Ellett, Aja Joy C.

June 27, 2019

Development Finance Prof. Edwin Santiago

Unfinished To-Solve List:

​A​ ​Development Status Assessment of the Philippines

Extent of Extreme Poverty

According to the Philippine Statistics Authority’s official poverty statistics for the first
semester of 2018, the poverty incidence among Filipino individuals was registered at 21.0%,
while Filipino families were registered at 16.1%. In the same report, it was stated that the
subsistence incidence among Filipino individuals, or those whose income falls below minimum
income required to meet basic food needs, also known as extreme poverty, was reported
around 8.5%, while Filipino families were registered at 6.2%. Although the portion of extreme
poverty takes up less than half of the poverty incidence of Filipinos, and it has decreased from
the 2015 statistics, it still represents a huge sector of the Philippines, especially with the
country’s population amounting to approximately 106.5 million Filipinos.
In the year 2012, extreme poverty rates in the Philippines took up 19.2% of the whole
population based on the international poverty line (Liacco-Dy, 2014). Majority of those in
extreme poverty lives in rural areas and works in agricultural-related jobs, specifically farming
and fishing. Most individuals from rural regions migrate to National Capital Region in order to
apply for more jobs due to the insufficient number of opportunities in rural areas. Although the
majority live in rural areas, they are also common in urban settings, and usually found in the
slums as informal settlers. In both urban and rural areas, most have large families
(approximately six members or more), in effect, the demand of needs is greater for each
individual, which then increases needed total expenses to provide for the family. This is
extremely difficult for each member of the family because those in extreme poverty have
minimal to no access to basic needs. In addition, these families have access to minimal
electricity, water sources, and proper toilet facilities, and limited access to proper health and
education services. Based on research from the Asian Development Bank, in two-thirds of
families in poverty, the head of the household only experienced elementary education or below
(2009). Asian Development Bank mentions that the Philippines is lagging behind access to
primary education and reproductive health care. The lack of assets to properly sustain families
and lack of access to basic needs for an individual comes with a lack of immunity and protection
when battling different communicable and incommunicable diseases or illnesses.

Economic Policy
As poverty continues to be a slowly-declining widespread in the Philippines, the
country's economic reforms and policies play an incredibly important role in its alleviation. It is of
importance to be accommodating to different investors, both foreign and local, in processes and
infrastructure. Costs are rising due to inefficiency, sighting traffic as an example. According to
the Japan International Cooperation Agency (JICA), the traffic in Metro Manila alone costs P3.5
billion in lost opportunities per day. Currently, the Duterte administration’s project, “Build, Build,
Build,” created to transport, improve infrastructure, and allow connectivity within regions.
Although beneficial for the country and is hoping to relieve traffic congestion, its means and
budget allocated are questionable for some people.
According to PWC’s primer on Investment Incentives, both Filipino and Non-Filipino are
allowed to receive incentives as long as they are registered with the government. The cost of
doing business in the country includes payment of processes and different forms. Once
authorized, businesses and investors can avail of different incentives such as tax cuts,
renovation of materials, and many more. Although the economic policy is

The Fiscal Framework

According to the Country Government Assessment by the Asian Development Bank, the
public financial management in the Philippines has not been meeting its goals on fiscal
discipline, strategic allocation of funds, and operational efficiency. It is of importance to improve
the functions of this financial government office because it affects budget sourcing. From a
speech delivered by Secretary Benjamin Diokno regarding Fiscal Issues on Revenue and
Spending, an expansionary Fiscal Policy is planned to sustain the GDP increase from 2 to 3
percent. However, this sustenance will be achieved through high government expenditures and
expected to reach around 20.8% of the GDP in the upcoming 5 years. Although the government
may have high spending rate which will improve the GDP of the Philippines, it doesn't
necessarily mean that it will improve the lives of the Filipinos. Besides the increase of GDP, in
the speech, Diokno shed light on the importance of investing in human capital - and they
continue giving the Social Services sector the biggest share of the budget. Investing in human
capital is investing in the future of not just an individual, but investing in an assured future for the
country.

Geography and Human Ecology

The Philippines is an archipelago that consists of 1,641 discovered islands and is
surrounded by 4 different seas namely the Philippine Sea, South China Sea, Celebes Sea, and
the Sulu Sea. Being an archipelago, the majority of the population and cities are located in
coastal areas from different islands.
Transportation is an important sector in the Philippines. The transportation sector of the
Philippines includes air, water, road, and rail transport. Although the Philippines has several
islands which heavily need water transport, the road is the most important and biggest mode of
transport. According to the the Transport Sector Assessment document of Asian Development
Bank, it accounts for 98% passenger traffic and 58% cargo traffic. Although there are
transportation systems readily available for public use, the level of service and quality is below
average. New and modern infrastructure to ease congestion is suggested by the agency (de
Vera, 2018). Besides the inefficiency of road and railway transport, the access of airports and
seaports are abundant in different regions in the Philippines.
One of the most valuable resources in the Philippines is its forests, providing several
livelihood opportunities and ecosystem services (SEPO, 2015). Filipinos, especially those in
rural environments, heavily rely on agricultural lands to cultivate vegetables and livestock. Other
than the importance of agricultural lands, the Philippines also heavily relies on the healthy
18,000km coastal environment surrounding the country. However, the country is experiencing a
loss of biodiversity and has been slowly degrading over time. According to research by the
Department of Environment and Natural Resources (DENR), the forest cover of the Philippines
has greatly declined from 60% of the land area in 1934 to 23.89% in 2011, mainly due to
deforestation. On the other hand, according to Greenpeace, the Philippines is the third worst
polluter in the world’s oceans (2018). The loss of biodiversity through these two major
environmental threats not only affects the livelihood of Filipinos but also compromises the safety
and nutrition of an individual - both poverty and financially capable individual.

Patterns of Governance
In the Constitution of the Republic of the Philippines, it is declared that the country is a
“democratic and Republican state,” and that the sovereignty resides in the people and all
government authority emanates from its people. Good governance is necessary to not only
alleviate poverty but also to consistently improve the lives of citizens. The Philippines is a
democratic county led by a president that is in power for 6 years and abides by what is written in
the constitution. According to the Country Government Assessment by the Asian Development
Bank, the public financial management system is not efficient due to lack of fiscal discipline,
unstrategic allocation of resources, and inefficient operations, which hinders the potential of the
Philippines opportunity-wise, especially in foreign investment. Despite the rules and regulations
made in this government unit, the utilization of development assistance to each project have not
been effective - especially from National Economic and Development Authority (NEDA),
Department of Budget and Management (DBM), Department of Finance (DOF), and
Commission on Audit (COA).
Based on the same Country Government Assessment by the Asian Development Bank,
it is due to the government’s fundamental limitations, both personal and financial, that the
government is unable to deliver their job properly. These limitations also open the opportunity
for officials to implement excessive red tape and lead to graft and corruption, especially for
top-level government officials. Red tape does not only open the opportunity for corruption,
however, it also affects development projects. Due to rigorous processes of the government,
development projects and programs that may present huge opportunities for growth is hindered.

Cultural Barriers to Economic Development

There are several barriers to economic development in the country, including religion,
class, social inequality, and income inequality. Women are generally respected in the
workplace, are entitled to rights, and have the ability to work beyond home production, however,
at times, disrespected on the streets. Based on the survey of Asiasociety.org, more than 86% of
the Philippine population is Roman Catholic, making the Philippines is the most Catholic nation
in Asia. Several political and social issues originate from differences of religious views -
examples of such are the RH Law, SOGIE Bill, and Homosexuality. Inactivity towards
accomplishing progress due to religion-related arguments, especially when it can affect the
country economically, slows down the economy. In addition, there are existing religious beliefs
and practices that hinder development but spikes up the population rate - specifically the
condemnation of contraceptives by the Catholic Church. There is a huge gap difference
between the higher and lower class of society caused by the social and income inequality of
citizens. According to the National Statistical Coordination Board, over 74.7% of the population
comprises of the lower class, while 0.1% of families are in the upper class (2015). The
continuous increase of the lower class leads to the consistency of our diminishing development
as a country.

Overall, to rate the development status of the Philippines, it would be slightly below
average. From the state of government offices to the public transportation quality, and the
intensity of extreme poverty in the Philippines, there are several opportunities to further improve
its state, mainly through good governance.
 References:

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Cabildo, J., Subingsubing, K., & Reysio-Cruz, M. (2017, March 1). Many farms lost to land
conversion. Retrieved from
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Dy-Liacco, G. (2014, September 15). Extreme Poverty in the Philippines. Retrieved from
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Poverty incidence among Filipinos registered at 26.3%, as of first semester of 2015 - PSA.
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