IT MAY sound like “sweet-lemoning” (“sour- graping” in reverse, that is), but the slowdown in the growth of the country’s gross domestic product (GDP) in the first quarter of this year need not be cause for undue worry.
“GNP is a means, not an end,” headlined a recent article by fellow Inquirer columnist Mahar Mangahas—and indeed, too many people apparently still miss that fact. Gross national product (now also commonly termed gross national income, GNI), along with GDP, merely measures the level of aggregate economic activity, reflected in the total value of final output produced or incomes generated in the economy. I’ve explained in a recent article (“What GNP, GDP don’t tell us,” Opinion, 4/21/15) that GDP/GNP/GNI were never meant to measure wellbeing, leading serious analysts to pursue the concept of gross national happiness as well. Still, news of faster GDP growth is always widely welcomed, and slower or negative GDP growth met with alarm. But as Mangahas points out, the slower-than-expected 5.2-percent GDP growth in the first quarter came with improvements on other indicators of the Filipinos’ welfare.
Through the years, I’ve rated the economy’s performance using my trademark “PiTiK test,” based on the P-T-K combination of presyo (prices), trabaho (jobs) and kita (incomes)—yardsticks that common people can readily relate to. Even if we took the Q1 output/income slowdown as bad news, news on the P-T indicators has been positive. Based on the historical record, prices have never been more stable in the past 28 years, with the likes of the May 2015 annualized inflation rate of 1.6 percent not seen since mid-1987. Meanwhile, we have seen four consecutive quarters of more than a million annual net job creation, after averaging less than 800,000 since 2010. But even with my PiTiK test, the picture is far from complete. One would still like to get a sense of whether there has been a felt improvement in the quality of life of the average Filipino family, and especially of the poorest of the poor.
With persistent poverty worldwide, the United Nations developed the Human Development Index (HDI) in the 1980s to provide a richer measure of wellbeing than income alone. The HDI is a composite measure that combines average income (GDP per capita), state of health (proxied by life expectancy) and level of education (indicated by functional literacy rate). As such, it was a substantial improvement over simply looking at average income, particularly when making comparisons across countries. Poverty clearly cannot be assessed on the basis of lack of income alone, and the inclusion of health and education indicators in the index greatly enriched the measure.
Still, this composite index combining income, health and education indicators, measured in the aggregate with arguably imperfect yardsticks, leaves much to be desired. For a much richer picture of the state of wellbeing and of poverty in the country, we pursued in the early 1990s the establishment of a Minimum Basic Needs (MBN) household monitoring system nationwide. It was copied from Thailand’s Basic Minimum Needs (BMN) system which, Thai officials told us—to our embarrassment—they actually copied from us, inspired by an old document from our own Department of Social Welfare and Development. The MBN/BMN system tracks how well survival, security and enabling needs of households are being met. Among the survival needs are access to food, clothing, water and sanitation, and health services. Security needs cover shelter, public safety/peace and order, income and livelihood. Enabling needs include basic education, participation in community development, and family care (including psychosocial). Data on these are gathered from every village household, where a knowledgeable household member is asked simple yes-or-no questions (e.g., “Are you able to eat at least two meals a day?” “Do you have at least two changes of clothing?” “Is there potable water accessible within 100 meters of your house?” and so on). This MBN system, earlier envisaged for nationwide implementation, has since been made voluntary for local governments, and is now known as the Community-Based Monitoring System, implemented in close partnership with nongovernment groups.
In a similar vein, the UN General Assembly adopted at the turn of the millennium the Millennium Development Goals (MDGs), aimed at cutting poverty to half of 1990 levels in all nations by 2015. It defined eight goals and 21 targets, including indicators of income, employment, hunger, maternal and child health, basic education enrollment, gender equality, environmental sustainability, and governance. The record of achievement across nations is mixed; we in the Philippines have missed a number of the key targets including on income poverty incidence, maternal and child mortality, and environmental protection. Some of our neighbors, including Vietnam, reached their goals well before the deadline.
Looking beyond 2015, the UN is about to formally adopt an even broader set of Sustainable Development Goals (SDGs) that are proposed to include 17 goals with 169 targets covering a much broader range of sustainable development concerns. Beyond what the MDGs covered, the SDGs will also track progress in combating climate change, protecting oceans and forests, and making cities more sustainable, among many other new indicators.
How successful have we been in improving our economy and the lives of Filipinos? One thing’s sure: GDP growth is not the place to look for the answer.
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