By: Jie

POVERTY AND INEQUALITY IN THE PHILIPPINES

(A reflection on Balisacan’s article)

The article started with a brief historical background on the economic plight of the
Philippines in the post-World war era. The main emphasis of economic strategies and
planning was on economic growth as the main solution to the poverty problem in the
Philippines. Poverty reduction as a central focus came in the latter part of the 20 th
century.
A recurrent theme in most of the economic strategies employed in most of the 20 th
century is the empowerment of the rural sector to boost production hence, economic
growth. In the 1970s, the Philippines experienced problems of income inequality, low
levels of living and inflation.
A run-through of the economic strategies that past presidents used was also
discussed. After the dramatic and ungraceful exit of former president Marcos, the
Philippines almost got stuck in an economic marsh. The Aquino administration focused
on strengthening the rural sector thus the CARP of Comprehensive Agrarian Reform
Program which was about the acquisition and distribution of land. This step reduced the
incentives for investment in agriculture and failed to address the problem of
infrastructures in the rural areas.
The Ramos administration saw massive government as the answer to the growing
poverty problem in the Philippines. Efforts were directed to the poorest areas of the
Philippines to uplift the people and in turn, make them contribute positively to the
overall economic growth. The weakness of Ramos’ program was the lack of budget and
lack of focus in the overall sustenance of poverty reduction programs.
In Estrada’s time, efforts were again directed to the poorest sectors of the
Philippines providing the necessary basic needs of the 100 poorest families in each
province. Emphasis was on rural-based development to boost economic growth however,
these efforts proved to be short-lived and short-term by nature following the former
President’s ouster. The Arroyo administration had its focus on the urban sector in
eliminating poverty failing to address the real issues that is confronting the Philippines in
its Southern most parts.
The overall economic performance of the Philippines in the 90s lagged behind
neighbor countries in Asia. As noted, political instability, natural disasters and
macroeconomic mismanagement have been responsible for the faltering economic
growth. Changes in poverty regionally in the Philippines have been caused by changes
within the regions than disparities among the regions.
Of particular interest within regions are the disparity between incomes, welfare
and human achievement that can be traced not only within the region but also within the
household. It was mentioned that the effect of overall economic growth on the poor can
only be apparent if the socio-political environment is conducive to development.
A change in the overall economic growth is manifested by increasing per capita
GNP however, as a criticism to GNP; it fails to measure existing differences in income
levels and welfare among regions and among peoples.
These differences stem from a number of interrelated factors such as the poor’s
access to education that will have an effect on the economy in the long run.
Infrastructures seem to have also been focused in urban areas leaving most of rural
sectors agriculturally dependent. The owners of the factors of production have all the
power to limit access to employment and capital for investment hence, the poor are left

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By: Jie
with alternatives which have more than enough remuneration for their services vis-à-vis
human capital.
In most of the poorest sectors in the Philippines there exists political instability that
constrict the local economy as these politicians are profiteering, self-interested
individuals uninterested in making economic opportunities open for all. These politicians
affect the poor by limiting their access to economic opportunities by rent-seeking or
merely through corruption which is prevalent in the Philippines. Good governance is one
of the best ways to utilize limited resources in a country to usher in economic growth
and reduce poverty.
There also exist problems in infrastructure that make transport of goods and
services as well as human capital difficult. The poor’s access to technology and
information has profound effects in the long-run on their capacity to become productive
and contribute positively in the overall economic growth.
This however, if not in most developing countries, has been the problem in the
Philippines. Too much emphasis has been given in developing the urban areas, where
trade and commerce is the way of life while little or no emphasis has been given to the
rural, traditional sector where most of the poor people in the country are located.
The dichotomy between the urban and rural sector is still a valid argument in light
of government-spending priorities. Emphasis should be given to the agriculture sector
that is labor-intensive because this might benefit the poor more than opening up more
and more commercial centers in the urban areas. Investment should be directed in these
areas because this enhances the productivity of labor-intensive jobs which in turn would
benefit the country more.
The Philippines is prone to typhoons and other natural disasters. As studies have
shown, the poor are also concentrated in areas constantly affected by these natural
disasters. Common sense would tell you that productivity and job opportunities are
difficult in these areas. Education is affected, which is one of the main fuels for growth in
the long run. Infrastructures are on the brink of destruction, factors of production are
often left untouched because of the high risks that public investment has on these areas.
These factors have overall impact on the economy. Addressing one factor without
considering the others would result to a slow pace of growth for the Philippines which
has been the cause of the low poverty reduction rate in the country over the years.
What then could be done to augment these problems? I believe that in a
democratic and republican country, government intervention is the solution. Balisacan
has highlighted correlations between the aforementioned factors to growth,
development and inequality.
Starting inside the household, even incomes between members of the household
are unequal. This income disparity inside the home must first be addressed. Policies and
legislations that seek to empower women and protect them from male violence can
foster incentives for all of the members of the household to become more productive.
Inequalities in income between regions are the interplay of several factors as
mentioned earlier but the focus should not be on eliminating these inequalities as they
are dependent on factors inherent in each region and varied across regions. What is
common in these regions however is the prevalence of the poor located in the rural and
agricultural sectors, so this should be addressed as the primary problem to be solved.
Empowering the agricultural sector by providing the necessary facilities to speed
up production is vital to high productivity and economic growth. Giving the poor aid in
terms of nutrition and education to make them competitive members of the workforce in
the long-run will reap its benefits in the long run. Opening up roads and bridges and
providing electricity to depressed areas would usher in investment and open economic

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By: Jie
opportunities. This would minimize not only income inequalities but also welfare
inequalities not just across regions but within regions and within the household.
What this tells us is that growth could only be felt by the poor if local and domestic
issues have already been resolved. Addressing the high incidence of poverty in its
grassroots origin is the key to ensuring sustained economic development and growth.

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