Volume
V, No. 4
July-August
1987
ISSN 0115-9097
MEASURINGPOVERTY AND DEVELOPMENT
,,ci l o,.,,,.i, ovor,y
EDITOR'S NOTE: The sensitive isle of poverty made the pazt regime retuctans to make official e#rimates of poverty incidence. At bezt_ there were vague tcrgen in poverty reduction in the country's development pla_ t¢ith the new political order, however, poverty measurement exercises were deemed part of the development package.. Put to task was the National Economic and Development Authority (NEDA) which has identified nine out of the country's thirteen regions whose poverty incidence is higher than the national average. Although .poverty incidence is more severe in rural than in urban population.centers, the latest NEDA survey indicated that poverty has become a critical problem in all the regions. The latest estimates stsow that regional poverty incidence in 1985 ranged from 44..1 percent in the National Capital Region (NCR) or Metro Manila, to a high 73.2 percent in Region V or the Bicol Region. The scenario in 1987 is not any better. Economists are still waiting for the economy to "take off." Meanwhile, the problem of unemployment continues to further deepen the poverty problems, with the Labor Dep_tment reporting an all-time high unemployment rate of 14.2 percent compared to 12.8 percent in 1986. Depressed urban areas are hounded by high population density, squatter problems, poor health, malnutrition, mendicancy, exploitation of women and children, drug dependency and labor unresL On the other hand, depressed rural areas do not only have the same problems but in addition, have a more pronounced peace and orderproblerru_ Our guest.writer for this issue is Dr. Mahar Mangahas, President of Social Weather Station, Inc. and NEDA Consultant on agrarian reform. He also worked with the Cabinet Action Committee on the Comprehensive Agrarian Reform Program (CARP}. In thLs article, Dr, Mangahas d_cusses the social context elrural poverty _ reviews trends in "serial weather watching" in the Phatppine._ Dr. Mangahas has written various aTt_le$ on poverty, and related issueL He was also involved in a number of reJearch prelects relating to poverty and dLstribu tire justice, social indicators, penpectLve planning and agricultura[ policy. This article is drawn from a lecture delivered for a conference on "Scientzfic Positions Challenging Rural and Urban Poverty in Developing Countries'" held June 22-26, 1987at the Justu_Liebig, Universitat Giessen,FederalRepublic of Germany.
undesirable condition which, all overty, however deÂŁmed, is an agree, should be alleviated anO as soon as possible eliminated. It is a longstanding problem for non-poor people as well as fo_ poor people, since the two are interdependent in their society, and social afflictions ff unattended t%could spread to more people and in other ways threaten the well-being of those presently more fortunate. Any proposed solutions to the poverty problem, whoever may be the proponents, will have to be implemented by the society as a whole. Some solutions may be bottom-up, or through self-help among the poor themselves, some top.down, or through programs instituted by the more privileged, and perhaps some will operate simultaneously from both ends. The more democratic the society, the more that the dominance in numbers of the poor and the near.poor would prioritize societal actions which benefit the poor over those which benefit the non-needy, not to mention the embarrassingly wealthy. The challenge to science in general is to widen all the posst_ole avenues of escape from poverty, such as population control, technological change in agriculture, and others. The challenge to social science in particular is to give the people (more than the scientists)an understanding not only of how poverty
ISNTS _r,
IIIIIII
: Jnlll_
mindDevelopment
I
II
,_
I
II
II
I
came about but also present actions may it or prolonging it, may redirect their
of how the people's be either alleviating so that the people actions accordingly,
Understanding the economic setting of poverty is one thing. The rural areas, compared to the urban, axe generally less endowed with the facilities and the institutions conducive to economic deveiopment. The natural-resource-intensive activities, agriculture most of all, obviously must be based in rural areas; but there is also much room for expansion of nonfanning activities. The translation of ecoheroic participation into income involves the size and structure of the ownership of economic assets (including both human and non-human assets), the oppor, tunities for productive employment of these assets, and the rotes of reward for such employment, net of the costs and impositions incidental to putting the said assets 'to use. The rewards depend on the size and structure of the markets served, whether directly or indirectly, by the commodities and services produced by the employed assets, To
be
efficacious,
such
Understanding the social, or ff one prefers, the class relationships determining the state of poverty, is another subject. The relationship of the state to both the domestic class structure and the balance
of
important implications (Griffin, 1985).
power for
IIII
II III
lllll
"Poverty country
within should
a be
particular measured
within the context of the values of its citizens since these are the people responsibility problem.
with for
the
prime
solving
their
"
Thus much faith is needed that, in the long-term, the balance of political power is not rigid; the gathering strength of mankind's aspirations for a democratic state will inevitably result in greater and greater tilts of the balance towards the poor. Whether these political tilts will be gradual, humane and orderly, rather than sudden, painful and chaotic, is for the world's peoples to resolve,
has
poverty
In their review of poverty alleviation strategies, Islam and Lee (1985) agree with Myrdal that 'greater equality is a precondition for lifting a society out of I
even more critical -- to ensure the delivery of food crops to feed the army, and to give the southern army's new army recruits a cause .worth fighting for (In]oung h/hang, 1987). . , , ,,
analysis
implicitly assigns important roles to socially-committed institutions. The government may undertake special employment generation schemes and other welfare programs; it may decide to subsidize the products of subsistence agriculture;it may build roads and transportation services designed not only to move goods and services to and from poor people and but also to move the poor themsdves to places of better opportunity (Howe and Richards, 1984)
international
poverty'..Observing that cases of unsuccessful land reforms abound more than the successful ones, they worry that policies having a possibility of hurting the rich are unlikely to be introduced at all. In India, except for a set of land ceiling legislations passed by some states, nothing of significance in land reform has happened (Srinivasan, cited by Islam and Lee). So mere legislations are inadequate without backup from social pressure. In the Korean case, .the invasion from•the North did not delay the start of the implementation of land reform. On the contrary, the invasion made the reform
worsening of the rural poverty situatioiL in all countries of South Asia. South Asian countries have very large and continuously growing rural populations. The cultivated area per rural inhabitant has been falling, indicating the near end of the land frontier. in the mid- and late 70s, the South Asian trends were as follows: Poverty declined in India over 1973.78 (annual observations). In Pakistan, there was a decline in poverty after 1970, but the level in 1979 was still the same as that of 1964 (only two more observations after 1972). In Bangladesh, however, the earlier worsening continued into 1977 and 1978 (two observations), in Nepal, poverty probably increased, based on indirect evidence; and in Sri Lanka the proportion below the poverty line rose over 1973-1981 (beginning year and ending year observations). Southeast Asia has been relativelymore successful in dealing with the poverty problem: In contrast to South Asia, the green revolution has been more impressive in Southeast Asia, and there have been somewhat higher rates of absorption of the labor force in urban areas particularly in Malaysia, Singapore, Taiwan and Korea. Thailand has had a reduction in rural poverty, based on income survey years 1962/63, 1968/69, 1975/76 and 1981. Over the first three points in time, the poverty incidence rate by one (top-down) standard (Meesook, cited by Krongkaew, 1985) fell from 61 percent to 43 percent and then to 37 percent; over the last two points, poverty by an alternative standard (Krongkaew and Tinakorn, 1985) fell from 32 percent to 24 percent. In Indonesia, Islam and Lee (1985) report a World Bank estimate that poverty in general declined over i970.76 (beginning and ending year observations).
'i|_'J_ __ _:ends in Rural Poverty Islam and Lee's (1985) survey of secondary data on country trends in rural poverty indicates that between the early 1960s and the early 1970s, there was a •
However, they also point
out that Prof. Sajogyo, using the reference data but with three class tions, found that the incidence of the POOR slightly decreased, that of the VERY POOR slightly increased and that of the DESTITUTE increased substant. lally. II
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DEVELOPMENT RESEARCH NEWS use for social surveillance, for many obvious reasons, Alternative readings of the poverty situation usually occur not due to alter-, native survey data but due to alternative poverty lines or criteria designed by different researchers or institutions, all applied to the same baseline survey data. Research in India, for example (Kumar, cited in Mellor and Desa!), indicates that one measure of poverty based on income and another based on fulfillment of basic needs do not have to be highly related to each other; estimates and the geographical patterns can differ de. pending on what concept is used) Value judgments are obviously critical to poverty measurement and surveillance. They cannot be avoided anyway, they may as well be as explicit and as well-ch0sen as possible.The relevant issue, in my opi.nion, is not which value judgements are to be used, but whose? If the measure is meant _o be used by international agencies, then one can understand the inclination to seek some universalistie norm, some least-common-
,incidence of poverty. Under-the ne_ regime, the government is undertaking
Social
Weat,_er
Watci{,_._t_i_.!_,: poverty
measurement exercises for the first time. The National Economic and
ill the Philipphles In the Philippines the official data base for orthodox measurement of poverty consists of the Family Income and Expenditure Surveys (FIES), which to date have been conducted in 1957, 1961, 1965, 1971,1975, and 1985. There also were one or more official income surveys done each year during 1978-83, but not as comparable since the reference was one quarter, not one year. Up to,and including the Marcos era (1966 to February 1986), there were no official poverty lines and no official estimates of the
TABLE
I.
Development Authority (NEDA), has decided to use the 1971 FIES (the last previous to the 1972 Marcos declaration of Martial Law)and 1985 FIES, ignoring all survey years in-between. Using a 1985 poverty line (national average) of P2,382 CUS$128) per family per month, NEDA puts poverty, as it defines it, at 49 percent in 1971 vs. 59 percent (64 percent in the rural areas) in 1985; its target is to reduce poverty to 45 percent by 1992. Research by academicians indicate that there was a worsening trend in poverty, both urban and rural, during 1961-71; the trend beginning 1975 is most unreli-
PHILIPPINES:
POVERTY
LINES --
Balance of Luzon
Questionnaire Item RP
denominator for all the reference countries involved. Presumably, however,
Median poverty line aS assessed by the
poverty must be solved more by actions internal to a society than by programs initiated from outside. Thus, poverty
poor, in pesos, per
Metro Manila
Visayas
Mindanao
Urban
Rural
Urban
Rural
Urban
Rural
month:
within a particular country should be measured, primarily within the context of the values of that country's own
July 1985
1500 2500
1200
1200
1500
1500
1500
1400
May 1986
1500 2500
2000
1500
1500
1000
1500
1500
citizens, since these are the people with the prime responsibility for solving their problem.
October
1250 3000
2000
1250
1500
1000
1000
1000
1250 2000
2000
1500
1250
1250 _ 1500
750
In a society with democraticaspirations, the values to be used should be those which most .closely reflect a democratically-reached consensus. The
1986
March 1987
Median poverty line aS a=_sed by all; in pesos, per month:
challenge to social scientists is to consciously avoid substituting their own personal values, and instead to scientifi.
July 1985
1500
3000
1500
1000
1700
1500
1500
1500
May 1986
1500
3000
2000
1500
1500
1000
1500
1500
cally discern and articulate the democratio consensus_ This is a continuing task, since the consensuscan, in fact should, change over time in response to changing situations. The most practical empirical
October
1500 3000
2000
1250
1500
1000
1500
1
1500 2500
1500
1250
1500
1000
1500
lO(mll
basis .for quantifying this consensus is, to my mind, the simple, statistically representative, mxvey of public opinion. 4
1986
March 1987 ........... Source:
i
1986, 1987Public OpinionReports Project(SWS-Ateneo) 198JBishops.Bustnessmen Conferenee_(BBC) Nationwide Socio-politicalSurvey. Illl I
it
]980)::FtOmi983t°1987,
altematiVei:::i:
data:::::On:::poverty :::are :: available :from: :
rose:::from:: 5:5: percent t
Self
:
:
:::
poverty :in mid: 0f:that: :
:::
::::
....
::
R ted
.............. :
........
:
:
:
:: : :: :
percent in June: 1985: (See 3?abie :l):This :: increase _plies that; in 1983-85_;over 10 :::
wasiveness :of
the: sUffering:i:was
i:ii:
:
more than:: might be suggested.: by [he
MAy 1906
: capita GNF:(Offieiallyi by !:4:6 percent),4
MAR1987
.......
:
i,_:
....
....
:
: noxt::
:
MAr _9se
::
MAR ,9s7
:
:
: .....
.....
1987 :::::Table::!: shows:::iiiat:: ::
July/:£ugu_:
tO : be: ::unreasonably
high;:::the ::ilational
: :medimi isi::only P! ;500::: (t_S$75): :per:: : family: monthi: the: mediansper: :is:an ind]_atioii Sta.bitffy: of t[ie: minimail hacreases
in
: 'two years, :viewed from: the bottom up, :: item ::years:: 1985 :iaalf: of: :: from the vo:ting.age population) fett fl_eir :: : : life: ha_: worsened: since:::thclpast:: year;: i:i: ii whiie:hl i9861 and::i9871 this:proportion ::::i
::
COS1:
...... IS
resnond::
mlllll_lal
i
.... 1[
1S
_ I101,:
a
:
_.._ .. s'[raln
survey
.... .... :i
:
POor
986,1987 to
ques: :
" : _': s ., mcome :recewea: or expe n0,1tl/re,' maoe:
::
:
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:
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derhne
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NotlO_w de:so_lo:_po r ¢c s,,i,vey
........
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Poor
(4)
:):(:::%/;)/,::.:!/i _: : :::::: >/: "::?: !//L:-/::::/):?: :
don_t
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i2_a'Xra-POo) -
p'o)ect(SWS'AteneO) ",er ce ",, s3t " EIF3C",2
_-,
Don t krtoW,
...... :
....
NO response
.... : ......
.... .....:
:
:::/:>:: _
: ...... ....
.....
.........
:
:
.....
DEVEL()PMENT
RES[
The values embedded in the responses given are those of the relpondents themselvet, not those of the group implementing the survey. The findings can be validated by replication of the survey by an independent group. Even thoush the subject matter of a survey is subjectire to a respondent, the resulting data are objective because they are objectively verifiable,
Another advantage of the acceptance of the validity of pubfic.opinion or perception-type indicators is the ease of f'mding out many more things besides the number of poor people in country. In a half-hour interview notthefatisuing to survey respondents, one can also learn, among other things, how the people feel about alternative poverty,
:proposals affecting
For instance, in the Philippines, public opinion surveys show that a large majority (60.65 percent) of the people favor a comprehensive land reform, covering all crops, all forms of tenure,
RCH NEWS
ULY-
mining the poverty line. For the poverty self-rating, the respondent is shown a small card with the word POOR written on its lower portion, the negative term NOT POOR on its upper portion, and a line dividing the two portions; then he/_e is asked where on the card he/she would place him/herself. (The Tagalog word consistently used for "poor" iSmahirap; this expresses the least degree of poverty, among various Tagalog synonyms.). This results in a three-way classi-. fication of respondents as POOR, NOT POOR, or BORDER LINE.
Post Script On 22 July 1987, President Aquino signed Proclamation No. 131 instituting a Comprehensive Agrarian Reform Program (CARP) and Executive Order 229 which provides a working mechanism for that program. However, the Presidential issuances left the most crucial elements of the program, namely the priorities and retention limits, to the discretion of Congress,both by profarmer and pro-landlord groups, and reckoned to be heatedly debated,
If the respondent is Self-rated as poor, then the next question is, how
NOTES I So few development plans have explicit targets in such areas as education or health, which are closely related to the poverty problem. The problem is not so much a technical one but a reflection of underlying priorities. The 1978 World
both the public and the private domain, and all forms of natural resources, not only land. A large majority (65 percent) support the idea of the President's using her (temporary) powers before Congress convenes in July 1987, to enact meaningful legislation on land reform. At present, a very powerful anti-land reform lobby, confident that it can tie the hands of the incoming Congress, is unrestrainedly Fghting to block proposed new land reform legislation by the President or at least to ensure that the landed areas, most under feudal conditions are excluded from it. Understandably, this lobby,
Development
which is trying to impugnonly the represents credibility aoffew, public opinion data which represent the many. Which why the President herself from a wealthy landed family, will decide, cannot bepredicted. But what can be known and quantiffed is whether her decisions o_ land reform and other crucial matters, (now and for the rest of her term_ as well as the actions of the incoming legislature
(Hagenaars andas alternative van Praag, poverty 1985), lines, pose the same issue although on a different plane. They do have better conceptual characteristics than the old-fashioned head-count approach; but they are no more frequently available than the head-counts and they are harder to communicate to the general public,
will satisfy the majority of Filipinos ; in the long course of history, people power cannot but prevail,
3This technique involves two questions, the first one for a self-rating as to poverty, and the second one for deter-
6
Report
(p.
66)
states.-
"The paucity of data on incomes, num'tiond deficiencies, and access to public services reflecn the abzence until recently of policy concern with the poor and of anti.poverty programmes with specific ob/ective& The collection of data on the condition: of the poor is within the cupacity of most countries." 2More sophisticated methods for poverty index construction, e.g. the Sen index or the Welfare Function of Income index
IIIIII]
AUGIJST 1987
II I]
much would his/her family need for home expenses per month in order not to consider him/herself poor anymore. If not self-rated as poor, then the question is revised slightly_ltow much would a family of the same size as his/hers which felt it was poor need for home expenses in order not to consider them. selves poor anymore?"Note that the poverty rating is not dependent on the respondent's poverty line. Both the selfratings and the bottom-up poverty lines are cross-sectionally well correlated with schooling and with other objective indicators of level of living.
For comparison, in the U.S., the American Institute of Public Opinion (Ga!lup Poll) asked the following question twenty-two times during 193771 (Ki!patrick, 1973): "'What is the smallest
amount
of
money a fwn@ of four (husband, wife, and two chgdren) needs each week to get along b_ this communit),?'" During 193%42, the English phrase used was 'to live decently or comfortably', instead of 'to get along'. In a 1982 national sample survey, the National Opinion Research Center of the Univer. sity of Chicago asked this questiogq-(continued on page 7)
REFERENCES Robert Chambers, "Rural Poverty Unperceived: Problems and Remedies," WorldDeveloprnent, 9:1, January 1981, pp. 1-19.
Nations, International Conference on Population 1984, Popu. /at/on, Resources, Environment and Developrnent. Proceedings of the Expert Group on Population, Resources, Envkonment
Aldi J. M. Hagenaars and Bernard M. S. van Praag, "A Synthesis of Poverty Line Definition," The Review of Income and Wealth, 31:2. June 1985, pp. 139 - 154.
and Development, Geneva, 25.29 April 1983.
T. Goedhart, V. Halberstadt, A. Kapteyn and B. M. S. van Praag, "The Poverty Line: Concept and Measurement," The Journal of Human Resources," Vol. 12, 1977, pp. 503. 520. Keith GrifFin, "Rural Poverty in Asia: Analysis and Policy Alternatives," in Islam, ed., 1985. John Howe and Peter Pdchards, eds., Rural Ro_ls and Poverty Alleviation, London: Intermediate Technology Publications, 1984. Rizwanul Islam, ed., Strategies for Alleviating Poverty in Rural Asia, International Labor Organization Asian Employment Program, Bangkok and Bangladesh Institute of Development Studies, Dhaka, 1985. Rizwanul Islam and Eddy Lee, "Strategies for Alleviating Poverty in Rural Asia," in Islam, ed., 1985. R. W. Kilpatrick, "The Income Elasticity of the Poverty Line," The Review of Economics and Statistics, Vol. 55, 1973. Medhi Kronglmew, "Agricultural Development, Rural Poverty and Income Distribution in Thailand," The Developing Economies, 23:4, December 1985. Medhi Krongkaew and Prance Tinakorn, "Poverty and Income Distribution in Thailand 1975/76 and 1981," Thommasat Economic Journal, 3, December 1985 (in Thai).
Mahar Mangahas, "Measurement of Poverty and EquRy: Some ASEAN Social Indicators Experience," Social Indicators Research, VoL 13, 1983, pp. 253-279. Mahar Mangahas, "Perception Indicators of Economic WellBeing: the Philippines in Relation to Other Countries," in ESCAP Seminar on Social and Related Stat/xties, May 1984, published-by the National Buxeau of Statistics, Economic Planning Board, Republic of Korea, Seoul, 1984. Mahax Margahas, "The Data on Indian Poverty and the Poverty of ASEAN Data," in Mellor and Desai, eds., 1986. John W. Mellor and Gunvant M. Desai, eds., Agrkultunz/ Change and Rural Poverty, Oxford Univ. Press for the International Food PolicyResearchInstitute, Delhi, 1986. Bernard M. S. van Praag, Theo Goedhart and Arie Kapteyn, "The Poverty Line: a Pilot Survey in Europe," The Review of Economics and Statistics, Vol. 62, 1980, pp. 461-465. Bernard M. S. van Praag, Aldi J. M. Hagenaaxs and Hans van Weerden, "Poverty in Europe," The Review of Income and Wealth, 28:3, September 1982, pp. 345-359. Amartya K. Sen, Poverty and Famines: an Essay on Entitle. ment and Deprivation, Oxford: Clarendon Press, 1981. In-joung Whang, "Administration of Land Reform in Korea, 1949-52," in papers collected for the Center for Research and Communieation's Symposium on Agrarian Reform in the Philippines: Experiences and Expectations, April 22-23, 1987, Metro Manila.
Mahar Mangahas, "Population, Resoureu and Environment and Prospects for Socio-economic Development," in United l
.....
i]
_,,i
I
l
,
i
i
.....
(Continuedfrom page6) (Davis, 1982): 'giVing where you do now and meeting the expenses you consider necessary, what would be the very smallest amount of income per month - after taxes - your house, hold would need to make ends meet?" I
I
i
In 1975, the Leyden group in the Netherlands (Goedhart etal., 1977) and in 1976, the Euro.Barometer survey in several European Community countries (Van Praag, Goedhart and Kapteyn, 1980) also used similar minimum income ques. tions using the phrase 'to make ends meet' (as translated back into English).
I
I[ I[
I
I
I I
I
4 Consumer price inflation was 44 .percent during 1984 and 24percent during 1985. This Should have been a clear warning that poverty was soaring.
.....
I
II
7
:: : ..... :
::: h0mogeneous::expeetations: (HE) assump.: tion, the Capital Asset Pricing Modal (CAPM) of Sharpe and: Lintner is: a special case, An.... : : errors,in.variable modells used to provide:: and the::: results are the framework of the
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""'_'_'
due-to:
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:appears the empirical: Lear model on a fundaretUrn-risk relation.
mentally
non-n.
Research
Fellow,
:::
Phd_pme
lnstiatte ....
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...............•_"_'_ .............................................. _"'_" " ............ .... ..... :
:
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: : Visitinmi:Fetlow iitta_:
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'The following nine papers iCOrnprise:: the preliminary oUtpUts of:a series o:_" : : studies on rural frnancial markets .... organized by PlDSiOhio State University
(?SU) and the Agricultural Credit Policy active COuncil (ACPC).I RS: research objective !prograrn in the i is to determine the viability of rural ;:,i: :AlthOugh :the country's: financial institutions in offering and expenditures as a expanding ifinancial services to its ctien-
:
...... : :to: that
..... of other:
:
i
_" i iI :
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lower compared I tele. These papers Were presented in a Asian: :countries like: workshop Rural F_ncial Markets Korea and Malaysia,:
Rese_eh last August 19.2.0, 1987 a.t the
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....."'_..... _....... *_ ::_t was: ':........ high':..... relahve: to available .... budgetar' y' : operations: Room of: the NEDA sa DevelomentStudies -"_ti ''_'' ........ : resources Public sector investment Makati Building, ..... Sta P .......... .......... ........ expanded rapidly particularly in the last ........... ..... .... ff _er Series No: 87.04 ..... ..... • '. , ..... .... : : : : : : : : :: :::half Of the: seventies and:early part of the' Liberahzation ::and::: Stabilization :: ::: mobili-Macroeeon0mic Perspective" : :: inadequate. Conse,. : : : : :::: : [his paper introdaces the concept Of non: : quently:,::the:: Public investment oro_ram Winfred M. Villamff,: ..... hornogeneity:: : parameters of the :pro[ ab!lity :::: distrtbution of: assets:: rates Of return,: and derives a non.linear equi-: libnum return nsk relatlonstup This = "" ....... ! ..... i" relationship: sliows a. new and additional
: : :
::Ne ' investors on the ::mean: and tet'_i Under
has:given: rise following: (1) a seri0Us:reduction in and Other operating expenditureSi: an unsustainable deficit that has in turn contributed to 3 the ::maitre foreign debt problem : ....
and the practices related to ::: : .... _' : u _ugeung. variance :Moreover;::this:study:sheds::iight on the of: :course of future :government act on a:eoinplete : of priorities and the traditional :inStitUfiOnalbudge_ reforms, .....
and ........
: :
Candidate ..... : Research Assoeiate, PIDS
....... ......... ThiS paper: background on fide cou rs ' ntr3:: experience with libe. ralizati0n and stabilization through a rationale referees and the policies adopted to operafionaliz tnem_ AlInOUgn remrrns din nave strong theoretical: and empirical justification, government Zhad:no weU-defined program regarding the timing az_d phasing of the
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• ,,
•
i wasexperiencingdffficBltiesi:: 21
_vln_:Mobillz:Stioni:
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'the different types Ofbanks and doemnent recent changes in the different regulations governing _'arious 'types of banks. Finally, file paper looks into whether this regulatory-induced: behavior improves or worsens the performance of 'the financial market:
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: : : : :: :
:: ....: : rh.e paper :a_ns to estabhsh !al saves
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5 ,:
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beha_
the effect:: 0f :inCOme: ]:::]: S_daiia :" : i ; , ..... :..... J3ea_, coueg_ .......... OJ rues _llie paper:also:examines: in: ¢tetaiItire ........ : Universi_ of the .... : _ :+ ....., ,.. ...... :;Aamm_strcn_ n; ' '3 impliCation:or financiar fiberalization: m ..... .............. " ' .............. :: : ........... ...... ...... d: .... ........: .... PP " .... :....... :.... the Philippinesi on the:level an cOmposi- : : : :: : ::....... : : • lion: finaneiai and the' r:da2: :: _[he: ;: i prolect : : amis: :to document ::: existing : ...... ,,......... :savings; : t_onsmp aggregate .............i savings ...... ......=..._ - -_ _-,--:-[ .ot the latter to ..... managemem srrucmres;nammy, uxgamza _ : in• add_hon, _t evah_ates the record of .... ...... ................ :' " : : tiOn;staffing:aild personnel developmem, at the regional Ldeposit ....._" mobilization .... "''_ ............... :and: ol_eratNg: policies and procedures, rlevet .... and. Corn ares the of _ : • • :.......P _: _. Perfbrmance . . .: ..... :Coutrolsystem s-and: therelat_onshlpwltb. the different• banking mstitut_ons, _, . "i RFIs it}ie central office aMregulators of namely_ contrnerclai: banks (CBs), mnfl b:aitks:::(RBs); and private:development
to eVal_iate the growth,
Cesf _f Banks: A Comparative Study" Teodoro S. Untalan,: ResearchAss,stant.,HDS. 'iiTrltlisaction:
factors related to bank transaction costs _namely; the regulatory enviromnent, presence of competition :the area, bal_N characte_ ristics and: practices (e.g., conservativeness. etc.). It also detem_ines whether transaction cost dif'fer among: different bank types (i.e_ branche s of commercial banks, rm'al banks, and development banks all operating in the ,same rurat setting) especially with those that engage in closely :related and competing bank activities.
institutions are structure and
ii
:i:i
'. }. :area:' :i " :: : : performance of selected :rural financial market ' i (PDBs) ::i: operating :: : : [:::: : : institUtiOnS: : relation 'to their managebanks m the same : .... : :: : :: : : : :me:nt structures; Comparative methodo, i::is:followed: in the study, analyzing
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banksand : i:
':_e .......
Banking:
gutatory
_'_
nwronment
i i
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::[:private:: de:veidpfiie_t banksi :Case studies are: Used :tO:provide: in:depth assessment of::the:::ma:nageinent: characteristics of : RFIs' ....
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:
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:current reg.la.. 6. 2' :r tR t,,on,ngand at,o g
.... ' " .....: tory:.........:.......... envi.ronmentS::i:ncmaing scop e of ' authorityi capital requirements, reseave airernent:,: agricultural: loan require. scheme; and bank entry)::: Within:::whiCh :::different :types of banks
:
i
_ely;: branches of commercial banks; : private:: development banks and rural banks that:operate in the Philippines. It alsol e_ineS: I the exten_ of tile effect 0f theSe:::_regtdations:on: the behavior of
B_leefl_Bl$_S
" .....
.... Ma.:Lucila.A, : :..... [ : Research AsSistant, [ ...... ........ .................. ..... : :: The : :analysiSof Credii /atlo"ing in the context ofthe classical equilibrium model :
implies: the existence of financial repression where interest: rates are controlled. Given fixed interest rates at a level lower than the:market clearing:rates, borrowers are expected to demand more loans than:[[
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)::: iiII),: :ii:!/:!:::::i iii !/i:)::::ii:ijili:!:)): i_:;/ ..... .....
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i j j ::: ii ? i_ ! :: j :/:::/::_ ?:)ii:i_:i :ii:i:::::7/:>
: ..... "' ...... 8, ..... Profitability of:Comme_lal Banks, : .... Private Devdopment Bmlks, and
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....... .......... Tr: ......... ....."" ansier Pricing: : -:
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" _ -Assistant, mS I ::
wfi!hout :
i
of prieing:fun:dS(:thatitre transferred betwee:n branches and head offices and. how 'these i: i ::prices should:be:set iri order to :maxhnize the ..... :::i: :profit:of: the;bank: as:a whole. The
aimea
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: 1 Hiniejihe: ::, . g: tO • ppy,: , ,. 1' ited ........ ............... :un ::::10an supply tends to d:iscrim :: nateagainst:some::borr0Wersi£ ......
of: tl'fis frame: :transfer Strategy.:ia br/nging abouti:positive: (ot::negative)profits N the three:types:of
banking:Sy_em
._md Savings Mobilization PrOfit". ..... : .... :i Dr. BruceZToientino, Ek'ecutiveDirector, .Agricutt.za'alCredit PollcyCouncil
(ACeC;
i
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:. 5):,:
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.... ..... The :paper exam!inesl th61 micro ievet aspects of rum[:: savings ::mobilization, covering bothl the Suppk¢(household) and the demand (bank) aspects but with special emphasis on the latter, gpecifical..: ]y, the paper determmes and docuraents
saving sche;meso_ strategies effective :in increasing .the level: of deposits held by rural ballks,
This analysis
provides
a:
(con,a, :: better understandi:ng the principal: banks financial and non-t?na.ncial determinants
and rural makes , banksi:....Finallyi :_e'paper ..... a comparison of the profitability of banks _ .... • :. wm_ ann wimout me _ransler of flmds:
of rural: Savings. The study also measures a:_ld evaluates the impact of rural savings mobilization : on
rurai
banks'
total
::StUdies:: :::
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