Get real
Philippine Daily Inquirer, 3 August 2013

 

The latest Philippine Human Development Report (2012/2013), launched last Monday, may not have the most eye-opening, or curiosity-inspiring, of titles—“Geography and Human Development”—but its contents belie whatever humdrum expectations may be implied.

The Report cites evidence showing that factors related to geography—climate type, slope, elevation, whether an area is by the sea or is landlocked—“explain” a substantial amount of the variations in the Human Development Index (HDI) between our provinces. How substantial? Would you believe 34 percent for HDI as a whole, and as much as 47 percent for poverty incidence? And if so-called “neighborhood effects” are taken into account, the percentage goes up to 44 percent for HDI and 54 percent for poverty incidence.

By what channels does geography affect these local outcomes—life expectancy, mean years of schooling, per capita income and poverty incidence—that comprise the provincial HDI? And what are the opportunity costs of not fully taking geography into account?

The answer to the first question, according to the Report, is that the links are through human health, agricultural prospects, access between locations, and specific political institutions. And the answer to the second question is: Significant costs in terms of lost productivity, missed schooling, substandard agricultural yields (up to 150 percent in yield increase foregone), food insecurity, forfeited agglomeration economies (benefits obtained when firms locate near each other), and lost growth.

The Report then explains that these costs arise because of a national organization (read: government) that is arranged as vertical silos (“a system, process, department, etc. that operates in isolation from others”) by agency, and by program, which is “incompatible with the integrated, ecosystem-based governance that local geography demands.” Moreover, the large inefficiencies and foregone benefits also arise from the “well-intended but misguided notion that spreading production evenly across space will lead to growth that is more equitable”—the so-called “divide-by-N syndrome.”

That growth by its nature will be spatially uneven, and that “resisting the forces of unbalanced growth … is tantamount to fighting economic growth itself,” is emphasized by the Report—but it also emphasizes that a geographic convergence of living standards can and must take place, that growth strategies must not be focused on places, but on people.

I focus on two examples in the Report, given the current public focus: the pork barrel and agriculture.

The pork barrel is brought up in connection with the divide-by-N syndrome, which the Report defines as the “mechanical and feckless dissipation of government funds across localities instead of their rational allocation to where these might have the most impact.” The pork barrel, according to the Report, typifies this “fragmentation of public resources across time and space”—and one supposes that the term “feckless” covers the ghost-projects scam.

Apparently, what has been sauce for the goose (the legislators, the president, the vice president) is also sauce for the gander, because per the Report, “the same fragmentation is found at local levels, where pork-barrel-like allocations are drawn from local development funds and given to members of the Sanggunian and municipal mayors, and from mayors to barangays (at least those aligned with mayors). Hence, the many small projects with little or no development significance dotting towns and cities, such as waiting sheds, entrance arches, multipurpose pavements.”

What about agriculture? The Report is particularly critical of the government’s undue focus on rice (P-Noy mentions rice sufficiency in his State of the Nation Addresses, and just yesterday, Agriculture Secretary Proceso Alcala bemoaned the fact that his department’s achievements in this area are overlooked), a focus that is not unique to the current administration. According to the Report, this misdirected focus—on rice self-sufficiency and on production rather than on cost-effective food security and on farm incomes—has crowded out support to other subsectors (e.g., fisheries, coconut) where poverty incidence is much higher.

Citing research findings, the Report concludes that the “single-commodity-production” focus has been costly, has undermined food security, and has been ultimately antipoor.

Has all this attention on rice resulted in the (unfortunately) desired self-sufficiency? The data speak for themselves: Between 2001 and 2010, per the Report, rice support claimed about 47 percent of the budget pie of P52.8 billion (excluding irrigation), but during the same period, self-sufficiency in rice declined by 10 percentage points from 91.29 percent to 81.27 percent.

Well, what about after P-Noy came in? The Report finds that in 2011, there was a sharp percentage point increase in the self-sufficiency ratio. However, again citing research, this was achieved by holding down imports to one-third their level in 2010 and then drawing down on the country’s rice stocks—an unsustainable strategy. And there is the fact that rice smuggling has proliferated (not in the Report), which is not reflected in import figures.

So what is the bottom line? The Report talks about economic integration and integrated delivery of basic and social services, with provinces as the key. Which is great. And we can start by dispensing with the pork barrel and reordering our agricultural priorities. That is, if we want inclusive growth. (Read the Report at www.hdn.org.ph.)