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CHAPTER I INTRODUCTION Background and Importance of the Study Poverty remains the most critical social problem that needs to be addressed. Philippines' poverty line marks a per capita income of 16,841 pesos a year. According to the data from the National Statistical Coordination Board, more than one-quarter (27.9%) of the population fell below the poverty line the first semester of 2012, an approximate 1 per cent increase since 2009. This figure is a much lower figure as compared to the 33.1% in 1991. The decline in poverty has been slow and uneven, much slower than neighboring countries who experienced broadly similar numbers in the 1980s, such as People's Republic of China (PRC), Thailand, Indonesia (where the poverty level lies at 8.5%) or Vietnam (13.5%). This shows that the incidence of poverty has remained significantly high as compared to other countries for almost a decade. The unevenness of the decline has been attributed to a large range of income brackets across regions and sectors, and unmanaged population growth. The Philippines poverty rate is roughly the same level as Haiti. The government planned to eradicate poverty as stated in the Philippines Development Plan 2011-2016 (PDP). The PDP for those six years are an annual economic growth of 7%-8% and the achievement of the Millennium Development Goals (MDGs). Under the MDGs, Philippines committed itself to halving extreme poverty from a 33.1% in 1991 to 16.6% by 2015. According from the book of Villegas entitled ‘Guide to Economics for Filipinos’ he stated that poverty or being poor means ‘experiencing a low quality of life deprived of both the material and non material requirements that allow an individual to live like a human being’. According to ‘Addison Wesley Economics’ by Richard M. Hodgetts’ said most of people regard poverty as ‘a condition in which people are unable to buy the minimal amount of food, clothing and shelter that is required for existence’. About half of the Philippines’ 88 million people live in rural areas. Poverty is most severe and most widespread in these areas and almost 80 per cent of the country’s poor people live there. Agriculture is the primary and often only source of income for poor rural people, most of who depend on subsistence farming and fishing for their livelihoods. In general, illiteracy, unemployment and the incidence of poverty are higher among indigenous peoples and people living in the upland areas. Overall, more than a third of the people in the Philippines live in poverty. The poorest of the poor are the indigenous peoples, small-scale farmers who cultivate land received through agrarian reform, landless workers, fishers, people in upland areas and women. There are substantial differences in the level of poverty between the regions and provinces and the poverty gap between urban and rural areas is widening. Indigenous people living in highly fragile and vulnerable ecosystems, people in the uplands of the Cordillera highlands and on Mindanao Island are among the poorest in the country. The causes of poverty in rural areas in the Philippines vary widely from island to island. Among the causes of rural poverty are a decline in the productivity and profitability of farming, smaller farm sizes and unsustainable practices that have led to deforestation and depleted fishing waters. Rural areas lag behind in economic growth and they have higher underemployment. This is partly because poor people have little access to productive assets and business opportunities. They have few non-farm income-generating activities, and people lack access to microfinance services and affordable credit. Some vulnerable groups also face specific problems. For example, indigenous peoples have high illiteracy rates and are affected by the encroachment of modern technology and cultures onto traditional norms and practices. Fishers face continuing reduction in their catches and they have few opportunities or skills outside of fishing. Women have limited roles outside of marketing and family responsibilities. (Source: IFAD) According to the Population Commission, there are about 30.6 million Filipinos suffering from poverty. Out of all the Southeast Asian countries, the Philippines is the worst when it comes to poverty. About 15.3 million Filipinos are subsistence individuals meaning that they do not make enough money to provide for basic food requirements. Statement of the Problem This study tried to determine the causes of poverty in Batac City, Ilocos Norte. Specifically, it elicited answers to the following questions: 1. What is the demographic and socio-economic profile of households living in depressed barangays in Batac City, Ilocos Norte? 2. What are the causes of poverty and the factors associated with it? 3. Who are the most affected individuals by this? 4. What are the probable solutions of the respondents to improve their quality of life? Scope and Limitations of the Study This study was limited to determine the causes of poverty in Batac City, Ilocos Norte. Economic analysis of the factors of poverty was included as part of the study. Other aspects concerning poverty are beyond the scope of the study. This study was also limited to the representatives of indigent households who were identified by the barangay chairman since there was no complete list of indigent household in municipality. Hence the results of this study are not conclusive for the whole municipality. The data gathered were limited to the memory bias of the respondents. Definition of Terms: The following terms are defined as used in the study. Demographic characteristics. This refers to the respondent’s age, civil status and household size. Socio-economic characteristics. This refers to the respondent’s social and economic status as determined by his occupation, educational attainment, family type and family income. Indigent Families. This refer to families who are included in the list of determined by the Department of Social Welfare and Development in Batac City, Ilocos Norte based on the level of income of household. Family Income. This refers to the income of all members in the family from all sources