public utility rates to reflect economic costs), an accelerated growth of regional centers and medium cities to provide services on a regional basis, and the improvement of social services in the bigger population centers in rural areas. The Plan defines 10 zones which will receive support on a priority basis and identifies three large metropolitan areas where growth will be discouraged. Priorities are defined taking into account each region's capacity to absorb population and provide employment, and resource endowment. 36. The spatial policies outlined in the National Urban Development Plan are reinforced by policies outlined in the National Industrial Plan published in March 1979. This Plan provides for the construction of industrial parks and related infrastructure in priority areas, preferential credit and energy prices for industrial firms located in them, and tax credits for investments and employment created as the main policy tools to encourage spatial deconcen- tration of economic activity. The area around the ports of Altamira/Tampico was selected as having high priority in view of its transport links with Monterrey and the potential it offers. Lazaro Cardenas, the site of the first Bank supported urban project in Mexico, and the Isthmus of Tehuantepec, are also identified as priority regions. 37. The National Development Plan issued in April 1980 endorses the spatial policies outlined in the above mentioned sectoral plans. It states that investments in the transport system would be designed to facilitate decentralization. The Transport Sector 38. Transport has played an impDrtant role in the economic development of Mexico. The expansion and evolution of Mexico's transport system has been supported over the years by adequate public investments in infrastructure in all modes, and strong, privately financed, bus, truck and aviation industries, which provide adequate services. This combination produced a transport system which was generally satisfactory until the mid-1970s, with good modal balance and sufficient capacity to serve demand. The system then only required selective expansion and modernization to meet the needs of a growing economy and support Mexico's strategy of spatial decentralization of population and economic activity. However, reductions in public sector investments since 1975, coupled with a surge in economic growth since 1978 and rapidly increasing demand for transport services, have led to bottlenecks, particularly in the railway system, which in turn have affected some ports and the highway system. A US$150 million loan to help finance the ongoing expansion of railway capa- city was recently approved by the Executive Directors. In the aviation subsector, the Bank appraised a project in 1978; however, no loan was made because of differences between the various agencies concerned over investment priorities.  - 11 - 39. MIexico relies on extensive road and rail networks for its transport- ation needs. Pipelines and coastal shipping are important but specialized, while aviation, the most dynamic mode in terms of growth, is still relatively small. In 1978, road transport carried about 41 percent of all cargo traffic in the country, while the railways carried about 21 percent. The remaining traffic, mostly of petroleum products, was moved by pipelines (23 percent) and coastal shipping (15 percent). Roads carried 94 percent of all passenger traffic, while aviation and the railways carried about 3 percent each. 40. Overall, traffic grew at about 10 percent annually between 1970 and 1978. Increases were experienced by all modes, especially since the economy began to recover from the 1976-1977 recession. The Mexican economy has been growing at 8 percent annually over the past two years and is expected to maintain high rates of growth in the 1980s. The implications for the trans- port sector of rapid and sustained economic growth in the future are of high rates of increase in demand for land transport and port facilities. Ports 41. Port traffic, if petroleum is excluded, is surprisingly small in view of the size of Mexico's economy. Much of the foreign trade is with the US, for which overland routes (railways and roads) are used. However, port traffic is expected to become more important in the coming years as the economy grows. Shipping is largely concentrated in domestic coastal traffic, mainly of petroleum. International trade consists mostly of the export of minerals, agricultural products and petroleum and the import of capital goods, grain and food supplies. There are some 30 ports on the long Mexican coast- lines; they handled some 40 million tons of international traffic in 1978, of which about 55 percent were petroleum products. For general cargo and non- petroleum bulk commodities, the capacity of Mexican ports has generally been adequate until recently; however, more than two million tons of Mexican imports and exports are being handled annually through US (Texan) ports, with extensive overland movement. Furthermore, difficulties in handling grain imports and container traffic have recently been experienced in some Mexican ports. This situation, together with prospective increases in Mexico's import volumes and container movements in general, warrants a review of the country's overall port development needs. Such a review is being undertaken in the context of Government plans for regional development, aimed at shifting population con- centration and economic activity away from the central plateau to the coastal areas (see para 29) and the industrial port development program (see paras 46- 50), which the proposed loan is to support. Port Administration 42. Up to early 1977, the Secretariat of the Navy was responsible for administration of commercial ports, but the administrative reform of that year transferred responsibility to the Secretariat of Communications and Transport (SCT). A Subsecretariat was created within SCT to take charge of all aspects of port construction and management, while SCT's Department of Planning assumed responsibility for planning port development in the context of transport development as a whole. The Subsecretariat for Ports includes a Department for Port Construction (OM) and a Department for  - 12 - Port Operations (OP). OM has a considerable number of engineers on its staff who have experience in construction of small commercial ports; it has not, however, yet developed all the expertise necessary for construction of large deep-water ports as envisaged in the industrial ports program. OP normally delegates responsibility for operation of individual ports to local port service companies; the nature of these companies and their efficiency varies. In the case of Tampico, the operating company is the union of port workers, which operates very efficiently. 43. While SCT has overall resonsibility for port development and administration, there are several other institutions which perform specialized functions in the port sector. The Comision Nacional Coordinadora de Puertos (National Port Coordinating Commission), an entity which coordinated all aspects of port development prior to the administrative reform of 1976, is still in existence and is used primarily as a vehicle to consult port users in industry and commerce on port development. FONDEPORT, a trust fund managed by SAHOP, has responsibility for land management in industrial port areas, while BANPESCA has recently been given responsibility for financing the activities of the fishing industry and the construction of ports. BANPESCA is a Government-owned bank which emerged from the reorganization of a cooperative bank; its function is to provide financing to the fishing sector and for commercial port development in general. As indicated in para. 46 below, a study unit reporting directly to the President of Mexico has also become involved in port development through its work in identifying areas for future industrial expansion. This has resulted in unclear lines of responsibility for the development of some aspects of the industrial port program discussed in Part IV of this report. Past Bank Participation and Experience in Ports 44. The Bank has provided broad support to the development of transport in Mexico. Since 1970, eight loans have been made to support investments in highways, railways, ports and aviation. A number of institutional and policy objectives have been sought in assisting transport development. For the sector as a whole, the goal has been to improve transport planning and adminis- tration. Progress in this respect has been made since the administrative reform of 1976, which gave SCT overall responsibility for policies and planning. 45. A Bank loan of US$20 million (Loan 820-ME) was granted in 1972, for a First Ports Project. It was fully disbursed in 1977. The principal reason for the Bank's participation was to help achieve more efficient operating methods and a commercial approach to tariffs and services. Substantial operational improvements have been achieved in some ports, but little has been accomplished so far in rationalizing port tariffs. Instead of a national port authority as originally suggested by the Bank, a new Subsecretariat in SCT has been made responsible for monitoring port operations and controlling investment planning, a clear improvement over the previous arrangements. Largely because of these changes, and because the new Administration which took office in 1976 had different priorities, a second port project appraised by the Bank in early 1976 was not carried forward. Further progress in the administration of the sector is expected to result from port planning activi- ties to be supported by the proposed project preparation loan.  - 13 - PART IV - THE PROJECT Project Origin 46. Early in 1978, the Government established a study unit reporting directly to the President of Mexico to draw up priorities and general plans for investments which would be of long-term benefit to the country. This unit, the Coordinacion de Proyectos de Desarrollo (CPD), was headed by a former Secretary of Finance and Credit. As its first task, CPD undertook a study of possible investments which would facilitate decentralization of economic activities from the Central Highlands to the coastal regions in order to make better spatial use of Mexico's territory and of its natural resources. Later that year CPD published a comprehensive study proposing investments in four port areas to provide the necessary infrastructure for new industrial development which would draw economic activity to coastal regions. These industrial ports are located in areas designated for growth in the National Urban Development Plan (paras 29 and 34-35) and are well served by inland transport infrastructure. Four port locations were proposed: two on the Gulf Coast (Altamira and Laguna de Ostion) and two on the Pacific Coast (Lazaro Cardenas and Salina Cruz). The two industrial ports on the Gulf Coast were to be entirely new harbors near the existing ports of Tampico and Coatzacoalcos while the two on the Pacific Coast were to be based on expansion of existing port facilities at those locations (see attached Map IBRD-15534). 47. CPD's study was endorsed by Government in early 1979 and the indus- trial port development was given high priority in the public sector investment program of Mexico since it would support large industrial investments in coastal regions envisioned for the next two decades. In 1980, SCT, SAHOP and other sectoral agencies were given authority to proceed with major contracts for construction of access-channels, connecting roads, railroads, water supply, urban development, and land acquisition at the four proposed industrial port sites, and CPD was made responsible for coordinating all studies, investments and promotional efforts for the program. Over twenty industrial and trading enterprises have already expressed interest in investing in the proposed industrial ports, and some have signed preliminary lease agreements for the land areas they would require and are reportedly postponing or cancelling investments in the Central Highlands regions in order to use the proposed port facilities on the Gulf and Pacific coasts. 48. In general terms, the proposed industrial port program includes the following: (a) at Altamira on the Gulf coast, about 15 kms north of Tampico, an entirely new port is to be developed on about 60 sq. km of flat, barren terrain adjacent to a straight, sandy coastline. Major steel industries, grain import and food processing facilities, petrochemical and aluminum industries are expected to be located on this site; (b) at Lazaro Cardenas on the Pacific coast, an existing port at the Las Truchas steel plant is to be expanded (see para 27), to accommodate food processing and chemical plants and ship con- struction and repair facilities;  - 14 - (c) at Laguna de Ostion on the Gulf coast, north of Coatzacoalcos, an entirely new port is to be constructed in presently unused swamp and lagoon areas adjacent to the coast, for major oil terminals and petrochemical industries; and (d) at Salina Cruz on the Pacific coast, near an existing general cargo port, a new oil terminal is to be constructed within an entirely new harbor basin, adjacent to the existing one, and related industrial facilities are to be accommodated on coastal lands to be developed nearby. The locations of these ports are in general accordance with the Government's regional development program and the specific sites selected at each location seem suitable for the land requirements of the proposed industries and their auxiliary and support facilities; in selecting these sites, appropriate consideration was given to land availability, terrain characteristics, land and sea access, and environmental aspects. The Government estimates that more than US$2.5 billion equivalent would be required for investments in infra- structure in the four port areas between 1980 and 1985. 49. The Bank was asked in late 1979 to review the CPD study on indus- trial ports and to consider its possible contribution in carrying out the proposed strategy. Bank staff concluded that, though the study outlined an acceptable strategy for economic decentralization, the absence of preinvest- ment work for specific components of the program made it difficult to define an appropriate role for the Bank; material produced by CPD was not specific enough to permit appraisal of a project by the Bank. During further discus- sions in August and November 1980, it was concluded that the Bank might best assist, in the first instance, through participation in the planning and review of preinvestment activities required for the program, and that such participation could be provided in the most effective manner through a project preparation loan. Since financing for preinvestment activities is not avail- able from UNDP, which has fully committed its resources for Mexico, and CPD does not have sufficient staff with experience in planning large ports, the Government has asked for Bank support for project preparation. The proposed loan would help tinance the cost of consulting services needed for technical, economic, financial and institutional analysis of specific components or general aspects of the industrial ports program. A brief description of the project may be found in the Loan and Project Summary at the beginning of this report; Supplementary Data may be found in Annex III and a tentative list of studies and other tasks to be undertaken to prepare the Industrial Ports Program may be found in Annex IV. Negotiations were held in Washington in January 1981. The Mexican negotiating team was headed by Mr. Izquierdo, Deputy Director of BANPESCA, and included a representative of CPD. At a later stage, Bank financing of construction and/or equipment acquisition for compo- nents of the program which had been adequately prepared might be considered. The Bank is also considering, separately, an Urban Development project aimed at achieving a rational and planned development of urban concentrations in the industrial port hinterlands, particularly of Altamira. 50. Work has been advancing at some industrial ports: at Altamira and Lazaro Cardenas, major contracts for dredging of harbor basins and land fill were awarded in 1980 by SCT, and construction work is in progress or being  - 15 - initiated. For the ports at Laguna de Ostion and Salina Cruz, which are to serve primarily petroleum related industries, the Government-owned oil company PEMEX will have overall responsibility for harbor basin construction and land preparation; no work has been started yet at these sites. Within all these ports, major tenant industries will construct their own specialized docking facilities, but each port will also have a public cargo terminal for multiple uses, which will serve both the industries that do not have their own water frontage and general traffic of the ports' hinterland; planning for these public cargo terminals has been initiated by CPD and their construction in all four ports will be the responsibility of SCT. Project Objectives and Description 51. The proposed project is to support the two main Government objec- tives for the development of new industrial ports: (a) decentralization of economic activity and growth to areas outside the central plateau; and (b) provision of direct access by major domestic industries to international maritime transport. 52. Specifically, the proposed project is to assist in the preinvest- ment stage of the port development program, through the provision of planning and management advisory services in program formulation and design, and through studies, detailed engineering, and related field and laboratory work, for sector and individual project components in the ports program. The proceeds of the loan would be used to finance the services of consulting firms, individual consultants or advisors, and any equipment and materials required for their services. A summary of studies and other services which would be considered for financing is given in Annex IV; it is intended to revise this list from time to time as may be necessary in the course of implementation of port development preparation activities. Since the proposed loan would help finance project preparation work, a Staff Appraisal Report has not been prepared. If the projects and subprojects analyzed in the feasibility studies prove to be technically and economically viable, the loan would also help to finance detailed engineering. Project Implementation 53. It is envisaged that Bank financing of preparation activities for the industrial port program would afford the opportunity for a significant dialogue on program formulation and relevant planning and organization issues. To this end, provisions would be made for close consultations and periodic meetings between all concerned Government agencies and the Bank on the scope, budget, progress and results of the program of preparation activities (see Section 3.03 of draft Guarantee Agreement). CPD, which has been designated to coordinate the program by the President of Mexico, would convene and preside ove-: such meetings. 54. Responsibility for retaining and supervising the services of consultants to be financed under the proposed loan would be given to the agencies responsible for implementing individual components within the port areas (e.g. planning and design of channels, marine structures and railroad trackage to SCT; planning and design of roads, land preparation, drainage and water distribution to SAHOP/FONDEPORT, etc.).  - 16 - 55. The Government and its agencies would employ consultants whose experience and terms and conditions of employment would be satisfactory to the Bank. Agreed procedures would be used for this purpose and prior approval from the Bank would be obtained for deviations from such procedures (see Section 3.04 and Schedule 2 of draft Guarantee Agreement). Project Costs and Financing 56. The total cost of the consulting services (net of Mexican taxes) is estimated at US$24.0 million, of which US$14.0 million are foreign costs. Budgets for individual studies and other preparation activities would be agreed during project implementation in the course of the consultations mentioned in para 53 above. The estimated total foreign and local costs shown in Annex IV are based on preliminary assessments of each task, and are made to provide a basis for determining (i) the order-of-magnitude of total project costs and (ii) the percentage to be financed. Preliminary estimates of the man-month effort required have been prepared for the first two items in Part A of Annex IV since they are the most urgent. It is estimated that 230 man-months will be required for item (1) and 60 man-months for item (2). The estimated unit costs for these services (including salary, costs, fees, international travel and subsistence), of US$14,000 to US$18,000 per man-month for foreign personnel and US$9,000 for local personnel, reflect the high level of staff qualifications required and the cost of living in Mexico. The average cost per man-month for the remaining items, which are less complex, is expected to be lower. 57. The proposed Bank loan of US$14.0 million would cover the estimated foreign cost of the project. The borrower would be BANPESCA, acting as financial agent for the Government. It would transfer Bank funds as required, under terms and conditions acceptable to the Bank, to the agencies retaining consulting services (see Section 3.01 of the Draft Loan Agreement). The balance of project costs would be covered from budgetary resources of these agencies. The loan would be repaid by the Government through BANPESCA. Disbursements 58. The Bank would disburse 58 percent of total cost of consulting services, foreign or domestic, which is equivalent to the estimated foreign cost of the project. Project Justification and Risks 59. The CPD study suggests that, prima facie, there is a case for investments in ports and other infrastructure facilities in Mexico's coastal regions, both to serve as a basis for expanding economic activity to draw population to such regions, and to open up new trade routes to Europe, the Americas and Asia. Further demand, planning, and engineering studies are required, however, to justify investments in large industrial ports. Because institutional responsibilities for developing the industrial ports program are not clearly outlined, the studies being prepared may not be comprehensive enough or of adequate depth to provide a sound basis for financing the major works contemplated in the ports program. The Bank could serve a useful role in helping structure and supervise the necessary studies. The proposed loan would help to finance the cost of such studies while assisting the Mexican authorities in designing and supervising them. The proposed studies are  - 17 - therefore worthy of Bank support; moreover, they could serve as a basis to appraise possible Bank assistance for port and related investments at a later stage. The risks are that major investment works (not financed by the Bank) may be initiated without the benefit of required studies and that there may be disagreement among the various Government agencies involved about the scope of studies and proposed developments at each port; the Bank could play a useful role in helping reconcile such differences, should they occur. PART V - LEGAL INSTRUMENT AND AUTHORITY 60. The draft Loan Agreement between the Bank and BANPESCA, the draft Guarantee Agreement between the United Mexican States and the Bank, and the Report of the Committee provided for in Article III, Section 4(iii) of the Articles of Agreement, are being distributed to the Executive Directors separately. Special conditions of the project are listed in Section III of Annex III. 61. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VI - RECOMMENDATION 62. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President March 5, 1981 By Ernest Stern  - 18 - Annex I * ~~~~~~~~~~Page 1 of 5 100 - NC7=w IDICATS DATA aUsT NzrtCo RERENCE momW (VIITAY 'ZS lA02DLEA 'ThOUS9ND 50. D) __ _- MST_R_C_T T:=_ AMICULTtlRAL 977. 2 IN6T RECUT MIDDLE 7ICONE MIDDLZ iNCNtE 1960 k 1970 k ESTIMATE LATIN AMRICA 6 CARIMUND EO?t GNP PER CITA (US$) 400.0 750.0 1590.0 1562.9 2749.5 zMUcy cossuMwTIOm PER cAPITA (KILOGLAMS O COAL EWIVALEIT) 770.0 1047.0 1384.0 1055.9 1641.4 POPULATION AND VITAL STATISTIC5 POPMLATIMS, IND-TIE 0(ILLIONS) 36.4 50.3 65.4 URtAN PDPULATION (PRCUT Or TOTAL) 51. 0 59.0 65.2 63.4 53.9 POPULATION PROJZCTIONS POPULATION IN TYAR 2000 (MILLIONS) 116.0 STATLOARY POPULATION (MILLIONS) 205.0 YEAR STATIONARY POPULATION IS REACHED 2075 POPULATION DENSITY PER SQ. EH. 18.0 26.0 33.0 28.1 77.2 PER SQ. EK. AGRICULTUNAL LAND 36.0 52.0 67.0 81.7 129.5 POPULATION ACE STRUCTURE (PERCENT) 0-14 YRS. 45.6 46.5 45.6 41.4 30.6 15-64 TnS. 51.0 50.0 50.9 54.7 61.1 65 YRS. AND ABOVE 3.4 3.5 3.5 3.9 8.2 POPULATION (GCVTE RATE (PERCENT) IOTAL 3.1 3.3 3.3 2.7 1. 6 URNAN 5.0 4.8 4.6 4.1 3.3 CRUDE BIRTH PATE (PER THOUSAND) 45.0 42.0 36.0 34.8 22.8 CRUDE DEATH RATE (PER THOUSAND) 12.0 9.0 8.0 8.9 6.9 GRORS REPRODUCTION RATE 3.2 3.1 3.0 2.5 1.5 FAMILY PLANNING ACCEPtORS, ANNUAL (TT8USANDS) .. 25. 1 845. 7 USERS (PERCENT OF MARRIED WOMEN) .. .. 21.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1969-71-100) 97.0 100.0 101.0 106.9 113.1 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIRIMENTS) 110.0 112.0 114.0 107.4 125.3 PROTEINS (GRAMS PER DAY) 65.0 66.0 66.0 65.6 91.0 OF WHICH ANIMAL AND PULSE 27.0 27.0 27.0 33.7 39.6 CHILD (ACES 1-4) MORTALITY RATE 14.0 9.8 6.0 8.4 4.3 HSALTH LIFE EXPECTANCY AT BIRTH (YEARS) 58.0 62.4 65.0 63.1 67. P INFANT MORTALITY RATE (PER THOUSAND) 78.0 74.0 60.0 66.5 55.9 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 54.0 62.0 65.9 URBAN .. 71.0 70.0 80.4 RURAL .. 29.0 49.0 44.0 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 62.3 URBAN .. .. .. 79.4 RURAL .. 13.0 14.0 29.6 POPULATION PER PHYSICIAN 1700.0 1481.0 1815.0 1849.2 1030.1 POPULATION PER NURSING PERSON .. 1613.0 1398.0 1227.2 929.4 POPULATION PER HOSPITAL NED TOTAL 617.0 831.0 851.0 480.3 289.7 URBAN .. 549.0 758.0 RURAL .. 1289.0 1077.0 ADIIISSIONS PER HOSPITAL RED .. .. .. .. 17.0 HOUSING AVERAGE SIZE OP HOUSEEOLD TOTAL 5.4 5.7 URBAN 5.7 5.7 RURAL 5. 2 5. 8 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL 2.9 2.5 URBAN 2.6 2.2 RURAL 3.4 3.2 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. 59.0 URBAN .. 80. 7 RURAL . 26. 0  ANNEX I - 19 - Page 2 of 5 TABLE 3A MEXICO - SOCIAL INDICATORS DATA SHEET MEXICO REFERENCE GROUPS (WEIGHTED AVERA ES - 1MST RECENT ESTI_ATE) - MOST RECENT MIDDLE INCCHE MIDDLE INCOME 1960 /b 1970 /b ESTIMATE /b LATIN AMQEICA & CARIBBEAN EUROPE EDUCATION ADJUSTED ENROL:.MENT RATIOS PRIMARY: TOTAL 80.0 104.0 116.0 99.7 105.9 hALE 82.0 107.0 119.6 101.0 109.3 FEHALE 77.0 102.0 114.0 99.4 103.0 SECONDARY: TOTAL 11.0 22.0 39.0 34.4 64.0 MALE 14.0 27.0 42.0 33.5 71.1 FEltALE 8.0 17.0 36.0 34.7 56.9 VOCATIONAL ENROL. (2 OF SECONDARY) 24.0 24.0 .. 38.2 28.8 PUPIL-TEACEER RATIO PRIMARY 44.0 46.0 46.0 30.5 29.4 SECONDARY 13.0 14.0 17. 0 14.5 26.1 ADULT LITERACY RATE (PERCENT) 65.0 74.0 76.0 76.3 CONSUMPTION PASSENGER CARS PER THOUSAND POPL'LATION 14.0 24.0 42.4 43.0 84.6 RADIO RECEIVERS PER THOUSAND POPULATION 91.0 278.0 306.0 245.3 192.2 TV RECEIVERS PER THOUSAND POPULATION 18.0 60.0 85.0 84.2 118.5 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 79.0 .. .. 63.3 93.0 CINEMA ANNUAL ATTENDANCE PER CAPITA 10.0 5.0 4. 2 .. 5. 7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 10993.0 14493.5 18951.2 FEMALE (PERCENT) 15.2 17.4 19.0 22.2 30.4 AGRICULTURE (PERCENT) 55.1 45.0 39.0 37.1 37.0 INDUSTRY (PERCENT) -- 19.5 23.0 26.0 23.5 29.3 PARTICIPATION RATE (PERCENIT) TOTAL 30.2 28.8 28.8 31.5 40.9 .YALE 51.1 47.4 46.8 48.9 55.9 FEMALE 9.2 10.1 10.7 14.0 26.2 ECONOMIC DEPENDENCY RATIO 1.6 1.7 1. 7 1.4 1.0 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOHE RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. .. HICHEST 20 PERCENT OF HOUSEHOLDS 61. 1/c 60.7 57. 7 LOWEST 20 PERCENT OF HOUSEHOLDS 3. 4/c 3.3 2.9 LOWEST 40 PERCENT OF HOUSEHOLDS 9.8/c 9.9 9.9 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 270.0 RURAL .. .. 216.0 190.8 ESTIMATED RELATIVE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 332.0 474.0 RURAL .. .. 332.0 332.5 385.8 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. RURAL .. .. Not available Not applicable. NOTES /a The group averages for each indicator are population-veighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is noc uniform. lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c 1963. Most recent estimate of GNP per capita is for 1979, all other data are as of April, 1980. 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L.0 L". ths .51. of me .INStOMW -t o tim oo-A the -tot 7o -od .e.Cose eoPe. .oofo.oto oo,.I.ood.4 -. -d 1.151 ootot. 0 00o.0 W051 01 inot Ls 0.-I. P d mrhet e.d kftohm satdin a to li. bulln 1977 dOta. I& ..". ooe ruiadoSo.~ dssb oo (Us eot of .polwiso e ooet,0 omotl a hfLki.E qlta lO Py am. ..ofto ptmto10.1 UUCOlA(US - P p. osIt. 0.111.00 corot so' p.1... ..I .1 IoX Ti oI ,t 1; i. .Of bhOw..' bod iI yU Sd~o...to