The World Bank finds it good—no, great—news that the Philippines can solve its perennial poverty problem. “The Philippines can overcome poverty!” exclaims Mara Warwick, World Bank country director for the Philippines, Brunei, Malaysia, and Thailand.
That this country can lick its persistent poverty (22 million Filipinos are considered poor) is not the issue at all. The issue—and the bigger problem—is that why has not the Philippines conquered poverty, after decades of trying hard?
Other countries in a much more difficult and penurious situation and with much less resources than the Philippines were able to reduce poverty levels massively. Examples of Asian success stories in the fight against poverty: China, Indonesia, Vietnam, and lately, Cambodia.
“Despite the generally good economic performance, poverty remains high and the pace of poverty reduction has been slow compared with other East Asia countries,” says the World Bank’s just-released report on poverty in the Philippines, “Making Growth Work for the Poor.”
“Compared with many East Asian countries, the Philippines stands out for showing little dynamism at both the low end (elimination of poverty) and the high end (rise in economic security and global middle class),” laments the World Bank.
Indeed, China reduced extreme poverty (defined as one earning $1.90 a day), from 18.8 percent of the population in 2005 to 1.9 percent in 2012, a period of seven years; Indonesia from 27.5 percent in 2006 to 7.5 percent in 2015, a period of nine years; and Vietnam, from 19.5 percent in 2006 to 2.8 percent in 2014, a period of eight years.
The Philippines, meanwhile, cut its poverty from 14.5 percent in 2006 to 6.6 percent in 2015, a drop of 54 percent in nine years.
The reduction seems dramatic—ratio-wise. It is not.
In percentage terms, China reduced poverty by 89.4 percent, Indonesia by 72.7 percent, and Vietnam by 85.5 percent.
Thus, with the population rising by 1.7 percent per year and since poverty incidence is measured as a percentage of the population, the number of poor Filipinos in 2006, 22.6 million, is almost the same as the number of poor today, 22 million. In other words, there has been no real progress in reducing the number of the very poor.
The World Bank blames nearly everyone for the slow reduction in number of the Filipino poor. Except itself, of course. Also, not mentioned—ADB.
Both these banks came to Asia ostensibly to reduce poverty, especially in the Philippines.
When ADB came to Manila in 1968, the Philippines was still the richest Southeast Asian country. In the 1970s, the World Bank promoted infrastructure as a solution to Philippine poverty. Not much success there.
The poor Filipinos have large families and low levels of education. They are self-employed in agriculture as laborers, fishermen, and farmers. Their households are headed by men below 50. Three of every four poor Filipinos are in the rural areas. Two of every five poor live in Mindanao; over 50 percent of the population in the Autonomous Region for Muslim Mindanao are poor. Squatters are the very poor. About 40 percent of squatters are in Manila.
Who is to blame for their poverty?
If you believe the World Bank: one, the government; two, the very rich; three, poor agricultural output; and four, typhoons and war.
Natural disasters have caused $23 billion in losses and damages in the Philippines since 1990, while conflicts, particularly in parts of Mindanao, “not only destroy physical assets, they also erode human capital through loss of life, injury, illness, denial of education and health services, and increased malnutrition.”
The bank seems to blame a succession of Philippine governments and politicians for what it calls “the lower pace and less pro-poor pattern of growth than in many other East Asian countries.” In the Philippines, only 10 percent are global middle-class compared with nearly two-thirds elsewhere in the region.
The private sector is blamed as well for failure to develop a manufacturing base. The Philippines doesn’t manufacture anything significant—except humans.
The very rich are blamed for “high inequality of income and wealth.” Half of the nation’s wealth is owned by the one percent ultra rich, notes the World Bank citing Credit Suisse Wealth Report—“the fourth highest after the Russian Federation, Turkey, and Hong Kong.”
Explains the WB: “This high concentration of wealth may have contributed to strong vested interests in the status quo by hindering acceptance of the reforms needed to prompt more inclusive growth and faster poverty reduction”, adding “Differences in the quality of human resources, and in the incomes of individuals and households can earn, drive a large degree of the inequality of outcomes in the Philippines.”
Says the World Bank report:
“Poorer children are at a disadvantage from the start. They have limited access to good-quality health care and early childhood education, which undermines their ability to succeed later in life. Twenty percent of children under age five are malnourished and stunted. Many poor people, including in the younger generations, have limited education.”
Among the working poor, only 31 percent have completed high school and two percent benefitted from college education, compared with 59 percent and 15 percent, respectively, for the non-poor. Graduation from high school reduces the risk of poverty to two-thirds of the average.
Fortunately, President Duterte promises to lick poverty—to 14 percent of the population in 2022, in three ways —cash dole to the poor, free college education, and massive buildup in infra, with P8 trillion to P9 trillion infra spending during his presidency, “so people will live long and healthy lives, be smart and innovative, and will live in a high-crust society.”
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