OPINION: Now, to make the growth inclusive

Manila (Philippine Daily Inquirer/ANN) - The Aquino administration has every right to crow about the country's economic performance for the first quarter of this year. A 7.8-percent growth rate in real GDP is not to be sneezed at, particularly since we outpaced our Asean neighbors and China for the period. Moreover, as the National Statistical Coordination Board points out, this is the third quarter in a row that the country's growth rate was at least 7 percent (7.3 percent in the third quarter of 2012, 7.1 percent in the fourth quarter). Which means that President Benigno Aquino III is assured of a high grade for his third year in office (July 2012 to June 2013) insofar as the economy is concerned-definitely much higher than the scores he received for each of his previous two years. I will not begrudge him his bragging in his coming State of the Nation Address, and neither should anyone else.

The President and his economic managers now face two equally important challenges over the remaining three and one-fourth years of his term: how to sustain those growth rates, and how to ensure that the growth will benefit the poor, i.e., it is "inclusive."

I sincerely hope they don't become overconfident, and expect that a three-in-a-row winning streak will be a portent of things to come. They don't even have to look very far in the past as far as our macroeconomic performance is concerned to realize how foolish that expectation would be: Just three years ago, in 2010, the GDP growth rates for the first, second and third quarters were 8.4 percent, 8.9 percent, and 7.3 percent, respectively-much higher than what we have just experienced. But in the last quarter of the year, the growth rate slowed down to 6.3 percent, and in 2011, the growth rates were mediocre, averaging less than 4 percent.

What Aquino has going for him is that he is personally not corrupt, and that there is a determined effort on the part of his administration to increase bureaucratic efficiency and the country's competitiveness. Moreover, his Cabinet officials, with unfortunately some very notable exceptions, not only have clean hands but are competent as well. What he has going against him are the vestiges of "trapo" or traditional politics in his makeup and his cacique mentality-which result in going to bed (figuratively) with some politicians whose corruption is legendary, the continuation of the pork barrel (withheld from political opponents, of course), and the effective institutionalization of confidential/intelligence funds in practically all government agencies, in complete disregard of their original purpose.

It is to be hoped that he strengthens what is going for him and gets rid of what is going against him.

Can the growth that the country has been experiencing be considered "inclusive"? It is to be noted, per the NSCB calculations, that industry contributed 3.5 percentage points of the 7.8-percent GDP growth rate, services contributed 3.9 percentage points, and agriculture contributed the remaining 0.4 percentage points. Within the industry sector, the manufacturing and construction subsectors were the biggest contributors to growth. And within services, the financial intermediation subsector, followed by trade, and then real estate, were the primary contributors.

So those working in manufacturing, construction, financial intermediation, trade and real estate would, ceteris paribus, be the most benefited by the growth in the first round. How much of the employed labor force do they represent? According to the latest labor force survey data, manufacturing accounts for 8.3 percent of the employed labor force, construction accounts for 6 percent, financial intermediation for 1.1 percent, trade for 18.9 percent, and real estate for 0.6 percent-accounting in total for roughly a little over a third of the employed labor force. These are the ones who have benefited the most.

Agriculture, on the other hand, which contributed only 0.4 percentage points of the 7.8-percent growth rate, accounts for almost a third of the labor force. Obviously, they aren't going to be benefiting very much from the growth. And it is from the agricultural/rural sector that most of our poor emanate.

Thus, it doesn't look like the country's growth has been inclusive. But at least we know what has to be done to make it so: Concentrate on increasing the productivity of those in the agricultural sector, particularly the small farmers and fisherfolk. National Economic and Development Authority Director General Arsenio Balisacan is the poverty expert. He should know. And by the way, it should be repeated over and over again that the correlation between the presence of political dynasties and poverty in all its dimensions has been found statistically significant.

But where will the funds necessary for agricultural development come from? Well, for starters, how about removing the unnecessary incentives that are given to industry, including mining (which, by the way, had a negative contribution to GDP growth), and using these for agriculture instead? My colleague in the UP School of Economics, Renato Reside Jr., estimates that the unnecessary incentives amount to at least 1 percent of GDP, or the equivalent of roughly 100 billion pesos (US$2.4 billion).

Senior Associate Justice Antonio Carpio also has an excellent suggestion: If the government just gets its fair share of the minerals that are being extracted, both inland and offshore, instead of getting a mere pittance (as in 2 percent of the value of the minerals at the source), then there will be enough to acquire and maintain a "minimum credible self-defense force" that will protect us from foreign encroachers (read: China) on our exclusive economic zone, as well as to use for the benefit of the Filipino people.


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Lupita Nyong'o's $150,000 Oscars dress stolen from hotel
    Lupita Nyong'o's $150,000 Oscars dress stolen from hotel

    The $150,000 pearl-studded, custom-made Calvin Klein dress worn by Oscar-winning actress Lupita Nyong'o at this year's Academy Awards has been stolen, police said on Thursday. The gown, embellished with 6,000 natural white pearls, was stolen from Nyong'o's room at the London Hotel in West Hollywood, during the day on Wednesday, a spokesman for the Los Angeles County Sheriff's Department in West Hollywood said. "Ms Nyong'o was not in the room at the time of the theft," Deputy John Mitchell …

  • US-led strikes on IS after group seizes 220 Christians
    US-led strikes on IS after group seizes 220 Christians

    The US-led coalition has carried out air strikes against the Islamic State group in northeastern Syria, where the jihadists have launched a new offensive and kidnapped 220 Assyrian Christians. The raids on Thursday struck areas around the town of Tal Tamr in Hasakeh province, the Syrian Observatory for Human Rights said, without giving information on possible casualties. The town remains under the control of Kurdish forces, but at least 10 surrounding villages have been seized by IS, along …

  • Militants abduct more Christians, smash ancient artifacts
    Militants abduct more Christians, smash ancient artifacts

    BEIRUT (AP) — Islamic State militants seized more Christians from their homes in northeastern Syria in the past three days, bringing the total number abducted by the extremist group to over 220, activists said Thursday. …

  • 3 Pinays on Forbes power women list
    3 Pinays on Forbes power women list

    Three Filipina executives, who are all daughters of known business tycoons in the country, made it to Forbes’ list of the 50 most powerful businesswomen in Asia. Teresita Sy-Coson, vice chairman of SM Investments and chairman of BDO Universal Bank, was included in the list for the fourth year in a row since its inception. “Under her (Sy-Coson) lead SMIC became the largest listed company on the Philippine Stock Exchange by market cap. Also in the 2015 list is 70-year-old Helen Yuchengco-Dee, …

  • 13 of 15 SAF survivors to leave PNP hospital
    13 of 15 SAF survivors to leave PNP hospital

    Thirteen of the 15 Special Action Force (SAF) policemen who survived the bloody firefight with Muslim rebels in Mamasapano last month are ready to go home after a month of medical treatment, a police official said yesterday. Philippine National Police (PNP) spokesman Chief Superintendent Generoso Cerbo Jr. said the two remaining survivors will have to stay in hospital for further treatment, one of whom has shrapnel embedded near his spine. One of the two SAF commando survivors is still …

  • US sends spy plane to patrol disputed sea
    US sends spy plane to patrol disputed sea

    The United States has deployed its newest and most advanced surveillance aircraft for patrols over the West Philippine Sea and South China Sea. The P-8A Poseidon aircraft completed more than 180 flight hours from Feb. 1 to 21 from Clark Air Base, according to the US Navy’s 7th Fleet. …

  • Review: SKK Mobile V2, a P3,999 watered-down LG G2
    Review: SKK Mobile V2, a P3,999 watered-down LG G2

    How well does this P3,999 offering from an underdog in the local mobile industry stack up against the competition? Let's find out. …

  • No coercion, force in sea row – France
    No coercion, force in sea row – France

    France renewed its call for a peaceful resolution of the West Philippine Sea dispute during a meeting between its leader President Francois Hollande and President Aquino at Malacañang. “We reiterated the importance of maintaining peace and stability in Southeast Asia and promoting maritime security, freedom of navigation and the peaceful settlement of disputes in accordance with international law, including UNCLOS (United Nations Convention on the Law of the Sea),” Aquino said in a statement …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options