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Article by Antonio S. Lopez, The Philippines is not the poor
Web Source: Manila Times Article ; Flight of Fancy Blog
The statistics and the analyses on poverty incidence in the Philippines are distressing. They will make you grab the nearest paltik and shoot the politician next to you.
My contention, however, is that the Philippines is not that poor. The Pinoy is not that poor. And yes, we need the politicians. Just look at how that priest in Pampanga is running the local government.
Why do I say the Philippines is not that poor? Let me cite some data:
1. The Philippines is a large country and a large economy. The population is 92 million, the 12th largest in the world. Only China, India, the US, Indonesia, Brazil, Pakistan, Bangladesh, Russian Federation, Nigeria, Japan and Mexico are bigger.
We are the same size as Vietnam. We are bigger than Germany 82.7 million, Thailand 65.3 million, France 60.9 million, the UK 60 million, Italy 58.2 million, Korea 48 million, Spain 43.6 million and Argentina 39.5 million.
The Philippine gross domestic product in purchasing power parity is worth $327 billion, according to the World Bank 2008 World Development Report and $319 billion, according to the IMF World Economic Outlook October 2008. That makes it the 36th largest economy in the world, out of 200 countries. The Philippines is the ninth largest economy in Asia.
We are bigger than Hong Kong, Norway, Chile, Portugal, Singapore, Vietnam, Ireland, UAE, Kuwait, and New Zealand. Switzerland, home to the largest hoard of hidden wealth in the world, is just slightly bigger.
In the whole of Asia, only eight other countries are bigger than the Philippines in GDP PPP – China, Japan, India, Korea, Indonesia, Taiwan, Thailand and Malaysia.
2. As a domestic market, the World Economic Forum classifies the Philippines as the 33rd largest market in the world. Domestic market here means GDP plus value of imports of goods and services minus exports. RP is bigger than Austria, Malaysia, Switzerland, Hong Kong, Portugal, Vietnam, Chile, Hungary and yes, Singapore.
In October this year, the IMF classified the Philippines as a newly industrialized country with estimated its nominal GDP per capita at $1,908.
Per capita, the Gross National Income, per World Bank 2007 data, is $1,620, 50 percent more than Vietnam’s $790. Even in per capita PPP terms, we are richer than the Vietnamese—$3,730 vs. $2,550, a difference of $1,180 or 46%. Of course, we could have been far richer if we had grown as fast as Vietnam.
In the eight years from 2000 to 2007, the Philippine average GDP growth was 5.14%. That of Vietnam was 7.63%, 48% faster. But who is happier—the Filipino or the Vietnamese?
3. The Philippines has ten million expatriate workers, the so-called overseas Filipino workers (OFW). There are 16 million families in the Philippines. That means 63% of total households in the country have an OFW. Two of every three families.
This year, the 10 million overseas Filipino workers will remit $18 billion. That’s an average remittance of $1,800 per worker. Divide that by 5.5—the average of Filipino family size and you get $327.27 additional per capita income. Add that to the domestic $1,620 per capita income and you get a per capita income figure closer to $2,000. In other words, one can conclude that 10 million households—two of every three—are middle class.
Compare that to the ten million households in America who are technically bankrupt because their homes have less value than the loans borrowed with which to buy them.
4. The Philippines is unique as a poor country. Filipinos spend more for e-loading and texting than for their milk, coffee, patis and even Jollibee. Is that the behavior of poverty-stricken people?
The Filipino farmer is productive only half of the time. He has plenty of spare time. He uses that to drink gin or beer with his barkada, make bets at the cockpit, and make love. He breathes fresh air, eats his wife’s cooking and listens to the latest two-bit political commentator on the radio. His wife, meanwhile, watches the latest telenovela.
Is he happy? Yes. Is he poor? Yes.
5. Philippine presidents are supposed to be corrupt, from Roxes to Quirino to Marcos to the present one - at least (if) you believe our NGOs and civil society groups. Ferdinand Marcos is supposed to have stolen $10 billion. Joseph Estrada is supposed to have stolen several billions too. And Gloria Arroyo topped the two.
Up to 40% of our budget goes to graft.
If it is true our Presidents, as well as all other politicians, steal so much, how come the Philippines is still standing as an economy? And based on the World Bank, IMF and WEF data, we are not doing very badly. The only conclusion: We have so much wealth which not even record thievery by each administration can finish. Or our Presidents are honest, after all.
If it is true we are that poor the Philippines should have been a goner long time ago. Just like Iceland whose banking system collapsed and whose savings evaporated.
Dr. Arsenio Balisacan praises how Vietnam has sharply cut down its poverty.
Vietnam, however, is a very different economy from the Philippines. The value added of agriculture in the Philippines is 14% of GDP. That of Vietnam is 20%. The services sector accounts for 55% of the Philippine GDP and 38% of Vietnamese GDP. Household spending is 80% of Philippine GDP, 67% of Vietnamese GDP, and 57% of Thai GDP.
The Philippines is not an agricultural country. It is a services economy. It is a consumption economy, just like the US. In services, it seems easier to created value added without adding to employment. That is why growth, no matter how dramatic, does not readily translate into large employment gains. Nor do its benefits cascade down to the masses. The result is growth with poverty all around.
Please remember that according to the World Bank itself, growth will always be uneven. Poverty will always be with us.
It is much easier for Vietnam to respond to poverty problems than the Philippines. Vietnamn is not a Christian country. You don’t have cardinals and bishops telling the government what to do, though sometimes Buddhist monks burn themselves to death to make a point.
Vietnam has a much larger agricultural base, thanks to the Mekong River Delta. And if food is half of consumption, then having a large agricultural base is a distinct advantage in addressing poverty problems.
In the light of the financial meltdown in the US and the ensuing global economic slowdown, how will the Philippines fare?
I think the Philippines will do better than most countries in the world.
We are not that dependent on the world as the other countries. Philippine exports as a percentage of GDP is only 41%, unlike Malaysia’s 109.6%, Vietnam’s 78.2% and Thailand’s 73.2%.
According to Goldman Sachs, the Philippines will be the 17th richest country in the world by 2050 with GDP of $3 trillion. We will be bigger than Italy, Iran, Egypt, Pakistan and Bangladesh in that order.
In 2050, China will be the richest country in the world, with GDP of $70.7 trillion, 1.8 times No.2 which is the US, with $38 trillion, followed by India $37 trillion, Brazil $11.6 trillion, Mexico $9.34 trillion, Russia $8.58 trillion, Indonesia $7 trillion, Japan $6.67 trillion, UK $5.13 trillion, Germany $5 trillion, Nigeria $4.64 trillion, France $4.59 trillion, South Korea $4 trillion, Turkey $3.94 trillion, Vietnam $3.6 trillion, and Canada $3.14 trillion.
By 2050, per capita, the Philippines will be the 19th richest, with $20,500. With current per capita income of $2000, Filipinos will make an additional $440.48 each year over the next 42 years to reach to the $20,500 per capita income.
At 49 to $1, $440.48 is an additional income of P21,583 per year or an extra P1,800 per month. That’s like saying your average Meralco bill will be free every month over the next 42 years.
This is not to say we should not pay attention to poverty. We should.
To me, there are three main causes of poverty - the unequal distribution of wealth, the Catholic Church, and the incompetence of government.
Only ten families plus the government own most of the 100 largest companies in the Philippines. The same families bankroll political ambitions and candidacies which in turn serve vested interests. It is a vicious circle.
Many tycoons and taipans do not pay the right taxes.
In this country, business, big or small, is a family affair.
In the 1970s, Jaime Cardinal Sin declared a preferential option for the poor. Help the poor. Fight for the rights of the poor. After 30 years, the number of poor doubled.
The record of the Catholic Church in helping the poor is disappointing.
This is ironic considering that the poorest regions in this country, outside of the Muslim areas, have the highest Catholicism. Bicol, one of the poorest regions, is 98% Catholic.
In the last 30 years, according to World Bank data, the Philippines registered per capita growth of 0.2%, the slowest in the world, bar none. Now that’s incompetence.
What to do then with poverty?
My solution: Go abroad. Or join a family.