development challenges sargen gjm.ppt

8/14/2019 Development Challenges SarGen GJM.ppt

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ExecutiveLegislative Coaching

Mayor Ronnel Rivera, Vice Mayor Banas, and

Councilors of General Santos City

Cong Manny, Gov Steve Solon, Vice Gov. Jinkee, Mayors

and Board Members of Sarangani


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PROVINCES WITH HIGHEST ARMED CONFLICTS

MILF/MNLF/ASG

POVERTY

INDEX RATE(2010)

POOREST

PROVINCERANK

Maguindanao 60.4 2

North Cotobato 26.1 55

Basilan 33.5 40

Lanao del Norte 46.5 10

Lanao del Sur 37.6 24

South Cotabato 26.4 54

Sultan Kudarat 41.5 17

Sulu 45.1 13

Zamboanga del Sur 34.4 36


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PROVINCES WITH HIGHEST ARMED CONFLICTS

CPP-NPAPOVERTY INDEX

RATE (2010)POOREST

PROVINCE RANK

Quezon 32.8 42

Davao del Norte 30.3 49

Albay 34.4 34

Cagayan 16.5 68

Metro Manila 4.8 75

Davao Oriental 37.2 26

Isabela 23.9 61

Davao del Sur 24.2 59

Camarines Sur 40.1 21

Agusan del Sur 52.8 5

Surigao del Sur 48.6 6

Kalinga 46.1 12

Apayao 16.8 67


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Breaking the Poverty Trap


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DEVELOPMENT Concepts

Amultifaceted process whereby the quality

of life and the humanityof individuals andgroups improves (Simon, 1990)

The creation of wealth and value for thecommunity and for individuals (Mier, 2006)

The satisfaction of human needs and

aspirations in the major objective ofdevelopment.(Brundtland Report, UNDP, 1987)


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7

Possible definitions of development

Alteration of the structure of production andemployment so that the share of agriculture declines and

industry/services share increases (measured by economic

output or GDP growth)

Enhancement of human life and the freedoms people

enjoy (measured by, among others, human development

indicators)

Sustainableuse of natural and other resources; care forthe welfare of future generations

Not just material wealth, but human satisfaction, welfare

and happiness


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Development is also a process of improving the

quality of human lives

It encompasses the three facets of the developmentprocess as follows:

1. Raising peoples living levels their incomes andconsumption levels of food, medical services,education, etc. through relevant economic growth

processes;

2. Creating and managing conditions that areconducive to the growth of peoples self-esteemthrough the establishment of social, political, andeconomic systems and institutions that promote humandignity and respect

3. Increasing peoples freedom by enlarging the rangeof their choice variables, as by increasing varieties ofconsumer goods and services


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SUSTAINABLE DEVELOPMENT

Sustainable development is a pattern of resource usethat aims to meet human needs while preserving theenvironment so that these needs can be met not onlyin the present, but in the indefinite future. The termwas used by the Brundtland Commission, which

coined what has become the most often-quoteddefinition of sustainable development as developmentthat "meets the needs of the present withoutcompromising the ability of future generations to meet

their own needs.

(Based on UNDP Definition)


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11

Source: http://go.worldbank.org/WE8P1I8250

Snapshot of Global Poverty


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12

Source: The Economist (2013).

Can we eradicate extreme poverty

worldwide?

Inequality matters

World Bank: a 1%

increase in incomes cutpoverty by 0.6% in the

most unequal

countries but by 4.3%

in the most equal

ones.


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Poverty: Deep and Deepening

Poverty incidence will get worse

before it gets better

Property of Benjamin Diokno

24


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Why is povertypersistent?


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15

Source: Balisacan (2011) drawing on data from the FIES (various years).

Poverty in the Philippines

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

19.0

19.5

20.0

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

1991 1994 1997 2000 2003 2006 2009

Percent

Millions

No. of poor % of poor


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TERRACES OF POVERTY:

ANNUAL AVERAGE SELF-RATED POOR

Self-Rated Poverty Question: Where would yo u place you r family in this card? (Not poo r, On the line, Poor)

*Note: The NSCB figures, wh ich c ompare income of the year to the off icial poverty line, are plotted in Jun e of the year.

55

74

67

47

6662

6867666568

635959616157

626360

515354

5053

49484952

'83'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12

10

30

50

70

% of fami l ies


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Note: Dont Know and Refused responses are not shown.Q: Nitong nakaraang 3 buw an, nangyar i po ba kahi t minsan na ang inyong pamilya ay nakaranas ng gutom at wala

kayong makain? KUNG OO: Nangyari po ba yan ng MINSAN LAMANG, MGA ILANG BESES, MADALAS, o PALAGI?

A HUNGER PLATEAU:

ANNUAL AVERAGE HUNGER,

PHILIPPINES

Moderate

Hunger

Severe

Hunger

TotalHunger

11.0

8.3

10.811.4

10.1

7.0

11.8

14.3

16.717.9

18.519.119.119.919.9

4.12.6

4.6 4.22.5 1.5

3.0 3.0 4.0 3.4 4.0 4.0 3.3 3.74.3

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

5

10

15

20

7.0

5.8

6.2 7.37.6

5.5

8.711.0

12.614.414.615.1

15.816.115.6

% of househo lds


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18

Source: Data adapted from De Joyos and Lessem (2011).

The poor get hit harder by crises and

shocks

Example: Food price shocks hit the poor harder because itconstitutes a large share of their spending

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

East Asia and the

Pacific

Cambodia Indonesia Lao PDR Philippines Thailand Vietnam

Population Average Among extreme poor


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20Source: Figure adapted from Balisacan (2011). Scenarios based onauthors calculations.

Economic growth is weakly

translated into poverty reduction

-5

-4.5

-4

-3.5

-3

-2.5

-2

-1.5

-1

-0.5

0

Ravallion(2001),41

DevelopingCountries

WorldBank(2009),East

Asia1990-2006

World

Bank(2009),

Thailand1990-2006

WorldBank(2009),

Indones

ia1990-2006

World

Bank(2009),

Vietna

m1990-2006

WorldB

ank(2009),

Philippines1990-2006

Balisacan

andFuwa

(2004),Philippines1988-

1997

Balisacan(2007),

Philippines1988-2003

Percent change in poverty incidence arising from 1% change in mean income

At 3% growth, and at 1.5% poverty elasticity of

growth, it will take the Philippines 360 years to

eliminate poverty.

At 8% growth, and at 1.5% poverty elasticity of

growth, it will still take the Philippines 130 years to

eliminate poverty.

At 10% growth (approximating Chinas) and 5%

poverty elasticity of growth (approximating

Thailands), it will take 24 years to eliminate

poverty in the Philippines.


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21

Rising prices of basic commodities and

the gradual erosion of purchasing

power

21

Source: Bureau of Agricultural Statistics, Department of Energy

0

10

20

30

40

50

60

70

80

90

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Galunggong (per kg) Well Milled Rice (per kg) Diesel (per liter)

Average prices

(before 2003):

Galunggong Php31

Rice Php 16

Diesel Php 9

Average prices

(after 2003):

Galunggong Php57

Rice Php 27

Diesel Php31


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The Basic Sectors

Farmers and Landless Rural Workers

Fisherfolk

Indigenous Peoples

Urban Poor

Workers in the Informal Sector

Disadvantaged Groups (who also cut across all sectors:- Women

- Youth and Disadvantaged Students

- Persons with Disabilities

- Senior Citizens and Veterans

- Victims of Disasters and Calamities


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POVERTY PROJECTIONS, 2006- 2016

Magnitude of Individuals (millions)

MDG

Target

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

4.5% growth

6.0% growth

MDG

Target


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25

Schizoprenic economy?


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Philippines is ranked 138 out of185 economies in ease of doingbusiness.

1

12

18

79

99

128 133 138

163


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C

Y

C

Y

BEP = Y = C

O


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Poor governance turned off investorsFDIs were low compared to its ASEAN neighbors, hit rock bottom in 2001


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Poor governance turned off investorsFDIs were low compared to its ASEAN neighbors, hit rock bottom in 2001


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Starting a Business

DB 2013 Rank 99 DB 2012 Rank 99 Change in 0Rank

Indicator Vietnam East Asia & Pacific OECD

Procedures (number) 10 7 5

Time (days) 34 36 12

Cost (% of income per capita) 8.7 22.4 4.5

Paid-in Min. Capital (% of income per capita) 0.0 13.4 13.3

It requires 10 procedures, takes 34days, and costs 8.7 % GNI per capitato start a business in Vietnam.

In the Phi l ippines, it takes 16 proc edures , 36

days , and 18.1 % GNI per capita to start a

business.

In Thailand, it takes 4 p rocedures ,29 days ,

6.7% GNI per capit a to start a bu sin ess.


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VOICE AND ACCOUNTABILITY


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POLITICAL STABILITY


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GOVERNMENT EFFECTIVENESS


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REGULATORY QUALITY


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RULE OF LAW


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CONTROL OF CORRUPTION

Corruption prior to 2010


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37

Corruption prior to 2010

Source: Transparenc

International, Global

Corruption Baromete

(2010)

Improvement from

129thin the

Transparency

Internationals

Corruption Index t105th(out of 176) i

2012.


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Where are the worlds

youth?


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39Source: Mahurkar and Mendoza (Forthcoming) using data fromBLES.DOLE.GOV

About 1.2 million young workers will

join the labor force each year from

2010 to 2040

0

20

40

60

80

100

120

140

160

2010 2015 2020 2025 2030 2035 2040

Total Population Working Age


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BPO: Bright spot, but with some

challenges

First calls were taken in 1997; today the sector employs638,000 people and enjoys revenues of $11 billion, about 5%

of the country's GDP.

Philippines now employs about 400,000 people at call

centres, vs Indias 350,000.

BPO industry could add another 700,000 or so jobs by

2016 and generate revenues of $25 billion. At that point, the

industry would make up nearly a tenth of GDP and be bigger

in value than the remittances from the 10m Filipinos working

overseas.

Indian companies Infosys and Wipro, as well as scores of other Indian firms, operate in the

Philippines not because of cheap labour, but because a Filipino accent commands a premium.

Challenge: To move up the value chain (more sophisticated back-office jobs, such as knowled

process outsourcing and legal-process outsourcing, where India still leads.

11


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Overseas Remittances

For the Philippines, thecontribution of exports laborto the economy is moresignificant than that ofmerchandise exports.

Despite the global crisis, thegrowth of OFW remittancesremained positivebutgrowth slowed sharply. Froma growth rate of 25% in2005, its growth slowed

drastically to 4.1% in 2009.Its growth will likely slow tosingle digit levels in the nextthree years.


11

11/09/10


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OFW Remittances (US$B)2004-2012


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43

Why is growth not inclusive?

REPRODUCTIVE HEALTH


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SOCIAL SAFETY NET

(POLICIES TO PROTECT)

PUBLIC GOODSREPRODUCTIVE HEALTH

POLICY

POVERTY REDUCTION

POLICIES (POLICIES TO

EMPOWER)

INFRA AND PPPs


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CITIESRural

Areas

Rural

Areas

Rural

Areas

Rural

Areas

Industrial Location Theory: Firms locate/relocate where profits are

maximized and cost are minimizedP = f ( L, L, K, e .. )

URBAN ECONOMIC


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REGIONAL GROWTH CENTERS OF THE PHILIPPINES

URBAN ECONOMIC


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FDI: Improving but still not

catching up


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other electronic8

43%

10 revenuestreams

45%

coconut, petroleum,chemicals, tobacco,minerals, machineries, etc.

12%

RP Merchandise Export Structure 2012US$32.2B; % share

Source: National Statistics Office

INTERNATIONAL ECONOMICS


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RP Country Markets 2012US$32.2B; % share

Increase

penetration;expandproductrange

Source: http://tradelinephil.dti.gov.ph


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Imbalanced Foreign investments

Arsi Balisacan: 60% of the countrys GDP is concentrated

in three regions in Luzon.


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PPPs biased towards Luzon

5


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The Economy on the Supply Side

The economy grew

a bit faster during

election years

(2010 and 2013)

The impact of the

Great Recession

was broad-based:

all sectors

contracted, with theindustrial sector

sharply down.

5


6


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The Industrial SectorManufacturing has lost steam

Manufacturing, thesource of many decentjobs, contracted themost.

Electricity, power and gasdeclined. Bad omen forfuture growth, though itprovides opportunitiesfor future investment.

Mining grew the fastest,

but its contribution tooutput is the lowest. Itcould be a growthindustry in the future.


7


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The Services Sector

The real estate sector was the worst hit during the recentglobal crisis, due to depressed demand for housing.

Banking and finance has been the fastest growing sector inthe past; it slowed drastically in 2008 (Legacy and otherproblems), recovered mildly, but not fully.


8


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Demand side: most spending items down

The economy is largely consumer-led. Personal consumptionexpenditures grew, on average, by 5% in the past, though it slowedslightly in 2012.

Capital formation peaked in 2010 and 2013both election years.Largely negative in other years. High and consistent investment, say at25% of GDP, is needed for faster growth.



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5656

Medium-Term Fiscal Path 2010-2016(as of July 9, 2010)

15.6 16.1 16.9 17.6

18.5 19.4 20.2

19.5 19.4 19.5 19.6 20.5 21.4

22.2

3.9 3.3 2.62.0 2.0 2.0 2.0

0.0

5.0

10.0

15.0

20.0

25.0

2010 2011 2012 2013 2014 2015 2016

Fiscal Position

PercentofGDP

Revenues Dis burs em ents Deficit

30


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Fiscal house in disarrayGMA run large deficits from 2001-04; huge deficits have reemerged in recent years

Property of Benjamin Diokno 11/24/10

31


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High and rising public debtAs the world economy recovers, interest rates would rise, leading to higher debt service

Property of Benjamin Diokno 11/24/10

ld b d


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World Competitiveness Scoreboard 2010Lagging behind its ASEAN-5 neighboring countries

Rank Country Score

1 Singapore 100.00

10 Malaysia 87.228

26 Thailand 72.233

35 Indonesia 60.745

39 Philippines 56.526

POVERTY ALLEVIATION MODEL


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Health

Education

Housing

Recreation

Food

Other

Entitlements

Household

Decision

Those who have less income

should have more entitlements.

Use of total income to purchase

entitlements is a function of

household decision

Y + E = TY

POVERTY ALLEVIATION MODEL

derived from govt, NGO & business

ImprovedQuality of

Life

GOAL


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Eliminate poverty within the decade and bring

prosperity within reach of every Filipino

Achieve Macroeconomic Stability

Pursue Comprehensive Development

Institutionalize Good

Governance

A FRAMEWORK FOR STRATEGIC INTERVENTION


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A FRAMEWORK FOR STRATEGIC INTERVENTION

Integrated Strategy Development Model

IAD

Ideology

Maturity & Unity

Values Orgn

ECONOMIC DEVELOPMENT ENVIRONMENTAL DEVELOPMENT

SOCIO-POLITICAL OR PEOPLE DEVELOPMENT

Prosperity & Equity

Values Orgn

Markets

Productivity & Quality

Area Industry

Agency


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Policies and Reforms to Promote High

and Inclusive Growth

Habito (2010):

1. Quality appointments to government posts and zero tolerance for corruption;

2. Strong and credible transparency and accountability systems; and intensified

decentralization;

3. Wider and deeper public participation in governance; and streamlined government

procedures to lower cost of business and speed up public services;

4. Democratization of the economy through asset reforms and competition policies;

5. Boost tax revenues by improving ICT systems in BIR, prosecuting tax evaders and reformiexcise taxes on alcohol and other products;

6. Narrow the infrastructure gap;

7. Enterprise development with a focus on MSMEs.


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Policies and Reforms to Promote High

and Inclusive Growth

Balisacan (2011):

1. Create productive employment opportunities, including through Infrastructure to promot

connectivity, especially between leading/urbanizing & lagging/rural areas; and Institution

facilitating transactions in the marketplace (in order to lower the cost of doing business)

2. Reduce the high inequity in access to opportunities (i.e. High priority on education, health

including family planning services)

3. Rebuilding institutions, including civil service, & good governance in pursuit of inclusive

growth


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Selected References

Balisacan, A. 2011. What does it really take to move the Philippines out of poverty? Presentation to theMindanao Bridging Leaders Program, 21 July 2011.

Collier, P. 2007. The bottom billion: Why the poorest countries are failing and what can be done about it. Oxf

Oxford University Press.

De Joyos, R and R Lessem. 2011. Food shares in consumption: New evidence using Engel curves in the

developing world. Mimeo. *Available at: https://mywebspace.wisc.edu/rlessem/web/engel.pdf+.

Economist. Poverty: Not always with us. June 2013. *Available at:

http://www.economist.com/news/briefing/21578643-world-has-astonishing-chance-take-billion-people-out-extreme-poverty-2030-not].

Habito, C. 2010. An Agenda for High and Inclusive Growth in the Philippines. Manila: ADB. *Available at:

http://www.adb.org/documents/reports/agenda-high-inclusive-growth/agenda-high-inclusive-growth.pdf].

Mahurkar, P and RU Mendoza. 2012. Anatomy of Anti-Poor Growth: Insights from Recent Employment Tren

Mimeo. AIM Policy Center.

Mendoza, R.U. 2011. Why do the poor pay more? Exploring the poverty penalty concept. Journal of

International Development 23(1):1-28. Mendoza, R.U. 2013. Why PH competitiveness is improving. Rappler.

Mendoza, R.U. 2013. Does investment grade matter for inclusive growth? Rappler.

Sen, A. 1999. Development as Freedom. New York: Knopf.

Virola, Romulo, et. al. 2010. The Pinoy Middle-Income Class is Shrinking: Its Impact on Income and

Expenditure. Paper presented during the 11thNational Convention on Statistics (NCS), EDSA Shangri-La Hotel,

October 4-5, 2010.


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We can t solveproblems by using thesame kind of thinkingwe used when we

created them. Albert Einstein(1879-1955)

Food for Thought

The task of government is to harness the energies


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The task of government is to harness the energies

the people into a material force for growth and

development. What is required is a partnership

among communities, government and the private

sector.

Nelson Mandela

We will not suffer the future. We will

shape it. We will not simply grow. Wewill manage our growth. We Will mak

change. But to shape our future, we

need a new vision of government

development challenges sargen gjm.ppt

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