Economic Development of the Philippines

Topics: Poverty, Gross domestic product, Economic development Pages: 5 (1342 words) Published: July 29, 2014
Philippines’ Economic Development
Economic development: the qualitative process of structural change that involves the development of an economy’s economic and social infrastructure. Economic development involves the use of more resources or better quality resources to improve real increases in the quality of life of society. The construction of roads, railways, schools, hospitals, universities, dams, bridges, factories, power plants, ports and airport facilities are examples.

Statistics:
1980 GDP per capita – US$ 685
2013 GDP per capita – US$ 2,792
1980 GNI per capita – US$ 700
2012 GNI per capita – US$ 2,470
1980 Adult literacy rate – 83%
2010 Adult literacy rate – 95.4%
1980 Mean years of schooling – 6.1
2012 Mean years of schooling – 8.9
1980 Life expectancy at birth (years) – 62.2
2013 Life expectancy at birth (years) – 68.4
1980 HDI – 0.561
2012 HDI – 0.654
1985 GINI – 41.04
2009 GINI – 42.98
1985 Population below national poverty line – 44.2%
2012 Population below national poverty line – 27.9%

These economic indicators all indicate a general increase in the quality of life from the period of 1980 when the Philippines initially experienced rapid integration with the global economy due to globalisation compared with the current period of 2010. However, the GINI coefficient has increased, reflecting the stagnant level of high income inequality even after globalisation and how the country’s lower income groups are not benefiting from the country’s increased economic growth. The high levels of poverty are also another prominent social issue.

Impacts of Globalisation on Economic Development:
1) Through globalisation, the Philippines is able to access foreign aid to improve infrastructure since it is still a developing economy. The Provincial Road Management Facility (PRMF) initiative was created between Philippines and Australia to improve public access to infrastructure and services by incentivising governance reform. In return for good governance reforms, the Philippines can access Australian aid to upgrade core road networks. In 2011-12, it received $21 million.

2) Globalisation also allows for foreign aid to help reduce its poverty incidence. This includes the co-operation with international organisations such as IFAD (International Fund for Agricultural Development). The IFAD provides funds for agricultural development in order to assist rural regions that rely on agriculture for their main source of income. Since 1978, IFAD has committed a total of US$168.8 million in financing 12 agricultural development projects. This enables poor rural people to improve their incomes, food security, education and health care, and consequently increasing their quality of life.

3) The Philippine economy is still mainly based on its agricultural industry. Almost 80% of the country’s poor lives in rural regions, and they depend upon agriculture for their only source of income. After the country’s commitment to the WTO, the market has been flooded with cheap imports from countries like the United States and Australia. This has reduced the competitiveness of the Philippines’ agricultural industry, and reduced the quality of life of poor rural farmers. Liberalisation due to globalisation is one of the factors that have caused the poverty incidence rate to decline at a slower rate as poor rural farmers still struggle.

4) Contagions of the international business cycle have also spread to the Philippines and affected its economic development. Households felt the impact of the GFC through reduced incomes and increased unemployment. As many as 208,128 domestic workers lost their jobs between October 2008 and August 2009 due to the GFC. 37% of working adults also had their working hours shortened, wages reduced or lost their job between February and April 2009. These economic shocks have caused the poverty incidence rate to rise as people lost their livelihoods, and consequently reduced their quality of...
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