Poverty - single most important policy challenge

Root of the problem – lack of responsible economic growth

Vs. Poverty as concrete manifestation of gross economic and social inequities

Economic growth

- necessary for poverty reduction.

- an essential condition for the generation of resources needed to sustain investments in

health, education, infrastructure, and good governance

Absolute Poverty – set standard; consistent over time and between countries

Relative Poverty – socially defined, dependent on social context -> income inequality

- Percentage of population with income less than the fixed proportion of median
income

PPP – Purchasing Power Parity – exchange rate determination; way to compare avg. costs of goods and
services bet. Countries

PH

-Inability to achieve and sustain INCOME GROWTH that is higher than its POPULATION GROWTH

- HUGE variation in infrastructure access and social services across regions

- Luzon is favored more; resulting in differences in economic opportunities, in rates of poverty

reduction, and in the incidence of armed conflict.

- Metro Manila has the lowest poverty rate while BICOL, WESTERN MINDANAO, AND VISAYAS had the
highest
*Agri and Rural Dev’t have a strong rel. with Poverty Reduction; investments in health and educ. Also
have high payoffs in poverty reduction

*Strong need to address population growth – strong link bet. Economic performance and poverty
reduction

*POVERTY IN THE PHILIPPINES IS LARGELY A RURAL PHENOMENON

- Even poverty in URBAN areas is due to LOW PRODUCTIVITY and SLOW EXPANSION OF EMPLOYMENT
OPPORTUNITIES in RURAL areas; this results in higher rural to urban migration

*Rural development fueled by rapid productivity growth in the agricultural sector holds the key to
sustained poverty reduction.

*RAPID, SUSTAINED, AND BROADLY-BASED agri growth results in sustained growth of farm incomes
despite price drops in world markets. Domestic food prices also remain low, rural employment
diversification gets enhanced, and poverty reduction eventually becomes robust

1980-1994; agri. Growth was at a measly 1.5% only; lower than the POPULATION growth which was at
2.4% during that time. POST WTO, increased to 2.4%, but that was still lower than china and vietnam’s
3.5% and 4.2% respectively

Production growth - can only come from expansion of cultivated area OR increases in output per unit
area; the former (expansion) is no longer a practical option for the PH since lots of land has already been
converted for non-agri purposes

Therefore, output growth would need to come from PRODUCTIVITY GROWTH SUSTAINED VIA TECH.
IMPROVEMENTS. A comprehensive measure of prod. Growth is TFP growth, or TOTAL FACTOR
PRODUCTIVITY GROWTH, an appropriate measure of efficiency improvement.