Country Listing

Philippines Table of Contents


Causes of Poverty

From one perspective, poverty is a function of total output of an economy relative to its population--GNP per capita--and the distribution of that income among families. In the World Bank's World Development Report, 1990, the Philippines was ranked at the lower end of the grouping of lower middle-income economies. Given its relative position, the country should be able to limit the extent of poverty with a reasonably equitable sharing of the nation's income. In fact, the actual distribution of income was highly skewed (see table 12, Appendix). Although considerable underreporting was thought to occur among upper-income families, and incorrect reporting from lack of information was common, particularly with respect to noncash income, the data were adequate to provide a broad overview.

In 1988 the most affluent 20 percent of families in the Philippines received more than 50 percent of total personal income, with most going to the top 10 percent. Below the richest 10 percent of the population, the share accruing to each decile diminished rather gradually. A 1988 World Bank poverty report suggested that there had been a small shift toward a more equal distribution of income since 1961. The beneficiaries appear to have been middle-income earners, however, rather than the poor.

The World Bank report concluded, and many economists associated with the Philippines concurred, that the country's high population growth rate was a major cause of the widespread poverty, particularly in the rural areas. Implementation of a government-sponsored family-planning program, however, was thwarted by stiff opposition from the hierarchy of the Roman Catholic Church (see Population Control , ch. 2). Church pronouncements in the late 1980s and early 1990s focused on injustice, graft and corruption, and mismanagement of resources as the fundamental causes of Philippine underdevelopment. These issues were in turn linked to the concentration of control of economic resources and the structure of the economy. Land ownership was highly unequal, but land reform initiatives had made little progress.

In urban areas also, the extent of poverty was related to the concentrated control of wealth. Considerable portions of both industry and finance were highly monopolized. Access to finance was severely limited to those who already possessed resources. The most profitable investment opportunities were often in areas in which tariff or other forms of government protection ensured high profits but did not necessarily result in rapidly expanding employment opportunities. In her election campaign President Aquino pledged to destroy the monopolies and structures of privilege aggravated by the Marcos regime. She looked to the private sector to revitalize the economy, create jobs for the masses of Filipinos, and lead the society to a higher standard of living. The state-protected monopolies were dismantled, but not the monopoly structure of the Philippine economy that existed long before Marcos assumed power. In their privileged positions, the business elite did not live up to the President's expectations. As a consequence, unemployment and, more importantly for the issue of poverty, underemployment remained widespread.

Data as of June 1991