JanFebMar08 UPdate

Reducing poverty can be realized through pro-poor development agenda by the national government such as scaling up investment in quality education and health, credit markets for education and small enterprises, an active population management program, sustained increase in labor demand coupled with producing highly-skilled workers and efficient social safety nets programs.

This was the proposition of three professors from the UP School of Economics (UPSE) in a lecture entitled “Poverty: Facts, Theories and Remedies” on January 31 at the National Institute for Sciences and Mathematics Education Development (NISMED) Auditorium and beamed live to other constituent universities of UP.

The lecture, which featured Dr. Arsenio M. Balisacan, executive director of Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), Dr. Dante Canlas, former NEDA secretary and Dr. Raul V. Fabella, former SE dean and the lecture’s convener, was drawn from an ongoing study Causes of Poverty in the Philippines jointly undertaken by UPSE and SEARCA.
Balisacan, in his presentation entitled Poverty Reduction: What We Know and Don’t, provided an overview of the poverty problem in the country. He defines poor as those whose income fall below a pre-determined income threshold.

Based on their study in 2006, 32 percent of 84 million Filipinos were considered poor and majority of these are situated in rural areas. “Poverty in the Philippines is still largely a rural phenomenon. Poverty incidence among agricultural households is roughly three times that in the rest of the population,” he said.

Despite the GDP (gross domestic product) growth from 2003 to 2006, poverty incidence in the Philippines has remained high compared to China, Indonesia, Malaysia, Thailand and Vietnam.

Factors hindering progress in the fight against poverty were discussed by Canlas. In his lecture Why Poor Remain Poor?, Canlas cited the rapid growth in population as one of the major causes of poverty. He explained that households with large family members, on the average, end up with low per capita investments in health and education for their children. Poor families that find it difficult to have access to education, particularly in the tertiary level, end up unskilled with low productivity. “The unskilled become either unemployed or underemployed in informal jobs like hawking and vending in the urban areas,” Canlas said.

Given this situation, poverty is transmitted across generations and turns into a vicious cycle.

Meanwhile, Fabella talked on policies and institutions that influence the country’s economic growth and its performance in the protracted war against poverty. His presentation focused on the role of trade openness or trade globalization.

Employing cross-country regression analysis, Fabella said there was no reason to reject the premise that “openness” stimulates economic growth in least developed countries, though it is not evident whether openness increases income inequality or whether income inequality serves as a drag on economic growth.

For the trade liberalization to be beneficial to least developed countries, domestic governance should secure policies and institutional reforms that would enhance the efficiency of domestic markets. “It lies in the role of quality of governance. A market economy requires a modicum of peace and order, contract enforcement and property rights protection to flourish,” Fabella explained.

Reducing poverty in the Philippines