Rethink approach to economic development

This refers to the news item “PH economy expands 6.7 percent in 2017” (Inquirer.net, 1/23/18) which stated what Socioeconomic Planning Secretary Ernesto M. Pernia said that the 2017 gross domestic product growth figure was “a strong finish that keeps our position as one of the fastest-growing economies after China’s 6.9 and Vietnam’s 6.8 percent.”

It further stated what Pernia said that the ambitious “build, build, build” infrastructure initiative, expected pickup in domestic demand on household consumption due to the lower personal income tax rates under the Tax Reform for Acceleration and Inclusion Act, and moves to lift foreign investment restrictions, as well as the rice import quota, will sustain robust economic growth moving forward.

My comments are based on the data culled from the CIA World Factbook 2017, which are as follows:

1. Basically, the Philippines, China and Vietnam are agricultural countries. By giving importance to agriculture, China and Vietnam have created a labor force representing more or less 59 percent of their total population; while that of the Philippines that gives importance to services is only 42 percent.

2. The labor force is distributed among the agricultural, industrial and service sectors. Vietnam has the highest percentage share of agriculture to the labor force at 48 percent, followed by China (28.3 percent) and the Philippines (26.9 percent).

3. The above GDP growth effected the further improvement of the GDP purchasing power parity of the Philippines at $8,200; China, $16,600; and Vietnam, $6,900.

4, With lower GDP, the Philippines and Vietnam consider agriculture as the backbone of their economies. The Philippines’ GDP has always been higher than that of Vietnam’s and it was 19 percent higher in 2017; but Vietnam’s percentage share of the agricultural sector to the labor force has always been higher than that of the Philippines, and it was 70 percent higher in 2017. This could be the reason why Vietnam’s population poverty incidence (PPI) has been reduced to 11.3 percent as against the Philippines’ 21.6 percent. With higher GDP, China considers agriculture as a vital industry. China’s GDP has always been higher than that of the Philippines’ and it was two times higher in 2017 and that China’s percentage share of agriculture to the labor force has always been higher and it was 5 percent higher in 2017. This could explain the reason why
China has the lowest PPI at 3.3-6.1 percent.

In summary, the country’s approach to economic development without giving importance to agriculture could hardly lead to the attainment of inclusive growth for poverty eradication. But given the fact President Duterte recognizes that the agricultural sector is the backbone of the economy, there is hope that he can muster the political will to place the agricultural sector as one of the top priorities of the development agenda under his administration. This should be his intention, direction and projection.

EDMUNDO ENDEREZ, [email protected]