Global poverty down, Philippine poverty remains high

Jun 11

That the poverty situation in the Philippines has not improved has been the cause of much concern lately.  According to the National Statistics Coordination Board, 27.9 percent of the population currently lives below the poverty line, a figure that was practically unchanged from the figure of 28.6 per cent and 28.8 respectively in the first half of 2009 and first semester of 2006, respectively. The figures are all the more disturbing because globally, the poverty situation has actually improved since 2005.   According to the World Bank, the proportion of people living in extreme poverty — on less than $1.25 a day — fell in every developing region from 2005 to 2008.   Moreover, the biggest recession since the Great Depression seems not to have thrown that trend off course.  According to the Bank, “The progress is so drastic that the world has met the United Nations’ Millennium Development Goals to cut extreme poverty in half five years before its 2015 deadline.” Debating the causes of global poverty reduction What accounted for this positive global trend since 2005?  One school of thought is represented by Brookings Institution researchers Laurence Chandy and Geoffrey Gertz, who claim that the “stunning progress” is due to “the rise of globalization, the spread of capitalism and the improving quality of economic governance – which together have enabled the developing world to begin converging on advanced economy incomes after centuries of divergence.  The poor countries that display the greatest success today are those that are engaging with the global economy, allowing market prices to balance supply and demand and to allocate scarce resources, and pursuing sensible and strategic economic policies to spur investment, trade and job creation. It’s this potent combination that sets the current period apart from a history of insipid growth and intractable poverty.”  In short, the key for Getz and Chandy was market-oriented or neoliberal reforms, also known as “structural adjustment,” that radically reduced government intervention, eliminated barriers to trade and capital flows, and promoted privatization. Seemingly convincing, this explanation, when subjected to close analysis, falls apart.  There is another, and indeed, more credible way, of interpreting the results.  The dismal period of little progress from the 1990s to 2005, occurred during the high noon...

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