Download Recent Socio‐Economic Developments & the  Current Policy Environment in the Philippines: Rethinking economic growth strategies and policies to achieve  SDGs: the role of productivity

Recent Socio‐Economic Developments & the Current Policy Environment in the Philippines:
Rethinking economic growth strategies and policies to achieve SDGs: the role of productivity
Jose Ramon “Toots” Albert, Ph.D. , Senior Research Fellow
Philippine Institute for Development Studies
Surian sa mga Pag‐aaral Pangkaunlaran ng Pilipinas
www.pids.gov.ph
1
Outline
1. Socio Economic Conditions in the PH : economic performance, income poverty, education
2. Policy Environment in PH on Raising Human Capital and Promoting Good Governance 3. Challenges in PH on Sustaining Socio‐
Economic Gains
2
1. Socio‐Economic Conditions in the PH
◦
PH No longer the “sick man of Asia”




Growth rate in Gross Domestic Product (GDP) of 6.3 percent in 2010‐2014 was the highest five‐year average during the past 40 years; Q3 2015 GDP at 6.0 percent
Inflation averaging 1.7% in first 8 months of 2015 Volatilities in domestic financial market (just like the rest of the region), but underlying fundamentals remain sound
Fairly broad‐based growth, but biggest share of economy in services: growth drivers in this sector are business process outsourcing (BPO), real estate and renting, among other business activities. 3
1. Socio‐Economic Conditions in the PH
76
74
72
70
2000 Q1
68
66
2005 Q1
2010 Q1
Year and Quarter
Fixed Capital
Ratio of HFCE to GDE (in Percent)
24
22
20
Ratio of FIxed Capital to GDE (in Percent)
26
Largely consumption based but with rising investments
Consumption driven, but rising investments
18
◦◦
That PH has largely been consumption driven (rather than export driven) has given a cushion to the country in the face of the global slowdown, and likely continuing slowdown of China
2015 Q1
Household Final Consumption Expenditure
4
1. Socio‐Economic Conditions in the PH
◦
Economy dominated by services, whether in output (57.7% in 2013) or employment (53.4% in 2013)
Output Share
Employment Share
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
0
20
40
Agriculture
60
Industry
80
100
Services
0
20
40
Agriculture
60
Industry
80
100
Services
Contribution of agriculture to economy minimal (11.7% in 2013, down from 15.4% in 1990 and 29.7% in 1946), with its share to employment decreasing from 45.2% in 1990 to about 31.0% in 2013
Trends in major sectors show a structural transformation in employment 5
1. Socio‐Economic Conditions in the PH
◦
40
35
Little progress in reducing poverty from 1991‐2012 33.1
30
26.3
26.1
11.9
10.8
2006
2009
25
20
16.5
15
10
Subsistence Incidence among population
5
Poverty Incidence among population
0
1991
2012
About one out of every 5 Filipinos were poor in 2012; compared to one out 3 in 1991. In 2012, one in 10 Filipinos extremely poor
Observed changes in recent years not statistically significant. 6
1. Socio‐Economic Conditions in the PH
60
Trends in poverty rates of selected ASEAN economies (using 1.9USD intl poverty lines): 1990‐2015
Poverty Headcount (in Perent)
20
40
 Points to the need for economic growth to be more “inclusive” (consistent with the global post 2015 Sustainable Development Goals agenda)
0
◦
1990
1995
2000
year
Indonesia
Philippines
Vietnam
2005
2010
Malaysia
Thailand
7
1. Socio‐Economic Conditions in the PH
◦
No reduction in “education poverty” rate (proportion of youth with less than 4 years of schooling) or “extreme education poverty” rate (< 2yrs) in PH
Lowest Quintile
Highest Quintile
Rural
Urban
Male
Female
National
Extreme Education Poverty Rate
1993
2008
7.2
19.0
0.6
1.2
3.0
8.5
1.0
2.7
2.1
6.7
1.7
3.9
1.9
5.3
Education Poverty Rate
1993
2008
7.2
18.8
0.3
0.7
3.2
7.9
0.7
2.3
2.2
6.5
1.6
3.3
1.9
4.9
8
2. Policy Environment
◦
Good governance agenda 


2010 presidential campaign mantra: “kung walang
corrupt, walang mahirap” (if there are no corrupt, there are no poor)
rekindled people’s hope for a corruption‐free government
led to successive credit‐rating upgrades and improvements in various global competitiveness rankings for the country
9
2. Policy Environment
◦
Other Government Reforms in Doing Business



Revitalize Industry Sector with a Roadmap for Manufacturing Reducing “Red Tape” and Cost of Doing Business
Improving financial inclusion (access to credit and utilization) as well as awareness of FTAs among firms to strengthen contribution of Micro Small and Medium Establishments (MSMEs) in the PH economy
10
2. Policy Environment
◦
Implementing Inclusive growth agenda with increased investments in human capital

For 2015 alone, the education budget totals about US$8 billion, representing an increase of 18.6 per cent from the previous year. Investments in a conditional cash transfer (CCT) program that provides assistance for poor households on condition that children go to school and get deworming, and mothers avail of maternal health services.

‒
‒
‒
Education grants : US$8 (300 PHP) per child per month for 10 months of the school year (for a maximum of three children per household). For health and nutrition, cash grants per household were about US$12 (500 PHP) per month per family. Starting in 2014, assistance extended to child beneficiaries to enable them to finish their high school education. Monthly cash assistance for high school students increased to US$12 (500 PHP). 11
2.1. Effects of Investments in Basic Education ◦
Declining number of Out of School Children (OOSC)
Number of OOSC by Age Group
3,500,000
3,000,000
2,500,000
12 to 15
2,000,000
6 to 11
5 year old
1,500,000
1,000,000
500,000
0
2013
2011
 Attributed to three key government interventions. (1) Passage and full implementation of mandatory kindergarten and the K‐12 Law,
(2) Increasing budget for Department of Education (3) CCT 2008
12
3. Challenges to Sustaining Gains
◦

◦
◦

What happens to CCT and other investments in the social sector in the next government?
Risk that these human captial investments (that could raise productivity) could be removed, though political economy analysts think that the CCT, given its size, will likely continue
Need to boost country’s competitiveness, climate for innovation, and infrastructure spending, as well as worry about rising tensions with neighbors Steps needed to deepen inclusion in socio economic and political landscape, including strengthening institutions, and consider recurring climate hazards
SDGs lists an ambitious global wishlist : 17 goals, 169 targets and 300+ indicators (159 “green” indicators). Countries will have to prioritize according to their needs, contexts and limited resources.
13
Philippine Institute for Development Studies
Surian sa mga Pag‐aaral Pangkaunlaran ng Pilipinas
Thank you
/PIDS.PH
Service through policy research
@PIDS_PH
http://www.pids.gov.ph
EMAIL: [email protected]
14