Seeing progress, poverty in mathematical terms

This refers to the news item titled “PH poverty ‘unchanged’, 10% of Filipino families rated  ‘extremely poor’” (Page A1, Inquirer, 4/24/13). The report states that the Philippines with a population of 97 million has attained economic growth of 6.6 percent in 2012, but its jobless rate in January stood at 7.1 percent, and its underemployment rate at 20.9 percent, of which 41.8 percent is in the farming sector. Please allow me to explain the matter in mathematical terms.

The historical data show that: 1) the GDP growth rate increased from an average of 4.95 percent in 2006-2010 to an average of 5.97 percent in 2010-2012; and 2) the corruption perception index (CPI) that measures the performance in fighting corruption improved from an average score of 2.4  to 2.8 between the two periods. The combined effect of the positive change in the values of the two variables resulted in reduced poverty incidence by 0.9 percent (from 28.8 percent in mid-2006 to 27.9 percent in mid 2012), which is not bad at all given the global recession that caused economic woes in many developing and developed countries. It is not surprising then that President Aquino continues to enjoy high satisfaction, trust and performance approval ratings.

Following the above-mentioned mathematical formulation based on concrete data, if the International Monetary Fund’s projection of the country’s GDP growth rate of 6.0 percent in 2013 and 5.5 percent in 2014 (which are lower than the 7-percent growth prescribed by economic experts) will be attained and an improvement in the CPI from a score of 3.4 in 2012 can be achieved, then a reduction in poverty incidence much higher than the present level is realizable. And if the inclusive growth is incorporated in the formula, there can be a significant reduction in poverty incidence and inequity as what happened in the case of Indonesia and Vietnam. Therefore, the mathematical formula that must be adopted by the government is that reduction in poverty incidence is the product of GDP growth rate, CPI and inclusive growth combined.

What is to be done? The news item stated that: 1) according to Norio Usui, senior country economist for Asian Development Bank, there is a need for a strong industrial base to give jobs not only to the highly educated college graduates, but also to high school graduates; and 2) the National Economic and Development Authority said it hoped to see improved results given new investments in infrastructure, agriculture and manufacturing.  In addition, the government should invest more in a programmatic manner in capacitating people’s organizations and cooperatives in poor farming and fishing communities in the fields of  marketing, technology, management and funding, which are the key success variables in business.

—EDMUNDO ENDEREZ,

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