Academic journal article Journal of Economics and Economic Education Research

A Repeated Cross-Section and Pseudo Panel Analysis of Alleviating Poverty in Developing Economies: The Philippine Case 1

Academic journal article Journal of Economics and Economic Education Research

A Repeated Cross-Section and Pseudo Panel Analysis of Alleviating Poverty in Developing Economies: The Philippine Case 1

Article excerpt

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

Poverty has been unrelenting in all economies. It is the basket case of most economies particularly among Southeast Asian nations. Poverty alleviation has been a principal goal for most economies because it has incessantly posed a long-term struggle, especially to the Philippines, since this has been the primary objective of all administrations. As per Schelzig (2005), the Philippines has a perceptible unequal income distribution which supports the premise that Filipinos in the lower distribution are highly susceptible to impoverished living conditions leaving households vulnerable. Meanwhile, according to Albert and Ramos (2010), income shocks have debilitating effects especially to the poor, which drives households to engage themselves in risky strategies that sometimes have negative effects that are irreversible and eventually succumb to deeper poverty.

The International Labor Organization (ILO), as cited by Schelzig (2005), listed five nonmonetary categories that define whether people are poor - food, water and sanitation, health, education and shelter. In 2009, according to the National Statistics Office (NSO), the share of food to total family expenditures accounts for 42.6 percent, which is a considerable portion of income allocation and signifies as one of the priorities of consumption spending. With the existing income inequality, this can be translated to food inequality through the income channel, which means that families and individuals in the lower income distribution are unable to gain access to food because of the lack of ability to afford decent food consumption. This is a serious issue because according to Reyes (2001), the poorest Filipino households allocate a significant portion of their income on food. Decreasing real income also signifies that capacity to spend on food is restricted; hence, families are forced to concentrate household expenditure on basic necessities.

The National Statistical Coordination Board (NSCB) and NSO come up with measures to assess the depth of poverty in the country. Measures such as poverty incidence, Gini coefficient, and income and expenditure ratios all relate to the traditional measure of welfare, which is the level of income. The measure of welfare and poverty is not limited to income and expenditure alone. In the Philippines, there are two official measures of poverty, namely, the food threshold and the poverty threshold (Schelzig, 2005). Moreover, Pedro, Candelaria, Velasco and Barba (n.d.) estimated food threshold adjusted to the lower 30 percent of the income distribution to represent the poor in the population to gauge poverty incidence through food.

However, beyond economic factors, there are other explanations as to why poverty exists in the Philippines. According to Abad and Eviota (1983), poverty is a condition caused by exhibiting anti-development traits, values and attitudes such as refusal for improvement and resistance to change, which implies that the poverty-stricken cause their own predicament for they are responsible for their own behaviors. Further, in a study by Spears (2010), the poor developed a set of beliefs and behaviors that are adaptive but constraining to poverty, which then creates a widened culture of poverty and as stated by Abad and Eviota (1983), such a culture will continue to perpetuate in the succeeding years. In addition, according to Bennett (2008), it is highly debated upon why the poor people continue to behave irrational ways that limits them in their impoverished state. Ultimately, in order to understand the Philippine poverty situation and why it is non-improving, the culture of the country's poverty can be evaluated by the Filipino characteristics inherent to the majority. It is then of uttermost importance to determine whether the Filipino culture may then be a pro-poverty culture.

Hence, we investigate the movement of household in and out of the poverty threshold. …

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