Hollow and shallow

A COMPARISON of growth numbers with key social indicators suggests that the quality of economic growth in the Philippines has been hollow and shallow. While the economy grew 6.1% in the first half of 2012, unemployment and underemployment rose while hunger incidence deepened. For those who were left behind in the growth process, the better-than-expected expansion of the economy didn’t matter.

Yesterday, October 16th, was World Food Day, a day of celebration. But while the entire world has reason to rejoice as the number of undernourished people fell by 13%, the Philippines has reason to despair. The number of chronically hungry people plunges in Southeast Asia, except in the Philippines, according to a recent joint report by the FAO, the International Fund for Agricultural Development and the World Food Program, entitled “The State of Food Insecurity in the World 2012.”

There are 5.4% more undernourished people in the Philippines now (2010-2012) than in 1990-1992. By contrast, during the same period, the number of chronically hungry people plummeted in all Southeast Asian countries: Thailand, by 79.8%, Vietnam by 75.1%, Indonesia by 43.8%, Cambodia by 37.8%, and Laos by 9.2%. There was no data for Malaysia but given its present state of the economy, it is reasonable to assume hunger rate has improved too in that country.

The proportion of undernourished citizens to total population declined in the whole of Southeast Asia by 63.2%. But it fell the least in the Philippines (-29.8%). Our ASEAN neighbors have done much better: Thailand (-83.3%), Vietnam (-80.8%), Indonesia (-56.8%), Cambodia (-57.1%), and Laos (37.7%).

Here’s another disturbing statistics. The hunger incidence released by the Social Weather Stations (SWS) for its July 2012 survey show that 21% or at least 4.3 million households experienced hunger in the last three months, up from 18.4% in May. Overall hunger soared the highest in Metro Manila: 26%, up 10 points from 16% in May, or an estimated 738,000 households.

These hunger statistics and the high joblessness numbers (2.8 million unemployed and 8.5 million underemployed) give a gloomier picture than the upbeat first semester GDP growth of 6.1%.

A malnourished body converts to an unproductive, low-paying, and low-spending worker. And with a huge army of hungry and malnourished citizens, more widespread among the youth, the idea of a demographic sweet spot is grossly exaggerated. For the demographic-sweet-spot argument to make sense, the young population should have been fed, given medical care, educated, and gainfully employed.

The UN report identified three steps that are needed for economic growth to enhance access to food that is adequate in quantity and in quality: “First, growth needs to reach and involve the poor and provide increased employment and income-earning opportunities for the poor. Second, the poor need to use their additional income for improving the quantity and quality of their diet, water and sanitation as well as on improved health services. (The role of women is crucial in ensuring that these spending patterns are realized.) Third, governments need to spend additional public revenues on safety nets and key public goods and services such as education, infrastructure and public health measures.”

A key program of the government should be to make agriculture more productive. The focus on business process outsourcing (BPO) and real estate, to the neglect of agriculture and manufacturing, won’t solve the joblessness and malnutrition problems. Most of the unemployed and the hungry are in rural areas. And most do have the benefit of college education.

Here’s what the UN Food and Agricultural report has to say on why agriculture is important:

“Agricultural growth is particularly effective in reducing hunger and malnutrition. Most of the extreme poor depend on agriculture and related activities for a significant part of their livelihoods. Agricultural growth involving smallholders, especially women, will be most effective in reducing extreme poverty and hunger when it increases returns to labour and generates employment for the poor.”

Land reform and asset distribution could have a positive impact on reducing extreme poverty. The report says: “China cut poverty extremely rapidly during the 1980s to mid-1990s during a period of strong agricultural growth, as it started from a situation of relatively equal access to farmland and human capital. As inequality increased over time, poverty reduction slowed. In parts of Latin America, however, because of an unequal distribution of land and the dominance of mechanized farming, the relationship between productivity and poverty reduction is much weaker: yields have grown rapidly but rural poverty has changed little.”

There is much to be learned from the 2012 UN report of food insecurity in the world. Philippine authorities should go through it carefully and use it as basis for crafting and vigorously implementing a national food and nutrition policy.

The new public policy should go beyond the goal of rice sufficiency in 2013. While the policy appears attractive politically, technologically and economically, it is neither attainable nor desirable.

For its tourism campaign, the country has adopted the slogan “It’s more Fun in the Philippines.” The irony is that it has now become an unhappy place, largely because of the country’s worsening social ills like poverty, joblessness, hunger, and malnutrition.

Benjamin Diokno is professor of Economics at the School of Economics, University of the Philippines (Diliman). He was formerly secretary of budget and management in the Estrada Cabinet and undersecretary for budget operations in the Aquino 1 administration. –Benjamin E. Diokno, Businessworld