This is a reaction to Michelle Remo?s article titled ?RP needs to grow by 7% to reduce poverty.? (Inquirer, 10/22/09) She said that World Bank country director Bert Hofman told members of the business community in a recent conference that the Philippines must attract more foreign investments to enable it to attain a growth level of 6 or 7 percent, which should lead to poverty reduction and allow economic benefits to trickle down to the poor.

It has been said that economic growth is a function of different variables?among them, foreign investment, local investment, public debt, irrigated lands and employment. For better understanding, I would like to compare the Philippines and Vietnam which have almost the same land area, although the former has a population 10 percent more than the latter. Based on CIA World Factbook 2008 data, Vietnam?s foreign investment was 88 percent higher, its local investment was 2.8 times more (in terms of GDP percentage); its public debt was 81 percent lower, its irrigated land area two times bigger, and its employment in the agriculture sector 59 percent higher. In fact, for the period 2006-2008, the average GDP growth rate of the Philippines was 5.4 percent while that of Vietnam was 7.6 percent; in 2009, the year of global recession, the Philippines is expected to attain a growth rate of more or less 1 percent against the 4 percent of Vietnam, the highest among the Asean countries.

In 2008, the Philippines attained a GDP per capita of $3,300 with the corresponding population poverty incidence of 33 percent compared to Vietnam?s 2,800 with the corresponding population poverty incidence of 14.7 percent. The Philippines can be outdone by Vietnam in just a few years in terms of GDP per capita and poverty reduction, not unless the Philippines will be able to attain 6 or 7 percent in GDP growth by improving its performance in key economic variables other than in foreign investment. But then better economic growth with equity can only happen in an atmosphere of good governance and freedom.

?EDMUNDO ENDEREZ,
edenderez@yahoo.com