Determinants of National Housing Policies

Transcription

1 World Bank Urban Research Symposium Dec , 2003 Determinants of National Housing Policies A Comparison of Mexico and Argentina during the 1980s and 1990s Cecilia, Ph.D. Dept. of Urban and Regional Planning, UTK

2 Outline Technical rationality Argentina s and Mexico s housing deficits Technically grounded policy directions Theory versus actuality Political expediency Stakeholder analysis Theory versus actuality Conclusions

3 Technical Rationality Technical considerations

4 Housing Deficits in Argentina and Mexico Selected Housing Argentina Mexico Indicators % % Deficit as % of total stock * Type of Deficit Relative Deficit Absolute Deficit * It could be considerably higher. Deficits are significant. Emphasis has to be on upgrading and expansion.

5 Other characteristics The deficit is concentrated mainly among the poor. Housing policies can play a key role in poverty alleviation. The lessons of the 1970s on affordability are highly relevant. The informal sector is a vital force in the production of housing. Alternative housing solutions sites & services, slum upgrading, progressive housing are appropriate. Homeownership is very high; rental housing is low. Opportunities for wide-range of collaterized financing instruments from micro-lending to secondary mortgages. Promotion of rental markets.

6 Technical Rationality Actual policies

7 Housing Policies in Argentina Traditionally regressive, ineffective and nonexperimental Low priority in the context of the Convertibility Plan Increased private sector participation Privatization of National Mortgage Bank (BHN) Progress towards secondary markets FONAVi,, the flagship housing agency, virtually untouched Change in funding formula Decentralization to provincial governments without focus on performance Some pro-poor poor initiatives at the margin Neighborhood upgrading under IDB Legislation for regularization of land tenure but no results

8 Housing Policies in Mexico Traditionally progressive, increasingly effective and innovative High priority in the context of reform programs Central to government objectives Engine of growth under President de la Madrid Community-based infrastructure investments are central to President Salinas Solidarity Program Marginal improvement in INFONAViT,, main housing agency Mixed success with pro-poor poor initiatives Successful intervention after 1985 earthquake Legislation for regularization of land tenure but no results Some progress with financial intermediation Strong partnership with the World Bank

9 FONAVI and INFONAVIT: Selected indicators Market Share Argentina FONAVI Mexico INFONAVIT % of public funds for housing at the federal level 97.3% 77% % of total formal housing finance Approx. 33% before Dec % FONAVI and FONAVI are the core programs.

10 FONAVI and INFONAVIT: Selected indicators Programmatic Argentina Mexico Effectiveness FONAVI INFONAVIT Finished units 83% 82.4% Unitary costs Very high US$26,000 High US$13,900 Narrow focus on finished housing. High unitary costs translate into lack of affordability. Not responsive to the needs of the poor.

11 FONAVI and INFONAVIT: Selected indicators Subsidies Indirect subsidies Argentina FONAVI Very high 54% of all resources Mexico INFONAVIT Very high 51.4% of all resources Overall Targeting Only 33% reaches the poor 38% for pop. income < 3 min. wages Lack of transparency in subsidies. Poor targeting.

12 FONAVI and INFONAVIT: Selected indicators Administrative Argentina Mexico Performance FONAVI INFONAVIT Allocation criteria Cost recovery Administrative costs Lack of transparency Very low 48% Very high 22.5% n.a. 22.4% of portfolio in arrears in 2000 (46% in 1996) Moderate 5.6% Serious administrative inefficiencies.

13 The Failure of Technical Rationality Results from the technical analysis indicate that Rationality and technical criteria do not explain national housing policies. Very poor policymaking in Argentina More mature in Mexico, but still with serious shortcomings Are policymakers inept or are other criteria at play?.

14 Political Expediency Stakeholder analysis

15 Overall Objectives of the Reform Programs While both countries pursued reforms tailored after the Washington Consensus, there were important differences Argentina A central objective was to maintain macroeconomic stability Mexico Poverty alleviation Ideological legacy Rebuild the eroded legitimacy of the PRI

16 Main Stakeholders Sub-national governments Labor unions Popular urban movements Developers and construction firms

17 Sub-National Governments Argentina Key to the sustainability of the Convertibility Plan Federal government controls only 54% of public spending Provinces are highly autonomous Significant variation in political spectrum Mexico Federal government controls only 79% of overall public spending States have strong nominal autonomy, which is greatly limited by strong presidential meta-powers Dominance of the PRI

18 Labor Unions Argentina Menem s Peronist background and political savvyness were key in deactivating them The battle was won as part of the privatization of strong union strongholds, such as phone and railroad companies. Mexico Unions retained significant power PEMEX and other important state companies were not privatized

19 Popular Urban Movements Argentina Not a strong legacy of land-rights based popular movements Popular movements were not active during the 1990s Menem s Peronist background served to co-opt opt them Still crippled from the Dirty War of the 1970s Mexico Strong tradition of land-rights based popular movements Renewed momentum after 1985 earthquake PRI was loosing support among the urban poor

20 Private Developers Argentina Traditionally strong influence on FONAVI Leadership had strong allegiance with domestic business groups Mexico Traditionally strong influence on INFONAVIT Key power base for market-based reforms

21 Main Stakeholders Matrix Main Stakeholders Argentina Mexico Sub-national governments Labor unions Popular urban movements Private developers

22 Political Expediency Actual Policies

23 Housing Policies in Argentina Through Political Lenses Poverty alleviation did not matter Getting the support of the governors did! FONAVI is used as bargaining chip in the negotiation of the Fiscal Pacts Governors accept a 15% cut in revenue-sharing transfers in exchanged for guaranteed level of transfers and full control FONAVI resources There is no overseeing of FONAVI programs Focus on expensive, finished housing continues, benefiting the same s private developers.

24 Housing Policies in Mexico Through Political Lenses INFONAVIT stays largely untouched Unions control one-third of INFONAVIT board Marginal improvements which leave core issues unresolved Emphasis on expensive, finished housing continues Developers control another third of INFONAVIT board FONAHPO, Mexico s low-income housing, becomes increasingly politicized Low recovery rates in response to pressures from popular movements Shift toward finished housing in response to pressure from developers.

25 Main conclusions

26 Main Conclusions Political expediency is a key determinant of national housing policies. During the 1980s and 1990s, sector policies as opposed to macroeconomic ones seemed to have provided more space for political maneuverings.