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Why Does The Philippines Import Rice?: Meeting The Challenge Of Trade Liberalization - Isbn:9789712202094

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  • Book Title: Why Does the Philippines Import Rice?: Meeting the Challenge of Trade Liberalization
  • ISBN 13: 9789712202094
  • ISBN 10: 9712202097
  • Author: Piedad Moya, Cheryll B. Casiwan
  • Category: Free trade
  • Category (general): Other
  • Publisher: Int. Rice Res. Inst.
  • Format & Number of pages: 165 pages, book
  • Synopsis: as world prices, this policy would have given every poor family of six an additional 6,000 pesos of income per year, which they ... This problem arises only because the government restricts rice imports and keeps Philippine prices above world ...

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Poverty in the Philippines: Lack of Vision, Yet New Solutions?

Poverty in the Philippines: Lack of Vision, Yet New Solutions?

Since 2010, reducing poverty in the Philippines has been an official objective of the government led by Benigno Aquino and less so by the newest government but it remains a priority. The country seems to be struggling however to maintain the healthy growth of 2010 (above 7%), which remains important to keep the country on the right path.

Official pledges vs. reality

On the upside, the new government openly acknowledges the interaction between corruption, inefficient governments and poverty in the Philippines. There’s still to see if it will actually act on it.But the task is quite daunting: inequalities are deep and widespread in the country.

The population keeps on growing almost too fast for the average GDP growth – i.e. the economy should be growing faster for living standards to improve for everyone. Otherwise the wealth created will simply “feed” the increasing population (housing, jobs, …) rather than reduce overall poverty in the Philippines.

Challenges ahead New anti-poverty program

With fighting poverty at the center of the new government's policy, the trendy type of social assistance known as conditional cash transfer (CCT) has been the weapon of choice since 2008 in this war against poverty in the Philippines. The CCT program provides cash to poor families as long as they fulfill their civic duties by making sure they receive basic healthcare (e.g. vaccines) and send their kids to school the whole year. Note that money is given exclusively to the female head of the family. It seems men have a tendency to spend money in alcohol.

Since 2008, the conditional cash transfer program has been extended to over 2 million families, with a budget of about $450m – not that much considering the number of people concerned by this. With the help of the international organizations including the World Bank, almost half of impoverished families are now receiving CCTs.

Lack of infrastructure

This is one of the biggest problems that both prevents the economy from growing and makes poverty in the Philippines even worse. There’s been a dire lack of investment in infrastructure, as much to invest in new projects as to maintain existing infrastructure. Now it’s left to see whether the government’s plan to use public-private partnerships will work out for the better. By letting private investors build the infrastructure (in exchange of them charging people a fee later on), the government avoids bearing the whole cost of building infrastructure.

However, many Filipinos increasingly resist what they see as a basic investment that the government should make for the country, rather than making people pay for using basic services such as bridges, roads or water supply. What’s more, lack of accountability from the government also means that sometimes shady deals are made between the government and a private company. On the other hand it also means that companies aren’t too interested in investing in the Philippines because of the lack of transparency in government deals.

Rural poverty in the Philippines

‍Child rural poverty in the Philippines

Population pressure & sources of income

The Philippines is a good example of how pressured rural land is in developing countries because of an excessive population. However, where the Philippine example stands out is that there has been a constant decrease in rural poverty in the country. In particular, it seems that rural Filipinos have been able to add other sources of income on top of their usual farming activities.

A study over twenty years has shown that a shift to non-farming activities has led to higher income and thus less in poverty in the Philippines. In return, people have invested in education and gained new skills. In other words, human capital has increased.

This is a very obvious hint at the importance of developing and diversifying local rural markets so they don’t just deal with farming activities and products. Filipino farmers have been able to increase their revenue by finding extra job opportunities in their own region. In turn, they started having fewer kids (i.e. demographic transition ) which means they could also afford sending their kids to school. All in all, there are two critical aspects that have helped reduce rural poverty in the Philippines: infrastructure (schools, roads, bridges) and the development of local job markets to create to sectors and new job opportunities.

Communities standing up against poverty

‍Slums & makeshift housing in the Philippines

Community-driven development

In the past decade or so, there has been growing frustration with the traditional, ineffective top-down approach to development and poverty reduction. Therefore, the Philippines and several other countries have been experimenting with community-driven development (CDD). The many local successes have now led the government to try and replicate the experience at a larger scale.

Empowering the poor

What’s wrong with the good old top-down GDP growth strategy? In the last 30 years, it has been proven worldwide that it doesn’t always benefit the poor, in particular those in extreme poverty. In many cases, the wealth created in the country remains within the hands of an elite or at best a small middle class.

That’s why community-driven development is now at the center of many strategies, so that the poor can actively take part in the development of their own region and reap the benefits from growing their economy. In the end CDD could happen in a top-down manner too, since it’s also about playing a fairer game with the poor, providing them with the right information, training and a fair trade system. But too often, governments or local officials seem to tempted to skew the rules of the game in their favor.

What are they developing?

Rice, rice, rice. Well, for the most part. The Philippines remains very much a rural economy and farmers’ income is generally quite low, so it makes sense to focus on the main staple in order to grow, develop (and hopefully diversify) the economy. With 1 in 2 farmers living below the poverty line and about 35% of the population in poverty, economic development remains an important challenge for the Philippines. And increasing rice productivity seems like a good starting point. The first community-driven development programs were indeed effective at improving this and gathered all local players in rural Philippines; from farmers to local NGOs, local officers, union representatives and so on.

How did it work? Technology itself hasn’t been changed, but farmers have learned how to use combine different packages of seeds, fertilizers and pesticides. In this sense, the community effect has brought much better distribution of information and training to farmers. The whole experience of scaling up this strategy has also shown something very interesting: rice productivity can be increased somewhere between 5-15%; which means that for many farmers, it’s been much more profitable to invest in other types of agriculture: fruits, vegetables and livestock.

The overall process can help make the Philippine economy more effective and competitive, with different farmers making the best from their land. It also means that scaling up doesn’t always work and that local actors should be free to adapt a strategy to their own situation (e.g. diversifying crops rather than obsessing on rice).

Is a globalized economy of any help?

‍The role of the Philippine youth and reforms to improve the situation

The problem with the free market

In general, East and Southeast Asian countries have pretty well managed their transition to a free market economy, using trade liberalization to build strong export-based economies (South Korea, China, Thailand and more recently Vietnam). But in these same countries, liberalization has also led to an unprecedented surge in inequalities, aggravating rural poverty in the Philippines while urbanites were thriving. In this regard, it seems that the Philippines have been among the biggest Southeast Asian victims of a not very well-handled transition to a global economy.

The country did two great mistakes: it has been a very early adopter of the liberalization and privatization wave led by the World Trade Organization (WTO) and the World Bank; and at the same time its tariff system (over-taxing imports) has also blocked the country from a smoother economic development. This has led the country to lack the proper infrastructure to welcome new investments all while missing on the opportunity to develop its own economy before opening to international companies.

Not like the others

Because they simultaneously fear and welcome trade liberalization and big corporations, the successive governments have offered a strange resistance to the opening up of their economy. But while South Korea, China and other countries have tried to mitigate their own opening up and globalization processes, it’s as if the Philippines had no development plan other than just taxing foreign goods. Overall the liberalization and privatization have hit famers the worst and limited the development of a domestic economy because of stiff competition with big international players.

On the contrary, most East and Southeast Asian countries have prevented foreign competition from entering the country in order to grow their own companies and build their own infrastructure. That way, the day their borders opened, they were ready to compete with big international names and brands. What’s more, they have always welcomed foreign investment (e.g. Japanese investment in Indonesia and Vietnam in the 1980s has been of invaluable help) to help develop their country, even while the borders were only semi-opened.

Other causes of poverty in the Philippines

The incomplete land reform aiming at overthrowing the traditionally unequal agrarian society coupled with lack of support for farmers has been a long-lasting flaw in the governments’ development policies that can still massively reduce poverty in the Philippines. Thus, the role of the state remains central to redistribute more equally the wealth created in the country, in order to avoid leaving the poor behind. Supporting the extremely poor must be seen as a long-term investment and counterbalanced with future gains.

However, mistrust in the government combined with corruption and/or incompetence makes the overall task much harder, even though it has led to the rise of militant movements that speak in favor of farmers to build fairer trade systems. In a strange way, another problem for the Philippines is that, in spite of having embraced liberalization and international organizations’ rules, they have now ended up less integrated in the world economy than other Asian countries.

For instance, import tariff on rice makes it one of the rare exceptions in WTO, although understandable when you see how important rice is to the livelihood of millions of Filipinos. However, recent research on food price increase has shown that tariffs do not help protect farmers and instead increases poverty in both rural and urban areas. That’s because, even if imported rice can compete with domestic rice, the competition results in an overall reduction in consumer prices that is good for everyone. Moreover, with the right support, it helps identify which farmers need help and training so that they can either better manage their rice production or diversify their crops.

Pro-poor strategies needed

‍Impact of climate change on the Philippine population

Protecting the “pre-poor”

Aside from the fact that over 1/3 of the population lives in poverty in the Philippines, experts have also observed that a good 50% of households are in a precarious situation – i.e. vulnerable enough to fall into poverty if a minor financial setback happens. Hence, the government must not just take care of the poor, but also make sure that millions more don’t fall into poverty. Prevention is a must, if they want to prevent the problem from getting much bigger. Precariousness is usually worse in rural areas, even though many urban Filipinos are often at risk of falling into poverty as well.

This shows that if urban poverty in the Philippines is much lower than rural one, there is a constant risk that it gets much bigger since many households are too vulnerable to economic shocks. Also, a characteristic of these precarious families is that they tend to have more kids than the non-precarious ones. Therefore, guaranteeing access to education and contraception are things that the government must focus on for its poverty prevention plan.

Pro-poor or anti-poor strategies?

Several studies have confirmed recently that the trade liberalization of the economy has – as usual – benefitted mostly the urban residents, lifting many out of poverty. On the other hand, rural Filipinos have generally suffered from liberalization, despite efforts to protect rice production.

In fact, the best way to help its own industry is for the Philippines to support its agriculture and help it find funding to modernize as well as build decent infrastructure (roads, bridges, markets). Many Filipinos also need training, technical help and useful and timely information (e.g. on weather, seeds etc). This in itself helps promote the education of children as adults realize the importance of learning new skills to improve their income.

Ending import tariff

The other main problem slowing down efforts to tackle poverty in the Philippines are tariff on imports (i.e. taxes). Although they were created to protect local production, they ended up having the opposite effect. Tariff has made it more expensive for local producers (both in agriculture and industry) to import much-needed input for production.

Therefore local production has stalled and resulted in more expensive prices for everyone. And in the end, many Filipinos were eventually buying foreign goods anyway as they’re (sometimes) cheaper and more diverse. In the 2000s, the government has started reducing tariff which decreased the price of energy (e.g. oil and coal) and eventually reduced poverty as other prices fell as well.

The government made up for the loss in revenue by implementing a carbon tax that also helped protecting the environment. Indeed, for a while cheaper oil also meant more pollution as the population used more machines. In the end, revenue from the carbon tax proved even higher than that from tariff. As a result, the excess of money led to lower taxes on the population and thus less poverty in the Philippines too.

  • ‍Scaling-Up Community-Driven Development. Evidence from the Philippines, Piero Conforti and Ugo Pica-Ciamarra, Piero Confortia and Ugo Pica-Ciamarra 2007
  • Correlates of Poverty: Evidence from the Community-Based Monitoring System (CBMS) Data, Rechel G. Arcilla et al. Business & Economics Review 2011
  • Voices from the Top of the Pile: Elite Perceptions of Poverty and the Poor in the Philippines, G Clarke & M. Sison, Development and Change 2003
  • ‘Free Market’, Export-Led Development Strategy and its Impact on Rural Livelihoods, Poverty and Inequality: The Philippine Experience Seen from a Southeast Asian Perspective, Saturnino M. Borras Jr. Review of International Political Economy 2007
  • Toward Measuring Household Vulnerability to Income Poverty in the Philippines, J. S. Albert et al. Philippine Journal of Development 2008
  • Analysis of the Impact of Changes in the Prices of Rice and Fuel on Poverty in the Philippines, Celia M. Reyes et al. DLSU Business & Economics Review 2010
  • New Dawn — or False Dawn. Business Asia, The Economist Dec. 2010
  • Anti-Poverty or Anti-Poor? The World Bank’s Market-Led Agrarian Reform Experiment in the Philippines, S. Borras et al. Third World Quarterly 2007
  • Poverty and Income Dynamics in Philippine Villages, 1985–2004, Jonna P. Estudillo, Yasuyuki Sawada, and Keijiro Otsuka, Review of Development Economics 2008
  • Poverty Effects of the Philippines’ Tariff Reduction Program: Insights from a Computable General Equilibrium Analysis, John Cockburn et al. Cororaton, Asian Economic Journal 2008
  • Tariff Reductions, Carbon Emissions, and Poverty, Erwin L. Corong, ASEAN Economic Bulletin 2008
  • Building Institutional Capacity for the Upgrading of Barangay Commonwealth in Metro Manila, L. Antolihao & B. van Horen, Housing Studies 2005
  • WTO, Trade Liberalization, and Rural Poverty in the Philippines: Is Rice Special. Caesar B. Cororaton and John Cockburn, Review of Agricultural Economics 2006

Poverty in the Philippines: Lack of Vision, Yet New Solutions?

Since 2010, reducing poverty in the Philippines has been an official objective of the government led by Benigno Aquino and less so by the newest government but it remains a priority. The country seems to be struggling however to maintain the healthy growth of 2010 (above 7%), which remains important to keep the country on the right path.

Poverty in Pakistan: Challenges of a Fast-Growing Population

Poverty in Pakistan spreads across a variety of issues: a very fast-growing population facing lack of education, jobs, technology, capital and investment. But the country is committed to tackling the problem and the poverty rate has fallen by more than 10% in the mid-2000s. That’s nearly 15 million people who were lifted out of poverty.




Food Clustering Analysis: The Impact of Typhoons in Food Production and Utilization in the Philippines

  • Leyte Normal University, Philippines

Objectives: Food has been a major concern in the Philippines regarding production and utilization. The main purpose of this research is to develop a model to venture the future of food production and consumption. Methods/Analysis: This study explored using data mining technique using regression and cluster analysis to establish a new knowledge from a data set ranging from 1990 to 2013, where the data taken and extracted into a software readable formatfrom the Philippine Government repository like the PhilFSIS and PAGASA. This research utilized software such as MiniTab 13.20 and Weka 3.7to facilitate model generation. Findings: The data generated were analyzed and found out that only poultry products were not affected by the typhoons. Thisresult is considered to be unique in nature considering that the Philippines is the most visited strong typhoons in the world, and can affect the poultry production. In the model generated, a significant finding also reveals that root crops, poultry products, and hog production increase if there is an increase of typhoons that enter the PAR. Finally, a theory was created based on the interpretation of the generated data from the data mining processes. Novelty/Improvement: These results only suggest that the authorities should look into the risk of declining of the production of other commodities and create a more climate resilient plan of production to sustain the future needs of the consumers. Further study must be conducted to establish the validity of the result of this study.


Cluster Analysis, Climate Change, Food Security, Regression, Typhoon, Theory Development.

Full Text: References
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  • COP21. Paris Agreement. European Commission on Climate Change. 2015. Available from: http://ec.europa.eu/ clima/policies/international/negotiations/future/index_ en.htm
  • Moya P, Casiwan CB. Why does the Philippines import rice? meeting the challenge of trade liberalization. Int Rice Res Inst. 2006.
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  • GMA News Online. Philippines Buys 150, 000 Tons Rice from Vietnam, set import More. 2015. Available from: http://www.gmanetwork.com/news/story/499166/money/ philippines-buys-150-000-tons-rice-from-vietnam-set-toimport- more
  • Haile M. Weather patterns, food security and humanitarian response in sub-Saharan Africa. Philosophical Transactions of the Royal Society B: Biological Science. 2005; 360(1463):2169–82.
  • Israel DC, Briones RM. Impacts of natural disasters on agriculture, food security, and natural resources and environment in the Philippines (No. DP 2012-36). 2012.
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  • Oracle Data Mining Concepts. (nd). Regression. Oracle. Available from: http://www.comp.dit.ie/btierney/oracle11gdoc/ datamine.111/b28129/regress.htm
  • Reyes MLF, David WP. The effect of El Niño on rice production in the Philippines. Philippine Agricultural Scientist. 2009; 92(2):170–85.
  • Regression Methods. (nd). Residual VS Order Plot. STAT 501. PennState Eberly College of Science. Available from: https://onlinecourses.science.psu.edu/stat501/node/280
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  • Why do Nations Import?

    Why do Nations Import?

    The motivation for a country to import goods and services from other countries is perhaps less obvious than its motivation for selling exports (making a profit on goods not consumed by the domestic market). As with exports, the purposes served by imports vary from country to country. Let’s explore these various purposes by starting with asking why a country like the United States, with its massive and extraordinarily diverse economy, would need to import anything from other countries.

    In fact, there are only a handful of goods or services that the United States absolutely must import from other countries. With a land area spanning several climatic zones, immense natural resources, and a dynamic workforce, the United States is able to produce, mine, or grow almost every item its citizens need to lead reasonably prosperous lives.

    Yet no country today, including the United States, can be totally self-sufficient without suffering a high cost. All countries need to—or choose to—import at least some goods and services for the following reasons:

    1. Goods or services that are either a. essential to economic well-being or b. highly attractive to consumers but are not available in the domestic market
    2. Goods or services that satisfy domestic needs or wants can be produced more inexpensively or efficiently by other countries, and therefore sold at lower prices.

    It is helpful to illustrate these points by looking at the case of the United States, precisely because it comes closer to being self-sufficient than any other country for the reasons mentioned above (several climactic zones, resources, able workforce). Coal, copper, iron, silver, and nickel are just a few of the natural resources the United States possesses in large quantities that other countries do not possess.

    There are some economically essential goods, such as tungsten and oil, which the United States either does not produce at all or does not produce in sufficient quantities to serve domestic needs at a reasonable price.

    The United States cannot meet its oil consumption needs exclusively through domestically produced oil; in 2012 the US consumption of oil dropped to a 16 year low, a total of 18.56 million bpd, as a result of a weak economy (Reuters, 2013). Meanwhile, the domestic production of oil rose sharply in 2012, with 6.4 million bpd being produced in the U.S. (Fowler, 2013). This means that the U.S. will need to import less and steadily become more self-reliant, with projections stating that U.S. output will overtake Saudi Arabia by 2020, making it the largest producer for about five years (Nguyen, 2012).

    The United States could, in theory, abandon foreign oil imports, but it would be a costly decision because:

    1. It is not clear that domestic reserves of oil, both those that are known and those that have yet to be discovered, could satisfy current domestic demand.
    2. Even if U.S. oil reserves were adequate, generating the extra oil necessary to fill the gap now filled by imported oil would be extremely costly. Many foreign countries are able to produce oil much more cheaply. Besides, accessing the additional U.S. reserves would require many years of research and development.
    3. Other energy sources—for example, coal, nuclear power, or hydro-electric power—could conceivably be substituted for oil imports, but complying with the respective environmental regulations, along with the cost of producing additional energy from these sources, would be very expensive. After all, oil currently satisfies more than 40 percent of America’s energy needs (including more than 99 percent of the fuel for cars and trucks) precisely because other domestic sources of energy are either not sufficiently abundant to cover demand or are signficantly more expensive to produce than oil (DOE, 2008).

    Of course, energy conservation measures could also reduce the need for oil imports by decreasing the energy consumption of the average American citizen. Energy conservation would be prudent, regardless of which energy supply the United States favors in the future; however, foreign producers would still be able to produce the oil more cheaply, regardless of the level of production. In addition, the scale of energy-saving measures needed to substantially reduce U.S. imports of oil would require dramatic changes in economic activity and lifestyles and have thus far have not been politically viable.

    Electricity produced by hydropower plants built into dams is another example of an essential resource that the United States does not produce in sufficient quantity to meet its consumption needs. The United States imports large quantities of hydropower from Canada.

    The United States will continue to depend upon imports to meet its energy needs into the foreseeable future. This, however, is not the same as saying that the United States has no choice but to import oil from other countries. As the preceding discussion suggests, there are alternatives. Unfortunately, those alternatives are less economically and politically feasible than simply continuing to import oil from countries endowed with generous petroleum reserves.

    The same logic applies to any resource or product whose domestic supply is limited although the domestic demand is high. The United States—-though not most other countries—-can often find ways to increase the production of a commodity, reduce domestic consumption, or identify domestic substitutes. These alternatives often prove more costly than continuing to import from other countries, though.

    The United States and other nations choose to import many other products that, unlike oil, are not economically essential, but differ in quality or features from equivalent products made at home. One prominent example is foreign-made cars which, starting in 2007, accounted for more than 50 percent of all cars sold in the United States (WTO, 2009).

    Americans do not buy imported foreign cars because foreign manufacturers produce certain kinds of vehicles that American manufacturers do not; U.S. carmakers produce an extraordinary variety of vehicles at a wide range of price levels. Many Americans have demonstrated, through their purchases, that they will opt for Asian and European cars. These imported cars posses a combination of qualities or features that satisfy their preferences more so than vehicles manufactured by U.S. carmakers.

    The same holds true for simpler products like wine, cheese, or shoes, and so on. All of these and thousands of other items that the United States imports from other countries are available through the domestic market. Some American consumers believe imported versions of these items offer a level of quality that American varieties do not.

    The United States has almost entirely stopped producing some goods because of foreign competitive efficiency. In other words, firms in other countries are able to produce these goods faster, more cheaply, and of possibly better quality. This is the case with many types of clothing because clothes can be produced at a much lower cost in other countries. Clothes can be manufactured more cheaply in developing countries due to the low cost of labor. Imagine that you are a t-shirt manufacturer. You can have your t-shirts made in a developing country with abundant cheap labor—workers who you only have to pay the equivalent of pennies an hour. This allows you to maintain large profit margins (by not spending so much on paying workers), and to sell your product at a cheaper cost (making consumers happy as well). This practice is a source of controversy that we will discuss later.

    The goods that the United States has almost ceased to produce because of foreign competitive efficiency include not only low-tech products, but also some electronic equipment. For example, the United States used to produce VCRs, but it completely abandoned their production because of the superior efficiency of foreign competitors (most notably Japan).

    It is worth noting that the country where a good is produced need not be the same as the country where the corporation that manufactures and sells the good is established. Several American clothing companies, such as The Gap, manufacture most of their clothes in developing countries.

    Closet Check: Grab a pen and paper and go to your closet. Take out the items that you wear the most and see what percentage is made in other countries. How many items from China? India? How many made in the U.S.?



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