BASIC ECONOMIC PROBLEMS CONFRONTING THE DEVELOPMENT OF THE PHILIPPINES
IN THE 21ST
CENTURY
1. POVERTY AND UNEQUAL DISTRIBUTION OF INCOME.
Families with limited or without resources cannot earn sufficient income that can
provide the minimum nutritional requirements for daily living and the basic necessities of
clothing and shelter. Unfortunately, the growth is restricted to the BPO, retail, and real
estate sector, and a large number of Filipinos remain without jobs. On top of that, natural
calamities further push people below the poverty line. Thus, economic disparity is a
common feature. In general, the gains from higher economic growth have not really
trickled down to the poor.
2. DEMOGRAPHIC CHANGES AND ITS ECONOMIC IMPLICATIONS.
Philippine population is projected to grow from about 88 million in 2007 to 142
million in 2040. The projected increase in population size will be accompanied by change
in the age structure: increase in the percentages of elderly and working-age populations
and decrease in the percentage of young population. Increase in population size by itself
will drive aggregate consumption and labor income to increase.
3. LOW INVESTMENT IN HUMAN RESOURCE DEVELOPMENT.
The economic transformation of any country can be traced to a certain extent on its
human resource. Only one-fourth of the Filipinos that enter the labor force are able to find
good jobs in the country, and the rest of them find jobs overseas, leave the labor force, or
end up becoming unemployed/underemployed. Thus, three-fourth of the workers are
unemployed or informally employed, with lack of opportunities to find good jobs. Though
jobs are being generated, there's a need to generate jobs at a much faster rate, to be able
to bring down the unemployment rate. Many of the unemployed individuals are college
graduates. Many wait for job opportunities abroad, and many families depend on
remittances from family members who are staying abroad.
4. WEAK INFRASTRACTURE.
Similar to the role of human capital on economic growth, physical infrastructure
facilitates and expands transactions that likewise fuel economic growth. In order to host
global companies, Philippines will have to pay more attention to enhancing the
infrastructure. A well-developed transportation (roads, railroads, ports, and air transport)
and communication system is extremely essential for economic activities. As per the World
Bank's Ease of Doing Business 2015 report, Philippines ranked 95 out of 189 economies. It
needs to improve its ranking in certain categories. It ranked 161 in the category of starting
a business, 124 in dealing with construction permits, 108 in registering property, 104 in
getting credit, 154 in protecting minority investors, 127 in paying taxes, and 124 in
enforcing contracts. Thus, the policy makers should take steps to attract global companies
or investors.
5. PURSUING FOOD SECURITY.
Hunger in the Philippines is caused by various factors. One culprit is inflation. High
retail food prices makes food items unaffordable and hinders the ability of poor households
to meet their daily food and dietary needs. The importance of agriculture in our economy
emanates from its role as the main supplier of food grains to the growing population
Income is another factor. People working in the agriculture sector are more prone to
hunger, because of low rural incomes (whether as farmers or farm workers), lack of access
to productive resources such as land and capital, and the vulnerability of the sector to
various shocks such as climate change, extreme weather events, pests, and disease.
Natural disasters and conflict influence hunger in the countryside, as these have direct
impacts on the food production and can result in a difference between farm-gate and retail
prices.
6. SLOW ADOPTION OF MODERN TECHNOLOGY.
The causes of slow pace of technology transfer and adoption were identified to
include ineffectiveness of extension delivery system, lack of adequate liaison between
ECONOMICS
