Social Protection and Poverty Reduction in Four Selected Southeast Asian Countries: An Analysis of the Healthcare Sector towards Pro-Poor Growth

Article excerpt

Abstract

This study explores key ideas needed in the current debate on the development of healthcare schemes and programs against poverty in four selected Southeast Asian countries; Vietnam, Indonesia, Thailand and the Philippines. It also traces the reasons why some of these countries have failed to achieve relative pro-poor growth through healthcare schemes. Using the poverty line of the four selected countries and Panel Data Analysis, the present study found that in Indonesia, Philippines and Vietnam, poor people do not benefit from the healthcare services provided by the government. In Vietnam the situation is even worse as the results showed that an increase in government expenditure on health led to increased poverty incidences. One of the possibilities for this to occur is that when government increases expenditure in healthcare sector, this causes a trade-off in other logistic sectors.

Keywords: Poverty, Poverty reduction, Social protection, Healthcare schemes, Panel data, Southeast Asia

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1. Introduction

Southeast Asian Countries experienced an immense economic growth in the last two decades (Warr, 2002; Warr, 2000; Tambunan, 2005; Balisacan et al, 2003). The region has overcome the Asian financial crises of 1997 and witnessed remarkable economic growth since the year 2000; as a result of efficient economic and political policies which most of the countries have implemented. Political stability also played an important role in enhancing economic growth for most of the countries in the region (Singh, 2008).

Figure 1 illustrates the continuous GDP per capita growth in the four selected countries. The figure shows that the financial crisis of 1997 had a negative effect on GDP per capita, indicating a steady decline in four countries. Soon after, these countries recovered from the crisis and experienced continuous growth in GDP, indicating a sign of improvement in the standards of living of the region. The GDP per capita growth leads to the increase in the demand for goods and services (Pangestu, 2001), consequently leading to increasing job opportunities. This was very conspicuous, since most of the selected countries such Thailand and Vietnam, had reached a nadir rate of unemployment at1.2; and 2.3 respectively (UN Database, 2010).

The growth in GDP per capita in the region led to the reduction of incidences of poverty, especially in Thailand and Vietnam as shown in Figure 2. Indonesia and Philippines seem to have been severely affected by the financial crisis since the incidence of poverty in these countries increased slightly after 1997. The achievement of economic growth and poverty reduction which the region attained was not consistent across the four countries. A comparison between Figure 1 and Figure 2 suggests that while Thailand and Vietnam achieved rapid economic growth which translated into dramatic decrease in the level of poverty incidences, Philippines did not perform well its economic growth; which clearly translated into the slow pace of poverty reduction. Philippines is slightly farther from achieving the Millennium Development Goal (MDG) by 2015. In Indonesia, even with the rapid growth in GDP per capita, the level of poverty incidence was again increased after the financial crisis.

Many studies have shown that poor peoples' income increase when the country experiences positive growth (Balisacan et al., 2003; Balisacan & Pernia., 2002; Dollar & Kraay, 2000; and Timmer, 1997). In this context, OECD (2009, p.17) argued that:

"Poverty reduction depends on sustained and broad based growth, which in turn requires complementary initiatives which share economic benefits and promote better developmental outcomes for poor and excluded groups".

But a same kind of economic growth may lead to a range of poverty alleviation levels (Islam, 2004). Studies have found that economic growth was an incentive to increase people's income. …