Poverty in the Philippines: Causes, Constraints, and Opportunities
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Poverty in the Philippines - Asian Development Bank
POVERTY
IN THE PHILIPPINES
CAUSES, CONSTRAINTS,
AND OPPORTUNITIES
© 2009 Asian Development Bank
All rights reserved. Published 2009.
Printed in the Philippines.
ISBN 978-971-561-857-1
Publication Stock No. RPT090621
Cataloging-In-Publication Data
Asian Development Bank.
Poverty in the Philippines: causes, constraints, and opportunities.
Mandaluyong City, Philippines: Asian Development Bank, 2009.
1. Poverty. 2. Philippines. I. Asian Development Bank.
The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.
ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use.
By making any designation of or reference to a particular territory or geographic area, or by using the term country
in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area
ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB.
Note: In this report, $
refers to US dollars, P
refers to Philippine pesos.
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CONTENTS
LIST OF TABLES, FIGURES, BOXES, AND APPENDIXES
TABLES
FIGURES
BOXES
APPENDIXES
ACKNOWLEDGMENTS
This report was prepared by Fernando Aldaba, consultant, in close dialogue with the Government of the Philippines and under the guidance and supervision of Camilla Holmemo, poverty reduction specialist, Southeast Asia Department (SERD) and the overall leadership of Neeraj Jain, country director, Philippines Country Office, SERD, and Shireen Lateef, director, Social Sectors Division, SERD. Many colleagues provided helpful comments on drafts and during presentations of findings, including Secretary of the National Anti-Poverty Commission Domingo Panganiban, Alice Bala, Leonor Briones, Dante Canlas, Erlinda Capones, Ramon Falcon, Francis Lucas, Austere Panadero, and participants in the consultation forum held on 7 May 2009 in Manila. In addition, ADB staff members from many divisions provided invaluable comments to complete the report, including Joven Balbosa, Armin Bauer, Claudia Buentjen, Aziz Haydarov, Joel Mangahas, and Florian Steinberg. The author is also grateful to Christian Mina and Melinda Romero for research assistance and to Madeline Dizon for overall administrative assistance.
ABBREVIATIONS
PART I
EXECUTIVE SUMMARY
Background
Poverty and inequality have been recurrent challenges in the Philippines and have again come to the fore in the wake of the current global financial crisis and rising food, fuel, and commodity prices experienced in 2008. The proportion of households living below the official poverty line has declined very slowly and unevenly in the past four decades, and poverty reduction has been much slower than in neighboring countries such as the People’s Republic of China (PRC), Indonesia, Thailand, and Viet Nam. The growth of the economy has been characterized by boom and bust cycles and current episodes of moderate economic expansion have had limited impact on poverty reduction. Other reasons for the relatively moderate poverty decline include the high rate of inequality across income brackets, regions, and sectors; and unmanaged population growth.
This study aims to provide a comprehensive analysis of the causes of poverty in the Philippines and give recommendations for accelerating poverty reduction through sustained and more inclusive growth. The study will provide an overview of the current status of government responses, strategies, and achievements and will identify and prioritize future needs and interventions. Millennium Development Goal (MDG) accomplishments to date will also be assessed. It will examine implications of the current financial crisis on poverty and recommend ways to move forward. The study is based on analytical work using current literature and the latest available data, including the 2006 Family Income and Expenditure Survey (FIES).
Current Profile of Poverty in the Country
Poverty incidence among households increased from 24.4% in 2003 to 26.9% in 2006 and the number of poor families increased from 4.0 million in 2003 to 4.7 million in 2006. The headcount index increased from 30.0% in 2003 to 32.9% in 2006 and the number of poor people increased from 23.8 million in 2003 to 27.6 million in 2006. It should also be noted that poverty incidence and magnitude do not necessarily coincide. According to the 2006 poverty data, Mindanao has the highest poverty incidence at 38.8% but Luzon has the highest number of poor families, with almost 2 million families (42.4% of the total).
Self-rated poverty¹ has ranged from 50% to 52% for most of 2008, peaking at 59% (an estimated 10.6 million people) in the second quarter. Inequality has also been persistent over the years. Although the Gini coefficient² improved to 0.4580 in 2006 from 0.4605 in 2003 and 0.4872 in 2000, the level of inequality remains high compared with other countries in Asia and has hardly changed for more than 20 years. High inequality has limited the impact of economic growth on poverty reduction.
The Philippines’ midterm progress report on the MDGs shows that the following gains have been made: (i) decrease in the proportion of people living in extreme poverty; (ii) visible improvements in household and population poverty indicators; (iii) maintained net enrollment rates by sex at both elementary and primary education levels; (iv) reduction in infant deaths per 1,000 live births; (v) prevalence of HIV/AIDS below the national target of 1% of the population; (vi) improvements in environmental protection; and (vii) active participation in the World Trade Organization.
However, the Philippines is still lagging behind in meeting the targets on access to primary education, maternal mortality rates, and access to reproductive health care. Because of the current global economic crisis and recent increases in poverty incidence, the goal of reducing the proportion of people living in extreme poverty may not be achieved. In all goals and targets, existing indicators exhibit significant disparity by region. In terms of gender, the Philippines has made substantial progress in enhancing the opportunities and welfare of its women and men (ADB et al. 2008); however, challenges remain in implementing key policies and improving maternal health and reproductive health care.
The main characteristics of the