Related Review Literature

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 Peoples 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; high
population growth rates; and perennial occurrences of disasters and longstanding
conflicts in various regions, especially in Mindanao. After years of recognizing
poverty as a key development problem and devising various strategies and
programs for its reduction, the government is still confronting high levels of poverty
and hunger among its citizens. Long and persistent periods of high poverty may
harm a countrys development path as poverty itself becomes a drag to economic
growth. In addition to the slow decrease in poverty incidence, there has been mixed
progress in addressing human development concerns, particularly outcomes in
education and health. The government has committed to achieving the Millennium
Development Goals (MDGs) through pro-poor sustained economic growth as
reflected in the Medium-Term Philippine Development Plan (MTPDP) 20042010.
However, efforts to meet the MDGs and reduce poverty and inequality are
constrained by weak implementation of reforms, financing gaps and leakages,
coordination failure, and governance concerns. The current global financial crisis
has started to affect the domestic economy as growth slowed to 4.6% in 2008 from
a high of 7.2% in 2007. Exports have continued to decline while the growth rate of
remittances, the economys lifeline, will likely slow down in 2009. Efforts to protect
the poor from the crisis and further reduce poverty must remain an important
priority, as the number of vulnerable sectors of the economy will increase if the
crisis deepens. The government has laid out the Philippine Economy Resiliency Plan,
a P330 billion stimulus package consisting of increased allocations for national
agencies and government, corporate, and financial institutions for infrastructure
spending, corporate and individual tax breaks, and social protection and safety nets
intended to protect the poor from the impact of the crisis.

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. The study uses a
comprehensive framework for assessing poverty in the country. It examines the key
areas that are relevant to poverty reduction: increasing incomes, human capital,
and capacity; risk protection; and voice and empowerment in governance and
institutions. It uses quantitative (trends in poverty and related indicators data,
regression analysis for poverty correlates) and qualitative analysis (key informant
interviews) to assess the poverty situation as it relates to the overall development
of the country. A workshop was organized to discuss the findings of the study, to get
feedback from key stakeholders, and to identify concrete and actionable
recommendations. An institutional mapping analysis was also undertaken to assess
the current responses to the state of poverty in the country.

Status and availability of Poverty data:

Effective policy formulation and successful program design and implementation for
poverty reduction are contingent upon the accuracy, reliability, and timeliness of
information available to policy makers. Given that the poverty problem is large and
resources are limited, poverty alleviation programs need to be efficiently targeted,
with minimal leakage to the nonpoor. Official data on poverty are gathered by the
NSO (National Statistics Office) and measures are released by the NSCB (National
Statistical Coordination Board). Every 3 years since 1985, the NSO has conducted a
survey on family income and expenditure (Family Income and Expenditure
Survey).This data set, randomly collected from a sample of more than 40,000
households nationwide, is the major source of the Philippines official poverty
estimates. The survey provides information on the levels of living and income
disparities among Filipino families, as well as their spending patterns. The estimates
for poverty incidence at the national, regional, and provincial levels are then
developed by the NSCB following specific guidelines. In addition to the FIES, the
National Statistics Office conducts the Annual Poverty Indicators Survey (APIS),
which gathers information on income and expenditures for minimum basic needs.
The data is then classified into multiple indicators (survival, security, and
empowerment) for monitoring the poverty situation in various regions of the
country. The APIS classifies families into two income groupings: the lower 40% of
the income distribution (a proxy for those falling below the poverty line), and the
upper 60%. Six rounds of the APIS have been undertaken: 1998, 1999, 2002, 2004,
2007, and 2008. However, only data up to 2004 are currently available in public use
files.
The NSO gathers non-income poverty indicators as well. These indicatorssuch as
health, education, population, demographics, and nutritionare used to track the
countrys achievements of the Millennium Development Goals (MDGs). Private
groups also generate data related to poverty, such as the Social Weather Stations,
which conducts a quarterly survey on self-rated poverty, and the Human
Development Network, which computes the human development index, the human
poverty index, and the gender development index of regions and provinces in the
country. Aside from direct poverty measures, other statistics on the macro economy
and the labor market are important for policy makers to adequately respond to the
poverty problem. However, the reliability of these data has been questioned.
Overall, while the Philippine statistical agencies can provide important information
on the poverty situation at various levels (including the municipalities) there is a
need to enhance the quality and timeliness of poverty data to improve its use by
government agencies for real-time interventions (Templo et al. 2006). For example,
the most recent national, regional, and provincial poverty estimates available are
for 2006 and, for municipalities, 2003. In addition, consistency in methodology must
be pursued to facilitate analyses across time and space. The methodological
changes in determining the poverty line in 1992 and 2003 also make it difficult to
do trend analysis, the trend during 19852000, which used the 1992 methodology,
must be examined separately from the trend of 20002006, when the current
methodology came into effect.

December 2009 Asian Development Bank

All rights reserved. Published 2009.
Printed in the Philippines.