Bernardo M. Villegas
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Rebalancing Strategy
published: Mar 31, 2017

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Greatest Challenge to the Presidentiables (Part 2)

           Another state intervention that will directly benefit the poorest of the poor is suggested by VP Jejomar Binay:  “Raise agricultural productivity by reengineering the Comprehensive Agrarian Reform Program into a well guided agri-agra program.”  Since there are millions of farmers, especially in the coconut regions, who are very poor because of the erroneous implementation of the first CARP, addressing the mistakes (e.g. by allowing the farm beneficiaries to lease and even sell their farms and providing vital infrastructure support to these farm beneficiaries) can reduce rural poverty significantly.  This redesign of CARP can liberate the farmers from poverty since more of them can have access to farm-to-market roads, irrigation systems, post-harvest facilities and agri-financing services.  As Rodrigo Duterte suggested:  “Expand agricultural production through agri-financing reforms and implementation of Land Bank programs for farmers.”  Duterte also emphasizes the importance of free irrigation to lessen the burden on farmers.  I would like that the other Presidentiables explicitly propose to address rural poverty through the provision of more infrastructures and agricultural extension services.

          In this regard, I would recommend that all the Presidentiables take a close look at how Thailand reduced poverty to single-digit levels more than twenty years ago.  As Dr. Rolando Dy, a leading agribusiness economist in the country, has repeatedly pointed out, we need not reinvent the wheel.  Let us just take a look at the success story of what used to be our “non-identical twin” in the 1980s:  “Thailand’s commercialization of agriculture owes much to three drivers in the 1960s and 1970s.  First, the expansion of large irrigation projects…and a shift to cost-effective small systems in the 1990s and 2000s.  Second, the massive road construction during the 1960s and 1970s, which helped facilitate the cultivation of new farmlands and improve the marketing efficiency of products.  These roads later facilitated rural-urban and rural-rural migration to take advantage of the seasonal and spatial variation in employment opportunities.  Finally, government investment in agricultural research transformed agricultural patterns.  The Department of Agriculture was the lead agency for agricultural research and development of new technologies.  During the period of the early 1970s and late 1990s, funding for research increased four-fold.”

           I wish that the Presidential candidates would be able to more clearly distinguish between policy proposals that will enable the entire economy to grow faster and on a more sustainable basis and those which directly address absolute poverty without depending on a questionable “trickle down approach.”  As Thomas Pikkety wrote, commenting on the Marxist criticism of nineteenth century capitalism:  “In any case, capital prospered in the 1840s and industrial profits grew, while labor incomes stagnated.  This was obvious to everyone, even though in those days aggregate national statistics did not yet exist.  It was in this context that the first communist and socialist movements developed.  The central argument was simple:  What was the good of the industrial development, what was the good of all the technological innovations, too, and populations improvements if, after a half of a century of industrial growth, the condition of the masses was still just as miserable as before, and all lawmakers could do was prohibit factory labor by children under the age of eight?  The bankruptcy of the existing economic and political system seemed obvious.  People therefore wondered about its long-term evolution:   what could one say about it?” This commentary could be applied perfectly to the Philippines today.    What good is a high GDP growth (one of the highest in the region) if rural dwellers continue to live in misery?

          Sri Mulyani Indrawati, managing director and chief operating officer of the World Bank, recently wrote an essay in which she echoed a similar criticism against societies with extreme income inequality.  She pointed out that it is not only income inequality that matters.  We should also consider inequality of opportunity.  This is especially true as regards inequality in access to quality education.  In her words, “Inequality is a problem all countries face, whether they are poor rich, or in-between.  Some inequality can be a temporary byproduct of economic growth when not everyone is moving at the same speed and at the same time.  But when the majority of people suffer economic and social stagnation, inequality poses a real threat to the progress of individuals and whole countries.  This is why high and persistent inequality is not only morally wrong, but also a symptom of a broken society.  It can lead to entrenched poverty, stifled growth, and social conflict.  This is also why the goals of the World Bank are not just to end poverty but also to promote shared prosperity.”

          I am glad that the recently approved $400 million loan granted by the ADB to the Philippine Government for the expansion of the Pantawid Pamilyang Pilipino Program (4Ps) has a major focus on education.   As Keith Richard Mariano reported in a Business World (February 10, 2016), the new loan will help the government support more families, now including high school students.  An evaluation of this program revealed that it has succeeded in keeping vulnerable young people at school, improving their future employability either in agriculture or in industry.  More than 93% of the households benefiting from the 4Ps are able to meet the conditions for receiving grants.  Contrary to what critics of the CCT say, the World Bank considers the Philippine 4Ps as the world’s fourth largest CCT program in terms of the number of beneficiaries.  It ranked next only to the CCT programs of India, Brazil (the pioneer), and Mexico.  I am glad that three of the Presidentiables (Poe, Roxas and Defensor-Santiago) make explicit reference to continuing and expanding the CCT coverage.   This augurs well for the only effective way to address Philippine poverty:  a direct intervention by the State, without waiting for economic growth to trickle down!  For comments, my email address is