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Poverty and growth: two stories

“A rising tide lifts all boats” is a saying oft-quoted by economists who posit that by raising national income and encouraging overall growth, all sectors of society will benefit. Some, in fact, have posited that as an economy continues to grow, the equitable distribution of income will naturally follow.

But others point out that in economies burdened by inequality, the benefits of growth will end up merely enriching the already rich, while the poor will not just remain poor but will feel the gap ever more keenly.

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Mara Warwick, the World Bank’s country director for Brunei, Malaysia, Thailand and the Philippines, said in a presentation on its poverty assessment report that there are actually “two stories to tell.” The first is that the Philippines can overcome poverty, giving everyone hope, said Warwick, that “poverty (is) not at all insurmountable.” But the other story is that the Philippines needs to do more to end poverty. The fundamentals are in place, the report points out, but persistent inequality means that the benefits of economic growth fall unevenly.

Despite falling poverty rates, the report’s main author Xubei Luo points out that “22 million Filipinos have been left behind.” Those at the tail-end of the economic story share several things in common: 60 percent are engaged in agriculture, with 80 percent of the country’s poor residing in rural areas, while 58 percent have families with six or more children.

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The “Philippine story” is that while poverty has been steadily declining through the years, the decline has not been fast enough and the gains made by those on the brink, or with a leg up from poverty, are so tentative and fragile that they can fall back down after a natural disaster or conflict; when and if a breadwinner loses a job, falls ill or dies; or in the event of a catastrophic illness in the family.

In the Autonomous Region in Muslim Mindanao, bedeviled by a decades-old armed conflict, more than 50 percent of the population is poor. More than a million Filipinos are impoverished each year by natural disasters, whether these be sudden disasters like typhoons, floods or drought, or long-term environmental crises like climate change. In the wake of Supertyphoon “Yolanda” alone, said Xubei, the estimate is that a million of our people fell below the poverty line. This is because nearly 60 percent of the poor work in agriculture, which is highly vulnerable to the vagaries of nature.

There are many other reasons so many Filipinos remain mired in poverty. One is large family size, with over 31 percent
of households with six or more members considered poor. The level of education of the head of the family likewise affects everyone’s economic standing, with 80 percent of the poor living in a household headed by individuals with less than a high school education.

Poverty likewise impacts the health status of family members, with two out of five children in poor households afflicted with stunting, a condition that has implications not just on their physical health but likewise on their mental capacity.

Since the official name of the report is “Making Growth Work for the Poor,” the authors do offer solutions to the problem of persistent poverty.

One is for both government and the private sector to create more and better jobs for both skilled and unskilled workers. Another is to improve productivity in all sectors, especially in agriculture. While educational reforms have been put in place, the report calls for boosting the quality of basic education, with special focus on secondary education, to equip young Filipinos with “the skills needed for the 21st century.” All sectors should also invest more in health and nutrition, especially in the reduction of child stunting and the implementation of the reproductive health law.

The report likewise calls for improved disaster risk management systems and strengthened social protection systems, like the 4Ps. Finally, the authors recommend that poverty reduction efforts be focused even more keenly in Mindanao, especially by increasing public investment and bringing lasting peace to the island.

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