Filipinos 175 years behind

ADB compares living standards around the world
 
It would take nearly two centuries for the Philippines to catch up with the living standards of industrialized countries at its current pace of economic growth, the Asian Development Bank (ADB) reported Thursday.

In a study titled, “A Cross-Country Analysis of Achievements and Inequities in Economic Growth and Standards of Living,” the Manila-based lender said the results suggest a large disparity in living standards across countries, and the disparity in per capita income was far greater than that in the other indicators of living standards.

The bank said the Philippines would take 175 years to catch up with industrialized countries’ per capita income with only $33.7 average gross domestic product (GDP) per capita income at 2005 purchasing power parity (PPP) compared to the industrialized countries with $397.20.

A proxy for economic output, GDP refers to the total value of goods and services produced in a country in a year.

The Philippines’ average GDP from 2000 to 2007 was at 2.9 percent, lower compared to Indonesia’s 3.7 percent, Thailand’s 4.3 percent and Vietnam’s 6.3 percent.

Per capita GDP in purchasing power parity dollars measures how rich a country is in terms of material consumption.

Lagging behind neighbors

The country’s requirement period was no longer compared to other Southeast Asian countries like Indonesia that needed only 110 years with per capita GDP of $36.2 to catch up with the living standards of industrialized countries. Thailand needs only 59 years, with per capital GDP $78.2, and Vietnam, 61 years, with per capital GDP $23.4.

The economic growth of Indonesia, Thailand and Vietnam were also higher compared to the Philippines at 3.7 percent, 4.3 percent and 6.3 percent, respectively.

“The per capita GDP is an important determinant of a country’s living standards: the richer a country is, the higher is the expected standard of living. An implication of this observation is that a country can enhance its living standards by promoting economic growth,” the ADB explained.

“If economic growth is the only channel to improve standards of living, it will take an exceptionally long—perhaps unrealistically long—period to improve standards of living; therefore, policies other than those promoting economic growth are essential to achieve this objective,” the report added.

Standard of living indicators

Standard of living is based on six indicators—per capita GDP at 2005 purchasing power parity terms; life expectancy at birth; adult literacy rate; primary enrollment rate; under-5 survival rate; and births attended by skilled health personnel.

The ADB said these indicators were selected to reflect people’s material well-being, health and education. The indicators are also a mixture of both inputs and results that satisfy certain criteria, such as availability of data and statistical correlation with other development indicators.

In terms of life expectancy at birth, the Philippines needs 151 years to catch up with industrialized countries; adult literacy rate, 132 years; net primary enrollment rate, 133 years; under-5 survival rate, 155 years; and births attended by skilled personnel, 241 years.

The study was based on data from 177 countries covering the period 2000 to 2007.

The ADB said there were factors other than income that have an impact on a country’s standard of living, including the basic services provided by governments in health and education, and access to these services by the population, which determines health and education outcomes.

“Countries whose performance in standards of living is inferior in relation to their per capita GDP do not have systems that promote the efficient delivery of services in health and education. While economic growth is essential, it is not enough to improve citizens’ well being,” the bank explained.

If growth was not enough, the ADB said the government approach would be to increase public spending. “More spending by governments can be crucial in promoting improvements in health and education outcomes. For instance, policy interventions to reduce mortality may require increased public spending or, similarly, it may be necessary to spend more on educational programs that aim to increase primary completion rates.”

The report added that most poor people do not get their fair share of government spending on public services in health and education. “While increased public spending is essential, it is not enough to improve people’s standards of living. Rather, governments’ planning, delivery and management of public services are major factors that determine progress in human development.”  –Darwin G. Amojelar, Reporter, Manila Times