Gini, growth, hunger

Friday, 06 May 2011 02:35

Written by Louie C. Montemar

In our part of Asia, with the exception of our country and its people, nation-states are showing increasing inequality but declining degrees of poverty over the last decade or so. The table below shows the Gini coefficient values for the Philippines, Vietnam, Thailand, Indonesia and Malaysia from 2007 to 2010. The Gini coefficient is the most commonly used measure of income inequality. This measure or “coefficient” varies between 0, which reflects complete equality and 1, which indicates complete inequality – meaning, “one person has all the income or consumption, all others have none.” Relatively, the Philippines has the highest Gini coefficient among these countries, which means a greater measure of inequality compared to the others. Thailand has lesser inequality than the Philippines, followed by Indonesia and Malaysia. The Gini coefficient for Vietnam is lowest of all the five countries.

Gini Coefficient (in percentage values), 2007 – 2011

COUNTRY	2007	2008	2009	2010
Philippines	46.1%	44.5%	44.5%	44%
Vietnam	37%	34.4%	34.4%	37.8%
Thailand	43.2%	42%	42%	42.5%
Indonesia	34.3%	34.3%	34.3%	39.4%
Malaysia	49.2%	49.2%	49.2%	37.9%

Source: Vision of Humanity, 2010. “Global peace indicators: Gini-coefficient,” www.visionofhumanity.org

Whatever the putative reasons for the persistence of inequality in these countries are, what is clear is that we are trailing behind. Moreover, in our country, economic growth comes with reports of the rising incidence of hunger. This is just consistent with data on income inequality in the country.

In the Philippines, data on income is recorded every three years through the Family Income and Expenditure Survey (FIES). The FIES survey of 2006 and 2009 showed that the nationwide income gap between the rich and poor sectors “barely changed.” According to one news report, although Filipino family incomes rose in 2009, the earnings of the “non-poor” are still four times greater than those of the poor.

The level of inequality in the country remains high compared to that of other Southeast Asian nations and there has hardly been any change for more than 20 years. In an Asian Development Bank (ADB) report, persistent levels of inequality in the country are noted in the area of income, land distribution, and welfare and human development. Despite reported economic growth in the past years, this growth has not been equitable. This “even if the Philippines continues to receive billion-dollar remittances from Overseas Filipino Workers (OFWs),” another ADB report notes. Only provinces with higher numbers of OFWs sent out actually appear to benefit more. In all, the richest 10% of Filipino families are “raking in more than a third of the country’s total income.”

The Philippines and other Southeast Asian countries basically have the same nature of policies that aim to address inequitable growth. The context of urban-rural inequality persists in these countries. What sets the Philippines apart is the regional inequality that is increasing.

The ADB's recommendation is for the Philippine government to help the Philippine regions with the most unequal distribution of wealth, based on the 2009 FIES, particularly Eastern Visayas and Mindanao. This, it is noted, may be done by strengthening its anti-poverty programs. Really?

Even the World Bank has made recommendations to decrease the levels of inequality in the country, noting that social protection policies will be needed to assist the poorest and the most vulnerable and that, in some cases, “short-term social transfers may be needed to help the poor to acquire the skills that they need to compete in new and emerging markets.”

Considering comparative data across East Asian economies and whatever our friendly “advisers” are recommending, the message can be taken as a positive one – poverty reduction and meaningfully addressing inequality is possible through directed and willful state intervention. Whatever particularities the Philippine development trajectory may have, it cannot be denied that governance matters. Other states have shown that poverty and inequality may be taken on frontally through policy intervention. The question is, what matters should be at the top of the development agenda of government and what should be the proper mix of public and private dynamics that should be effected for a more inclusive economic growth pattern to be realized.

Allow me to posit some broad stroke answers. First, regional development plans must be strengthened and made responsive to local community needs. Looking at the population distribution and sectoral employment patterns in the Philippines' rural areas, government should more clearly define the role of agriculture as, by necessity, a leading growth sector. This actually counters the suggestions of our “advisers” from the multilateral banks.

Second, the urban local governments need to more seriously address the various aspects of migration and development given the problems of sustainability in their areas. Third (and closely related to the second point), the urban informal sectors have to be considered in development planning and mainstreamed, as it were, to the extent possible. There is tremendous human resource locked up and under maximized in this gray sector of the economy.

In all these, and this is the fourth key concern, local governance must be strengthened and the efforts of local government units must be synchronized and made to more clearly dovetail with national government efforts. As anti-corruption efforts are beefed up and sustained especially for national agencies, capability building and adequate resource support must be provided to the local executives, officers and bureaucrats.

Going back to the first point, government needs to define the most broad-based development strategy that it would employ particularly recognizing continuing expressions of the experience of hunger in the country especially in the poorest regions. In the final analysis, one can only wonder why in an agri-based and resource-rich country like the Philippines, it is the food producers themselves – farmers and fisherfolk – who complain consistently of experiencing hunger despite national government claims of notable economic growth.

Tragically, the Philippine economic pie remains improperly distributed. What persists in the Philippines, as noted by some including the most conventional of economists, is a kind of jobless growth – one that may also be described as growth with hunger.

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