Do we even know what affects growth and poverty?

Don’t we know that all that matters for reducing poverty is growth, especially after China? And therefore we development economists should focus on the things that make growth happen: Macro policy and creating the right institutional environment. And not bother with the micro evidence…

No, no, and, as the expression goes, no. Every step in that syllogism is wrong, and, I will argue … each step is probably more obviously wrong than the previous one.

Abhijit Banerjee

It is rather ironic that just as the annual meeting of the ADB convened in Manila to discuss the “Asian century” emphasizing the role of the region in propping up the global economy that a survey by the Social Weather Station on self-reported poverty showed that a majority of Filipinos (55% in the first quarter of 2012 compared to 45% in the previous quarter) still considered themselves poor. Business leaders and policymakers seemed unflustered though as they expressed confidence in our long run prospects for growth and development.

After more than sixty years of working with both bilateral and multilateral aid agencies as well as non-governmental organizations, you would think that a good understanding of the links between growth and poverty reduction would exist. Unfortunately, there is strikingly very little we know based on the evidence that is available.

At the very least, all that we do know is that the so-called trade-off between growth and poverty reduction does not hold. From cross country analysis, we find that fast growing countries tend to see poverty decline. But that is about it. We do not know which causes which. Is it growth that reduces poverty or does poverty reduction provide the initial conditions for growth to occur?

To be clear, we don’t know if: (a) countries that grow faster, reduce their levels of poverty quicker (growth reduces poverty), (b) countries that reduce poverty subsequently grow faster (poverty reduction causes growth), or (c) growth without poverty reduction becomes unsustainable politically and therefore leads to cases of growth interrupted (both growth and poverty reduction have to occur simultaneously).

The previous government of the Philippines for instance spent the better part of the last decade focusing on growth through public spending and foreign investments. The incidence of poverty however did not decline which led to the pilot-testing of a conditional cash grants program to indigent households near the end of its second term of office. Its political difficulties stemmed from another source: perceptions of illegitimacy in the way it had acquired and held on to power.

The subsequent government has placed a greater emphasis on fixing perceived areas of corruption while rolling out the conditional cash grants program of its predecessor, but has found not only growth to have slowed, but (self-reported) poverty to have risen as well, at least at the onset.

This to-ing and fro-ing from one policy agenda to another demonstrates why it is so important to know the answer to the question how are growth and poverty related. Otherwise we could be wasting much of our time and resources promoting one type of reform when in fact we should be promoting another.

We know precious little about what promotes growth to begin with. It would be a shame investing so much in it (getting an investment grade credit rating for instance through fiscal austerity) when what we should be doing is throw everything we’ve got at something else.

It doesn’t help that what we thought we knew has been subsequently disproven or found to be flawed. For example, back in the 90s we were told that growth (or the lack of it) was mostly explained by adequate (or inadequate) levels of savings and investment in physical infrastructure, human capital and population. It turns out those factors only account for about a third of the growth. The rest remains unexplained.

The implications of this are that even if the government were able to take advantage of the fact that for once in our nation’s history we are no longer a net debtor, but a net creditor nation, and competently implement the roll-out of its public private partnerships, its education and health reforms and some variation of a reproductive health program, growth of the kind that it hopes for would still not be guaranteed.

If we were to compile all the findings of empirical work on cross-country growth rates, we would find that a total of 145 variables have been identified as significant, contributing either positively or negatively to growth. Given the number of countries to be observed and the range of variables to be tested, no satisfactorily robust method exists that would allow us to test all these variables all at once to measure their relative importance.

Even if we relied on partial correlations that tell us that policies, institutions and anti-corruption measures significantly affect growth, we still would not know which policies, institutions and forms of anti-corruption matter most. The data sets for testing such suppositions simply do not exist. Macro analysis simply is not viable. It exposes much policy work to the accusation that it is merely based on conjecture, ideology and politics.

Suppose we were to test proposed solutions at the micro level using micro experiments? Random evaluations using control and test groups might hold the key. Applying for instance new forms of administration across a range of local government units might help us rule out or rule in certain reforms. Evaluating specific policies like the Pantawid Pamilya as it rolls out might provide evidence as to how our version of conditional cash grants is either effective or ineffective in different settings throughout the country.

(Note the distinction I made between Pantawid Pamilya and other similar programs such as Brazil’s Bolsa Familia. Knowing that a version of conditional cash grants works in one setting does not necessarily prove it will work everywhere else. We should be cautious in accepting the claims made by Jeffrey Sachs, a speaker at the ADB meeting, who believes that we already know how to fight poverty in every setting throughout the world.)

When it comes to promoting growth through industrial policy (targeting poverty through industry and employment programs), we were told by the Washington Consensus not to experiment anymore. Growth came by lowering trade barriers and improving governance. They claimed that “one size fits all”. Countries had to craft their policies in a way that followed “best practice” which meant letting the free market allocate resources and determine our place in the value chain of global production.

What our experience and that of Latin America and Sub-Saharan Africa in adopting this so-called consensus points out, what we should have been pursuing was not the principle of best practice (our laws and regulations are often regarded as such), but the one of “best fit” as highlighted by the East Asian growth experience.

The countries in that region didn’t accept the Western capitalist mould of economic governance, but developed their own forms based on local institutions and tradition. This made the process of development more acceptable and sustainable. If we are to follow their path, then perhaps we should not be so hesitant to experiment as they did.

The problem is that our policy elite suffer from an identity crisis. They are habitually more Asian in their practices, but they seek to pass themselves off as Western. As a result their prescriptive pronouncements often conflict with social reality such that when the rubber of public policy hits the road, it quickly burns out because of excessive friction.

It would be wonderful if we could experiment with new ways of doing public policy that worked with, rather than against, our collective identity. To do that though, we would first need to acknowledge our collective ignorance about a great many things.

UPDATE: It has been reported this morning that self-reported hunger in early March this year has gone up to the highest level it has ever been (exceeding the previous peak in 2008).

ADB tells Aquino to start “picking winners”

According to the Asian Development Bank, the Philippines needs to beef up its industrial policy if it is to achieve rapid and inclusive growth.

Taking the right road to inclusive growth, the report that Norio Usui penned is chock full of evidence in support of this position. The ADB has added its voice to UNIDO in arguing the case for industrial policy to be adopted by developing countries. This is against the grain of thought held by the World Bank, the IMF and the WTO which continue to hold on to the “Washington Consensus” that free markets and good governance are all that is needed for countries to prosper.

Unlike other reports that are full of analysis that mostly describe the problem but offer very little advice (mostly motherhood statements) this one drills down to specific prescriptions and targeted sites for intervention. Usui uses the analytical and methodological tools developed by Dani Rodrik of Columbia University and Ricardo Hausmann of Harvard (both of whom I have featured here and here) to plot out the “product space” into which the Philippines could best diversify its manufacturing and export base.

On a personal note, I was quite excited to see the “Top 20” charts he assembled of products which were closest to our current revealed comparative advantage, which had the greatest potential for spillover, and which had the greatest impact in terms of labour employment. Having done a similar exercise for a development agency in Australia which identified the technology intensity and revealed comparative advantage of the jurisdiction, I was never able to identify the areas in which to diversify. What Usui has done represents the cutting edge of developmental diagnostics at an industry level.

The irony is that the Philippines has demonstrated the capacity for producing highly sophisticated products which is normally associated with richer countries (a point that Hausmann made in The Economist). The problem is that without sufficient public intervention to deal with coordination and information problems and other market failures, such diversification will not occur.

Usui makes the point that while the decline of manufacturing has in part been offset by the growth of services (business process outsourcing being the most recent trend that supported growth throughout the 2000s), growth in employment, productivity and incomes have not kept pace with our ASEAN counterparts. To catch-up, growth would be required in manufacturing to supply “a second leg” with which the economy could pick up the pace.

Despite the presence of broad based programs to attract investments, reduce regulatory red-tape and corruption through the BOI and the PEZA, incentives have been largely redundant and used inefficiently. Although poor infrastructure and costly energy costs the oft cited reasons why investor shy away have some basis, Usui shows how that it may not necessarily be the overriding barrier or cost driver across the board.

In short, specific, targeted, industry-supported interventions and incentives are what would be needed for our manufacturing sector to grow and diversify. These interventions could range from supplying concessional loans or co-investment (something I discuss here), supporting the entrepreneurial process of self-discovery over how to adapt foreign technology to local capacity through research and development (something borrowed from Rodrik), coordinated infrastructure investments to providing subsidies for training (something I discuss here).

To counter the argument that such measures are difficult for weak governments to implement and merely give rise to cronyism and rent-seeking, Usui supplies the remedies acquired through practice by the East Asian economies in their path to development: sunset clauses and exit strategies, clear targets, monitoring and evaluation and contingent cost-recovery mechanisms.

In a previous post I have estimated the quantum of investment required to bring unemployment down to manageable levels along with the policy instruments required for encouraging such investments. What Usui has done is basically identify the sectors to target and engage.

If the government were to spend 200 billion pesos over the course of the next four years to co-invest in private-led initiatives that would generate five times that amount in counterpart funds (we currently have over one trillion pesos locked away in special drawing assets in the banking system) that would raise GDP by about 3% points a year. Add that to the 4-5% growth trend at present, and the government would just about hit its growth target of 7% over six years.

Unlike the scattergun approach being used to implement good governance which like the fiscal incentives program could prove highly inefficient and ineffective, I have recommended a targeted approach appropriate for our level of economic development by focusing on revamping the economic bureaucracy (covering both industry policy and revenue collection and enforcement). Usui supports this view by endorsing industry councils based on the East Asian model.

As I have mentioned before, it is not necessarily a lack of resources that is the problem (we can tap our foreign reserves if we have to, which incidentally will dampen our currency which at the moment is overvalued and hurting manufacturing). Rather it is the poverty of ideas and the ideological and dogmatic blinkers that have prevented successive governments from putting into practice pragmatic solutions to mend the country’s ills.

As the ADB points out, the country is well poised for economic growth given its openness to trade, sound banking system, and benign macroeconomic environment. External events like currency adjustments and wage inflation in China could also provide a precious window of opportunity for us. But there is no time to waste as other countries in the region are rapidly acquiring the capacity to produce highly sophisticated products as we have. The report concludes by saying

Structural transformation, by its nature, is a long process. Challenges may look overwhelming. It cannot happen tomorrow, but in a future within our reach. The Philippines has a huge potential to become a key production base within the regional production network … The government needs to be pragmatic enough to exploit the precious opportunities. Strategic public sector support that embodies a long-term vision of the economy makes it possible to change the economic structure that drives inclusive growth in the Philippines. Success is not always as distant as it seems.

I couldn’t agree more. Let’s hope someone in the Palace is listening.

The Daily Roundup: 3 February 2011

Aquino on corruption in gov’t: I’ve reached saturation pointby Regina Bengco and Gerard Naval

PRESIDENT Aquino yesterday said he was no longer surprised by former state auditor Heidi Mendoza’s statements about corruption in the Armed Forces because he has already reached the saturation point so early in his presidency.

“Marami na ang na-discover natin, at walang tigil ito. Naabot ko na rin ang saturation because ang reaction natin kadalasan, ‘Pati ba naman iyan, pati ito hindi na pinalampas.’ Akala malaki na iyan, yun pala (may mas malaki pa),” Aquino said in an ambush interview in Laguna.

“Parang nahirapan na akong magulat,” he said.

Read more at Malaya

Heidi Mendoza: May her tribe increaseby Solita Collas-Monsod

The Garcia plea bargain hearings have taken some unexpected but very welcome turns that give the country greater reason to hope: the emergence of a role model in the fight against corruption — Heidi Mendoza, may her tribe increase; and maybe, just maybe, the much lesser likelihood now of the rank and file following blindly in their officers’ coup attempts — nothing like realizing that their so-called gods have feet of clay.

At the same time, it opens the door for a closer scrutiny of what has been going on at the supposedly independent constitutional body called the Commission on Audit which seems to be turning out to be not so independent after all.

Heidi Mendoza exemplifies what social psychologist Philip Zimbardo (of Stanford Prison Experiment fame) calls heroism. But his hero is not a hero-cum-celebrity, or a hero cum-larger-than-life. Zimbardo defines his hero as a person who performs an ordinary action in an extraordinary manner. And an ordinary action becomes extraordinary when three requisites are met: it is an action in behalf of other people in need, or for a moral cause or principle; it is an action which costs the actor — there is a sacrifice involved; and finally it is an action which is done without thought of reward.

Read more at Business World

New taxes needed for devt goalsby Cai U. Ordinario

NEW taxes must be imposed, if the Aquino administration is to meet the Millennium Development Goals (MDGs) by 2015, according to a study released by the Philippine Institute for Development Studies (PIDS).

The state-operated think tank said in its study, titled “Financing the MDGs and Inclusive Growth in the Time of Fiscal Consolidation,” that while improving tax collection helped increase revenues, new taxes were still needed.

The study said the new taxes could be done by restructuring the excise tax on sin products; the rationalization of fiscal incentives; and reforming the road-user charge.

Read more at Business Mirror

DOST: ‘Creeping disaster ‘ in PHL due to La Ninaby Mia M. Gonzalez

A SCIENCE official on Wednesday warned of a “creeping disaster” in the Philippines due to La Niña, as shown by larger-than-usual flooding in parts of the country since November last year, and the expected stronger typhoons this year compared with those in 2010 due to the weather phenomenon.

In a Palace news briefing, Science Undersecretary Graciano Yumul Jr. cited the amount of rainfall experienced in Surigao City in January, which was 300 percent more than the normal rainfall for the month, and said that even more telling is the 1,000 millimeters of rainfall observed in some other areas.

Read more at Business Mirror

“Lower minimum wage seen on poverty data” by Darwin G. Amojelar

THE Philippines’ minimum wage is likely to contract as a result of the government’s new way of measuring poverty, according to the National Statistical Coordination Board (NSCB).

“The poverty threshold went down under the new method so the minimum wage could go down,” Romulo A. Virola, NSCB secretary general told reporters.

Under the new official poverty estimation methodology approved by the NSCB Board, the Philippine poverty line would drop an average of 4 to 5 percentage points.

Read more at The Manila Times

Gov’t offers four PPP dealsby Jessica Anne Hermosa

A LIST of public-private partnership (PPP) projects up for bidding before July has been trimmed to the sale of two light railways and an airport plus construction of an expressway.

To be privatized are the Metro Rail Transit Line (MRT) 3, Light Rail Transit (LRT) Line 1 and Misamis Oriental’s Laguindingan Airport as well as implementation of phase two of the Ninoy Aquino International Airport (NAIA) expressway worth a total of $579 million, data from the Investment Relations Office (IRO) showed.

The latest list was bared in Tokyo on Tuesday where several Cabinet members attended gatherings of business leaders from both countries, the IRO said.

Read more at Business World

Budget deficit may be smaller, says Paderanga by Iris C. Gonzales

The government’s 2010 and 2011 budget deficit as a percentage of the economy’s total output or gross domestic product (GDP) may be narrower on the back of strong economic growth last year, the country’s Socioeconomic Planning chief said.

Socioeconomic Planning Secretary Cayetano Paderanga Jr. said that with last year’s GDP expansion recorded at 7.3 percent or the highest since the post-Marcos era, the deficit-to-GDP ratio would likely be below 3.9 percent for last year and below 3.3 percent for this year.

In the fourth quarter alone, the economy grew by 7.1 percent.

Read more at The Philippine Star

House leaders foreign chambers meet on pending vital measuresby Paolo S. Romero

Speaker Feliciano Belmonte Jr. and other leaders of the House of Representatives held a dialogue yesterday with representatives of the Joint Foreign Chambers of Commerce (JFCC) on the need for the swift approval of pending bills on various concerns, including taxes, mining, and environment.

Leading the dialogue for the House was Belmonte and Hubert D’Aboville, president of the European Chamber of Commerce in the Philippines. Also present were chairmen of the key committees of the chamber.

Also present in the dialogue were representatives from the American Chamber of Commerce; Australia-New Zealand Chamber of Commerce; Board of Airline Representatives; Business Processing Association-Philippines; Canadian Chamber of Commerce, Capital Market Development Council; Employers Confederation of the Philppines; and the Philippine Chamber of Commerce and Industry (PCCI).

Read more at The Philippine Star

ADB cited for organizational effectivenessby Edu Lopez

The Asian Development Bank (ADB) is an effective, transparent, client-focused organization, and should continue with current efforts to further improve its effectiveness, according to a new donor assessment report.

The report, commissioned by the Multilateral Organization Performance Assessment Network (MOPAN) consisting of 16 donor countries, gives ADB satisfactory to high marks in most key performance indicators, including in areas such as making transparent decisions in allocating resources, focusing on achieving results, reporting results information clearly, and harmonizing procedures with other development partners.

“Over the past four years, ADB has been implementing a number of reforms designed to improve its effectiveness and the findings suggest that these reforms are providing the foundation for organizational effectiveness,” the report said.

Read more at Manila Bulletin

ADB warns gov’t against move to hike VAT to 15%

ADB warns gov’t against move to hike VAT to 15%
By Ronnel Domingo
Philippine Daily Inquirer

MANILA, Philippines—The government should not raise the value-added tax to 15 percent as this, along with the corporate income tax being lowered further, would make the Philippine tax system more regressive, according to the Asian Development Bank.

In a policy note on the Philippines, the multilateral lender said the Philippines should rather raise excise taxes on tobacco, alcohol and gasoline to improve its tax effort or collections expressed as a percentage of total output (gross domestic product).

The ADB noted a standing proposal for another increase in the VAT from the current 12 percent and a further lowering of the corporate income tax to 25 percent from 30 percent would not improve the tax effort, which was pegged at 12.8 percent in 2009.

“The overall impact [of this scenario] on the tax effort is neutral,” the ADB said. “But if the [corporate income tax] is cut further to 20 percent, the tax effort decreases by -0.6 percentage point.”

Forum cites development tasks

Forum cites development tasks
BusinessWorld Online

ASIA is now increasingly the focus of growth in the world, but individual economies like the Philippines and similarly less developed markets have to identify sectors that need support in order to boost their competitiveness, experts said at a forum yesterday in the Asian Institute of Management in Makati City.

In her presentation, Suzanne Rosselet, deputy director of the International Institute for Management Development World Competitiveness Center, noted that Asia’s population will hit 5.26 billion by 2050, compared to Africa’s 1.77 billion, the European Union’s 628 million and the United States’ 447 million.

“This pretty much sums up where the long-term growth will be. [It] will be in Asia,” she said.

In the Philippines, she said, the government needs to focus on supporting small- and medium-scale enterprises (SMEs) and services, which have been an engine of growth.

She added that “there has to be job creation for young people moving into the workforce.”

David Jay Green, a fellow of the Asian Development Bank-Asian Institute of Management Knowledge Hub for Trade and Investment, noted that within the Association of Southeast Asian Nations (ASEAN) are pockets of less developed clusters like that of the otherwise resource-rich sub-region grouped into the Brunei Darussalam-Indonesia-Malaysia-Philippines-East ASEAN Growth Area (BIMP-EAGA).

He noted this group, which was formally established in 1984, was formed precisely to enable the less developed component areas to pool resources and efforts to help them catch up with more developed urban areas in the same countries. The Philippine components of BIMP-EAGA are Palawan and Mindanao.

Experts have prescribed increasing trade and other economic ties within Asia, as demand recovery in the US and Europe remains sluggish.

But Mr. Green stressed the need to further streamline trade processes within BIMP-EAGA if it is to live up to expectations as a driver of growth in Southeast Asia.

This, in turn, requires more efficient government operations, better infrastructure and “connectivity policies” — all of which will facilitate the transport of goods and trade in services.

“It’s a whole series of things that has to be done to encourage the business environment, trading environment and the ability of people to invest in their own country,” Mr. Green said.

Sought for comment, Augusto B. Santos, deputy director general of the National Economic and Development Authority, said the government has been finding ways to provide cheap loans to SMEs, help localities focus on a few products and services they can excel in, and is poised to embark on an infrastructure buildup under public-private partnerships in order to lay the groundwork for sustained, faster growth. — JJAC

Aquino to protect big infra investors

Aquino to protect big infra investors
Philippine Daily Inquirer

President Benigno Aquino III Thursday said that his administration would compensate investors prevented by the courts or Congress from collecting contractually agreed toll or user fees.

“If for some reason, a court decision threatens the adjustment, the government will compensate the private concessionaire for the difference between what the tariff should have been under the formula and the tariff which it is actually able to collect,” the President said at the opening of the public-private partnership conference in Pasay City.

Before some 500 foreign fund managers at the Marriott Hotel, Mr. Aquino unveiled this landmark policy that his economic team hoped would assuage overseas businessmen’s fears about their ability to recoup investments.

“If we are truly interested in a square deal for all, then what we shake hands on, should be what endures,” he said. “To this end, what we will be doing in so far as solicited projects are concerned is to minimize your risk in a meaningful and fair manner.”

Mr. Aquino said the government would provide investors with protection against so-called “regulatory risk” or the risk of being unable to recoup one’s investments due to changes in the local regulatory environment—a common complaint among foreign businesses operating in the Philippines.

“Infrastructure can only be paid for from user fees or taxes,” he said.

“When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees—by regulators, courts, or the legislature—then our government will use its own resources to ensure that they are kept whole.”

Seeking to lure back foreign investors, many of whom have been personally burned by soured investments or deterred by tales about the perils of doing business in the country, he said: “You cannot deal with a government where the right hand is offering a handshake while the left hand is trying to pick your pocket.”

SLEx example

Mr. Aquino gave the example of a private firm that agreed with the government on a specific formula for toll increases for the public’s use of a road it rehabilitated.

Malaysian-backed South Luzon Tollways Corp. (SLTC), which holds the 30-year concession for the South Luzon Expressway (SLEx), was earlier stopped by the Supreme Court from implementing a new toll rate.

The new rate, which is 250-percent higher than the existing toll, is meant to help the company recover the minimum of P12 billion it spent to rehabilitate and modernize the road.

The additional funds will also allow the company to maintain world-class services at SLEx.

The delay caused by the restraining order, which has since then been lifted, has cost SLTC up to P1 billion in foregone revenues.

Market risk not covered

“Commercial or market risk, which you are in the business of determining, will be borne by investors, as it should be,” the President said.

Mr. Aquino said the guarantee he was giving was different from the “politically difficult guarantees” that past administrations had given.

He cited the power supply contracts that committed government to buying electricity “regardless of what the actual demand was”—known as “take-or-pay.”

Take-or-pay means that a company will still be able to collect payments even for energy it is not able to deliver due to lower-than-expected-demand from consumers.

Honest, transparent

Mr. Aquino said the contracting of projects under the public-private partnerships would be “clear, honest and transparent.”

He unveiled 10 rail, road and airport projects to be formally put out to tender at the end of next year and worth a combined $3.4 billion.

Break from past

In an interview with the Inquirer, Finance Secretary Cesar Purisima said the new regulatory risk guarantee marked a crucial break from policies of past administrations which guaranteed investors’ “commercial risk.”

“Back then, the government committed to pay a fixed amount whether the investors could sell [their product or service] or not,” he said.

“That is how we got saddled with expensive power rates from these IPPs (independent power producers, contracted at the height of the 1990s power shortage),” he added.

“Today, we will no longer guarantee commercial risk, but instead cover only regulatory risk for solicited projects.”

Funding pool

The finance secretary said the scheme would involve the creation of a funding pool, initially put up by government financial institutions, that will be, in turn, backed by guarantees from multilateral lending institutions like the World Bank and the Asian Development Bank.

“If the investors cannot collect their agreed return on investment—for example, because of a court-issued injunction on a toll hike—the government will pay them the difference of the existing rate and the rate that they should be collecting,” Purisima said.

He said this “regulatory” risk guarantee sought to preserve the sanctity of the contract.

This also ensures that there are no sudden changes in government policies that may hinder a company from recovering its investment.

Alistair Macdonald, head of the European Union delegation in the Philippines, said he welcomed the government’s pledges of fair play and transparency.

“I think it’s something that’s extremely important that I was delighted to hear. The President … addressed precisely this question, which will also be very encouraging for the business community,” Macdonald said.

Protest rally

Activists staged a rally in front of Marriott Hotel at the launching of the public-private partnership (PPP) program.

Senior Insp. Prudencio Lumapad said some 40 members of militant groups led by Bayan Muna held the demonstration at around 10:30 a.m.

Bagong Alyansang Makabayan (Bayan) secretary general Renato Reyes Jr. said policemen took away the streamer carrying the message “Philippines not for sale!”

Critics said the PPP program would bloat the country’s debt and speed up corporations taking over roles played by the government at the expense of public interest. With reports from Tina G. Santos and Agence France-Presse

Infrastructure woes hinder MDGs

Infrastructure woes hinder MDGs
Written by Cai U. Ordinario
Business Mirror

DESPITE the country’s efforts to increase social spending through programs like the conditional cash-transfer (CCT) program to meet the Millennium Development Goals (MDGs), the Asian Development Bank (ADB) believes that addressing infrastructure constraints will still hold the key in achieving the goals by 2015.

In a statement, ADB president Haruhiko Kuroda said developing countries like the Philippines must address basic infrastructure constraints to achieve the MDGs in five years.

Kuroda said many areas in developing countries still do not have electricity, all-weather roads and other basic infrastructure. These limit access to health care and discourage children from completing their education.

He said the region is lagging in the targets for basic sanitation, infant mortality, maternal health, hunger and environmental improvements, and reducing greenhouse-gas emissions.

“Less developed countries, or those suffering from conflicts or disaster, will need more regional help to make progress, and the Asia and Pacific region must step up cross-border cooperation in trade, investment, knowledge and technology, to help bridge gaps in resources and capacities,” the ADB added.

Addressing these concerns is National Economic and Development Authority (Neda) Director General
Dr. Cayetano Paderanga, who delivered the Philippines’ statement during the High-Level Meeting on the Millennium Development Goals in New York City.

Paderanga, who is also the Socioeconomic Planning secretary, said while the Philippines made considerable strides in meeting some of the MDGs, like cutting child mortality, and malaria and tuberculosis incidence; increasing access to sanitation and safe and potable water; and providing equal education for girls, there is still a lot to be done.

The Neda chief said the measures that will be implemented by the national government to help achieve the MDGs will be included in the Medium-Term Development Plan for 2010-2016.

He said the MTDP will make sure this growth is inclusive and can help protect the vulnerable by ensuring access of every Filipino to quality health, education and employment opportunities.

These, Paderanga said, will be done through an appropriate mix of physical and social infrastructures, and by strengthening social safety nets, like CCTs and universal health care.

“Despite the gains attained in the last decade, we need to push ourselves more to meet the MDGs, particularly where we lag behind. Moreover, the Philippine scenario is characterized by wide disparities. Our latest progress report also shows that climate change poses a threat to the achievement of our targets. The population above the poverty threshold is declining as a result of low capacities to cope with the effects of shocks leading to more ‘transient poor,’” Paderanga said in a statement.

He urged development partners to also keep their promise of sharing a portion of their gross national income (GNI) to developing countries for MDG achievement. The United Nations official development assistance target is set at 0.7 percent of GNI.

“Excellencies, as we enter the last stretch, the Philippine government is exerting all means to deliver on its promise to realize its MDGs, not just as an international commitment but because our people demand it. Let us remember that each and every one of our citizens deserves a life of quality, meaning and dignity,” Paderanga said.

For its part, the Manila-based ADB said it is targeting increased support for basic infrastructure, such as roads, power and sanitation, which are crucial for meeting MDGs.

It also intends to scale up assistance for education, and for environmental improvements, including the use of clean energy, where ADB investments have grown to more than $1 billion a year, and which are targeted to double to $2 billion by 2013.

Kuroda added that countries in the Asia and the Pacific region, which is home to three-fifths of humanity and two-thirds of the world’s poor, represent the world’s best hope for achieving the MDGs by 2015.

“With more than 500 million people having overcome poverty since 1990, the target for reducing extreme income poverty is in sight. The region is also likely to achieve near universal primary school enrollment by 2015, attain gender parity in education, meet the target on access to safe drinking water, and halt the spread of deadly diseases such as TB and HIV,” Kuroda said.

The country’s fourth progress report on the MDGs showed it had a low probability of achieving indicators—such as increase elementary education net enrollment rate, elementary education cohort survival rate, elementary education completion rate, reduce by three quarters maternal mortality, universal access to reproductive health, halt HIV prevalence among 15 year olds, and provide comprehensive correct knowledge about HIV/AIDS to 15 to 24 year olds.

The report also showed the country had a medium probability of achieving the indicators on halving the proportion of population below the poverty threshold or P15,057 per year per person, halving the prevalence of underweight children under five years old, halving the proportion of households with per capita intake below 100 percent dietary energy requirement, universal access for the proportion of the population with advanced HIV infection to antiretroviral drugs, and halve the proportion of the population with access to safe water.

The indicators also showed the Philippines had a high probability of achieving of halving the proportion of population below the food threshold or P10,025 per year per person, all the indicators of Goal 3 which pertained to gender equality and women empowerment, indicators under Goal 4 of reducing child mortality, the malaria morbidity rate, the malaria mortality rate, the tuberculosis case-detection rate, tuberculosis-cure rate, and the proportion of the population with access to sanitary toilet facilities.

The MDGs are a set of eight goals, 22 quantitative targets and more than 60 specific indicators meant to serve as a focus for international and national development policy.

The first seven goals are concerned with outcomes, identifying the progress toward certain standards of human welfare and development that should be achieved globally and nationally by 2015. The eighth goal is concerned with “global partnership for development” to support the realization of all the goals.

ADB, UNICEF agree to help countries achieve MDG goals

ADB, UNICEF agree to help countries achieve MDG goals
GMA News

The Asian Development Bank (ADB) and the United Nations Children’s Fund (UNICEF) signed an agreement to help some countries in Asia and the Pacific region, including the Philippines, to reduce poverty and inequalities and improve child welfare.
The agreement was signed with five years remaining until the 2015 deadline for the world to achieve the Millennium Development Goals (MDGs), the Manila-based bank said in a statement released to media on Thursday.

The ADB said the two agencies will look for opportunities to work together to accelerate the achievement of the MDGs, including reducing infant and maternal mortality rates, improving the quality and relevance of basic education, promoting investments in water and hygiene, strengthening child protection systems, and combating HIV/AIDS.

They will also look at opportunities to cooperate on public-private partnerships and enable the poor to participate in and benefit from economic growth, the bank said.

The ADB said the agreement will run for five years from the date of the signing of the agreement, and it may be extended by mutual consent.

Apart from the Philippines, priority areas for the project include Armenia, Bangladesh, Cambodia, Georgia, Indonesia, Lao People’s Democratic Republic, Mongolia, Nepal, Pakistan, Papua New Guinea, Timor Leste, Uzbekistan, and Vietnam, the bank said. —JE/VS, GMANews.TV