Investment’s Role In Poverty Alleviation In The Philippines

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The Philippines, as we know it, is still a developing country struggling with the prevalence of poverty in it. Through the years, studies have been conducted to determine the root causes of poverty and propositions towards actions based upon these have been made in order to upgrade the economic status of the citizenry. A report by World Bank entitled “Making Growth Work for the Poor: A Poverty Assessment for the Philippines” showed that the reasons for this include less pro-poor pattern of growth, high inequality of income and opportunities, and the adverse effects of natural disasters and conflict. Other reasons as pointed out by different sources include low education and skills, causing limited access to the also limited formal and high paying and highly skilled jobs.

According to Jan Rutrowski, Lead Economist of the World Bank’s Social Protection and Labour Global Practice, “The ‘scarcity of good jobs’ reflects the structure of the Philippine economy where low-value-added activities predominate… partly due to constraints in the investment climate and the high cost of doing business in the formal sector.” This state of inequitable investment in human capital and insufficient well-paying job opportunities then trap the poor in poverty across generations (World Bank). From 2006 to 2015, fortunately, the latest available data from the report by World Bank shows that the poverty rate in the Philippines fell by 5 percentage point (26.6% in 2006 to 21.6% in 2015).

With this, the country is challenged to provide more economic opportunities for the people to engage in more chances to increase their incomes. And what would be better to do than to invest? That is, to invest not just money but also time and effort in the aspects or avenues in the Philippines having high potential of yielding more and better jobs and career opportunities for the people in order to help alleviate their poverty. That report also mentioned the government’s plans that focus on poverty reduction, specifically AmBisyon 2040 and the Philippine Development Plan 2017-2022, targeting reducing poverty to 13-15 percent by 2022. Strategies recommended to achieve these include the creation of more and better jobs, improvement of productivity in all sectors, especially agriculture, equipment of Filipinos with skills needed for the 21st century economy, investment in health and nutrition, and management of disaster risks and protection of the vulnerable.



Although it remains a pillar in the Philippine economy as a provider for a large portion of the labor force, agriculture in the country has still a long way to go because 60% of the Filipino families below the poverty line work in agriculture, animal husbandry and forestry in the rural areas (Romero, 2017). The poorest are those dependent on agriculture in the countryside in areas prone to disasters or in conflict-affected areas of Mindanao. In response to this, public and private initiatives are being pushed through to pave the way for the transformation of agricultural farming into a thriving agribusiness-driven sector.
One of these is the “Agribusiness Support for Promotion and Investment in Regional Expositions,” a joint project of the Department of Agriculture (DA), Department of Trade and Industry is a program to improve domestic and international market access for small farmers (Oxford Business Group). Another one is World Bank’s approval of an additional $170 million dollars in the financing of the Philippine Rural Development Plan in January 2018. “Uplifting the country’s agricultural sector through industrialization and proper investments will yield significant results in rural development and poverty alleviation efforts” (Gonzales, 2015). And this transformation entails harnessing new technologies to industrialize the sector like the use of modern production facilities and processes, the use of genetically advanced products, promotion of disaster preparedness with climate change proofing mechanism, building of agricultural infrastructures connecting producers to the market like farm-to-market roads and such, and more research development (Gonzales, 2015; Oxford Business Group; Agribusiness).



One of the earlier mentioned reasons for poverty is lack of education and therefore lack of knowledge and skills needed to be able to get high paying jobs. As Becky Franciewicz, president of ManpowerGroup North America said, “As new skills emerge as fast as others become obsolete, skills are the new currency and we anticipate more employees will invest in training their current workforce in 2019 to do the jobs open today and tomorrow” (O’Donnell, 2019). Therefore, there is a need to upskill our workforce to increase the employees earning capacity. Given that, the government’s action of giving free higher education through RA 10931 or “Universal Access to Quality Tertiary Education Act of 2017”, adding P2.8 bi
Given that, the government’s action of giving free higher education through RA 10931 or “Universal Access to Quality Tertiary Education Act of 2017”, adding P2.8 billion this year for state universities and colleges’ (SUCs) operational and equipment expenses, and allocating P2.5 billion more for the Department of Education budget (Diaz, 2019) are steps in investing in the future of tomorrow’s workforce.
“Ensuring that all Filipino children have access to good quality education and skills development is a must to eliminate extreme poverty and promote shared prosperity,” said Aleksandra Posarac, Lead Economist and Program Leader in the Philippines for the Social Protection and Labour Global Practice (HR in Asia).
However, it doesn’t end there. Studies also show that even if there are actually ones who pursued higher education and hold degrees, they still end up accepting low paying jobs and experience skills mismatch because of the ‘scarcity of good jobs’. That is why education investments should be complemented by investments in job creation. A conducive environment for businesses and industry promotes the creation of productive jobs, especially for youth. Decent work should also be made available to those without college or more advanced degrees (Basilotte, Rao, and Martinez, 2018)

According to data from the Department of Trade and Industry (DTI), small and medium enterprises (SME’s) comprise the backbone of the Philippine economy, responsible for more than 99 percent of all enterprises in the country, employing more than 63 percent of the workforce here in our country. Through technological advancements and innovations such as online business-for-sale marketplaces, these SME’s could promote their products and services and be able to attract investors to further their ventures. Not only that, but these also provide avenues for the creation of more and better jobs for the country’s domestic workforce.



In today’s fast-paced technological age where almost everything is almost just a click away, we need to keep up with the rest of the world in terms of technological advancement and innovation. Investments geared towards the improvement of agricultural, educational, economical, health, transportation and government facilities and programs would certainly take us a step further into progress and sustaining high economic growth.

A great source of investment also comes from foreign direct investments (FDI). Some of the positive contributions of FDI to poverty reduction are achieved through horizontal and vertical spillover effects, employment creation, and an increase in investment capital (essential for economic growth) (Meyer 2004; Gorg and Greenaway 2004 as cited in Magombeyi and Odhiambo, 2017). However, the recent dip in FDI rates in our country prompts us to work on that aspect as well.



Personally, we Filipinos could also improve our own economical statuses by investing in ourselves (learning new skills, pursuing higher education, attending seminars and workshops on topics you are interested in), starting small businesses, and investing in mutual funds, bonds, and savings (Zoleta, 2017).

As the Philippines collectively goes through the process of giving premium to investing in potential avenues, ideas and its own people, our country would in no time be able to totally escape from the clutches of the poverty trap and move towards growth and the so-called greater shared prosperity.

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Investment’s Role In Poverty Alleviation In The Philippines. (2020, Sep 18). Retrieved from https://samploon.com/investments-role-in-poverty-alleviation-in-the-philippines/

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