Editorial
Uneven growth
Philippine Daily Inquirer
First Posted 00:40:00 01/14/2009
Filed Under: Poverty, Opinion surveys, International Economic Institutions
Officials who still believe that the reduction of poverty and inequality should have the highest priority would do well to read the 2009 World Development Report of the World Bank. There they will find at least part of the answer to the ironic and puzzling situation where continuous economic growth hardly makes a dent on mass hunger and poverty. [Read story on World Bank report]
In the latest survey conducted by the poll group Social Weather Stations (SWS) in the last quarter of 2008, 52 percent of Filipinos or a total of about 9.4 million families rated themselves as poor, while 24 percent said they straddled the border between poor and not poor. The figure is slightly higher than the 50 percent average for the whole of 2007. When asked if they considered themselves “food poor,” 42 percent said yes while 30 percent said they were on the borderline, meaning that 7 out of every 10 Filipinos felt they were not eating enough. [Read story on SWS survey]
Another SWS survey showed the figure on hunger scaling a new high of 23.7 percent during the last quarter of last year. That means that 4.3 million households experienced involuntary hunger in the previous three months. The percentage of hungry people is not only higher than the 21.5 percent in the third quarter of 2007 but, more disturbingly, it was 11 percentage points above the 10-year average of 12.6 percent.
So where did all the fruits of several successive years of economic growth go? Last year was of course a bad year, with the growth in gross domestic product estimate to be less than 4.0 percent. But 2007 was a very good year—the best in three decades, in fact, measured in terms of GDP growth rate at 7.2 percent. And yet September 2007 saw the hunger incidence shoot up to a record high. Apparently, the government has not been doing enough to redistribute the new wealth created by economic growth. What it has done instead is make the rich grow richer and the poor grow in number. And this is because it pours most of its resources into areas that are already more developed and better off.
The World Development Report noted that in the Philippines, as well as in other middle-income countries, economic development was highly concentrated in a few urban areas, like Metro Manila and the regions of Central Luzon, Southern Tagalog and some cities like Cebu, Davao and Cagayan de Oro. If the rural areas only had the same quality of services and infrastructure as these urbanized areas, investments and therefore growth would be spread out, the report said. Indermit Gill, the World Bank’s chief economist for Europe and Central Asia, said policymakers could “ensure the convergence of living standards across the country through carefully designed policy and public investments in social services like health, education, housing and social protection in both urban and rural areas.”
The World Bank’s country director for the Philippines, Bert Hofman, has pointed one way to achieve a more balanced allocation of resources and ultimately development: revise the way the internal revenue allotments (IRA) are distributed among local government units to favor the less developed towns and regions. Under the present system of sharing, the IRA, which adds up to 40 percent of the national government’s internal revenue collection, is divided among the provinces (23 percent), municipalities (34 percent), cities (23 percent) and barangays (20 percent). The share of a province, city or town depends on its land area and population, giving the more developed places, which are naturally more heavily populated, larger shares. Thus cities like Quezon City get a much larger share than most others even though its coffers are already filled to overflowing. The result is the deepening of the disparity among local government units and the scandalous misallocation of resources which sees some rich cities building marble barangay halls or prettifying sidewalks at a cost of tens of millions, while poor towns cannot even afford to hire doctors or nurses.
The obvious solution is to give poorer towns bigger IRAs, and richer cities less or none at all, as Hoffman has suggested. This can be achieved by amending the Local Government Code, a task our lawmakers should address quickly if they intend to reverse the gross inequalities that are the principal source of disaffection and discord—even violence— among the Filipino people.
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