Inclusive growth


Garbage scavengers - symbol of extreme poverty in the PhilippinesThe term “inclusive growth”, as a development paradigm or economic strategy, is defined by economists as “an equitable allocation of resources with benefits incurred to every section of the society.”  It is also variably referred to as “broad based growth” or “shared growth” or “pro-poor growth.”  In practical sense, inclusive growth implies lifting millions of Filipinos out of poverty.

Growth is inclusive when it creates productive economic opportunities for the poor and ensures equal access to them.  By encompassing these otherwise excluded segments of population in productive economic activities, we can achieve many good things — job creation, poverty reduction, repercussive benefits throughout the economy, and so on and so forth.  Inclusive growth allows poor people to participate and benefit from economic growth.

The question is how do we translate “jobless” economic growth into broad based growth?  The government is not telling us.  After three years in office and four SONAs, Pres. Aquino remains silent on where he is leading us into and how he intends to get us there.

So what does it take for the Philippines to achieve shared growth and dramatic reduction of poverty?  Let us first take a look at the challenges that lie ahead.

The National Statistical Coordination Board (NSCB) has reported that 22.4% of Filipino families are considered poor by the government.  Other independent local and foreign surveys place the number of poor in the country at a much higher figure.  But even at the NSCB figure, we are still looking at around 22.2 million men, women and children surviving each day on less than PhP54.50 (the equivalent of US$1.25 international poverty line at today’s rate) for all their basic needs: food, clothing, shelter, health, education etc.  And we are only talking here of the bottom 25% of “subsistence” poor Filipinos.

The second big challenge is how to lift the independently-estimated 40-50% of poor Filipinos out of poverty.  Clearly we need to do a lot more than jobless growth.

Joblessness remains at the core of extreme poverty in the country today.  Poor people without jobs will remain poor.  If we are to achieve any significant reduction in the number of poor Filipinos, it would require sustaining our growth rates while undertaking strategic reforms that facilitate job creation and poverty reduction.

Inclusive growth is the intended result of strategic policies and programs that take years to mature and bear fruits.  And here the devil is not only in the details.  A president with a term limit of six years may not be inclined to prioritize strategic reforms that may only yield social benefits after his or her presidency is over.

Here are some of those strategic concerns that are begging to be addressed and resolved:

1.  Our people are our most valuable assets.  Reforms and increased public investments in good quality and “affordable” education from early childhood to higher education are needed if we are to produce a globally competitive workforce.

At the same time, the issue of universal healthcare should be addressed as far as reasonably practicable.  A healthy workforce is a productive workforce.

2.  Resolution of the decades-old twin insurgencies.  Development and investments do not go where there is no peace and order.

The recently signed peace agreement between the Philippine Government and the Moro Islamic Liberation Front is a good start and must be made to work and stand up to both public and legal scrutiny.  A similar peace pact should be sought and forged with the Communist Party of the Philippines.

3.  Culture of transparency and zero tolerance for corrupt practices in the government service.  Corrupt public officials and employees invite corrupt private suppliers/contractors and waste limited public resources.

4.  Prudent fiscal and monetary management that ensures a healthy balance between budget management and public spending.  Keeping the budget deficit in check is good, but so is economic stimulus spending.

5.  Support for small farms in the form of improved infrastructures and credit facilities so farmers can improve their yields and bring their produce to the  market.  Post-harvest facilities are equally important to small farmers.

6.  Streamlined business procedures and regulations for small and medium enterprises (SMEs) and friendlier business climate.  SMEs, not the giant multinationals, are the backbone of the economy of developed countries.  By helping SMEs to grow and prosper, we are in fact improving the economy and creating more jobs.

7.  Support for manufacturing of high-value-added goods in the form of business incentives and export assistance.  While more and more people may be employed in the service sector, it is the manufacturing sector that creates the nation’s wealth.  We simply must produce and export more than what we import and consume if we are to achieve a favorable balance of payment and a “multi-legged” economy that employs more people.

8.  Expanded social safety nets.  Our social welfare systems are tied down to formal employment.  Poor people who are eking out a living in the informal economy should also benefit from an appropriate social security system.

A thriving economy can afford to give a little more to the poor and vulnerable sections of the society.

Finally, inclusive growth “travels in a straight line.”  By that I do mean stimulating industries and productive economic activities to operate in rural communities where joblessness and hunger are prevalent and where shared growth matters the most.  Extreme poverty drives many farmers to pawn or sell their small farms to finance the high cost of recruitment for menial jobs abroad in order merely to survive.  Many more rural poor simply migrate with their families to cities and urbanized areas to find employment and livelihood opportunities, compounding the problems of urban poverty and “squatting”.

Community-based rural industrialization is possible by consolidating small, fragmented farms into agro-industrial estates and empowering farmers to collectively own small to medium scale production facilities where they can process their agricultural produce into high-value-added products and sell them at much improved prices to both domestic and foreign markets.  This development scheme is particularly feasible in areas where coconut farming is the main source of income.

Coconut is an excellent base for rural industrialization because of its abundant and “renewable” supply and its versatility as a source of material for literally a thousand and one food, commercial and industrial products <>.

Imagine what a network of small to medium scale “integrated” coco-processing plants throughout our 68 coconut-producing provinces can do for our national efforts at job creation and poverty reduction in the  country.  And we are talking here of not just producing raw materials for the volatile world market but cooperative value-added production of a diversified range of finished products made out of coconut materials supplied by the coop farmer-members themselves at much improved prices.

Author:  Rene “RC” Catacutan
Published 03 August 2013  


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