Poverty in the Philippines
Introduction
The Philippines is one of the three countries granted exemption in 1995 from the removal of quantitative restriction (QR) on rice under Annex 5 of the World Trade Organization (WTO) agreement. Japan and South Korea are the other two countries. The exemption will expire on December 31, 2004. The primary objective of the paper is to look at the possible poverty and distributional effects of the removal of the QR and the reduction in tariffs on rice imports. In particular, the paper attempts to analyze the following issues: (a) Do the poor share in the potential gains from a freer market for rice? (b) What alternative or accompanying policy measures may be needed to ensure a more equitable distribution of the potential gains from a more liberalized market for rice? (c) What is the transmission mechanism in which the removal of the control may affect the poor? These are some critical issues that the government may have to address as it implements market reform and opens the economy for imported rice.
Rice is the staple food of about 80 percent of Filipinos, and therefore a major item in the consumption basket of consumers. It is the single most important agricultural crop in the Philippines, and therefore a major source of income of millions of Filipino farmers. Because of its political significance, the government is heavily involved both in the supply and distribution of rice to assure consumers sufficient and stable supply of rice at low prices and to maintain a reasonable return to rice farmers with adequate price incentives. One major policy instrument of the government at present is the control on imported rice through QR.
A market reform in general and a removal of QR on rice in particular could have economy-wide effects. In this regard, it is appropriate to analyze these types of issues using a computable general equilibrium (CGE) model calibrated to national accounting data. On the other hand, it is appropriate to study the effects of reforms
The Philippines is one of the three countries granted exemption in 1995 from the removal of quantitative restriction (QR) on rice under Annex 5 of the World Trade Organization (WTO) agreement. Japan and South Korea are the other two countries. The exemption will expire on December 31, 2004. The primary objective of the paper is to look at the possible poverty and distributional effects of the removal of the QR and the reduction in tariffs on rice imports. In particular, the paper attempts to analyze the following issues: (a) Do the poor share in the potential gains from a freer market for rice? (b) What alternative or accompanying policy measures may be needed to ensure a more equitable distribution of the potential gains from a more liberalized market for rice? (c) What is the transmission mechanism in which the removal of the control may affect the poor? These are some critical issues that the government may have to address as it implements market reform and opens the economy for imported rice.
Rice is the staple food of about 80 percent of Filipinos, and therefore a major item in the consumption basket of consumers. It is the single most important agricultural crop in the Philippines, and therefore a major source of income of millions of Filipino farmers. Because of its political significance, the government is heavily involved both in the supply and distribution of rice to assure consumers sufficient and stable supply of rice at low prices and to maintain a reasonable return to rice farmers with adequate price incentives. One major policy instrument of the government at present is the control on imported rice through QR.
A market reform in general and a removal of QR on rice in particular could have economy-wide effects. In this regard, it is appropriate to analyze these types of issues using a computable general equilibrium (CGE) model calibrated to national accounting data. On the other hand, it is appropriate to study the effects of reforms