Regional inequality improves in 2018 as poorer regions post faster growth

MANILA, Philippines — The economic inequality among regions in the Philippines improved in 2018 as some low income areas posted high gross domestic product (GDP) growth during the period, the Department of Finance (DOF) said yesterday.

In an economic bulletin, Finance Undersecretary Gil Beltran said regional inequality in the Philippines, as measured by the coefficient of variation of the gross regional domestic product (GRDP) per capita, worsened in 2017, but recovered last year.

 “The coefficient of variation of GRDP per capita rose from 0.791 in 2016 to 0.795 in 2017, but the trend of growing inequality was reversed in 2018 as the coefficient of variation slid back to 0.788,” Beltran said.

The coefficient of variation measures how the GRDP per capita varies with respect to the national average, according to Beltran.

Over a longer period, Beltran said the coefficient of variation of GRDP per capita rose from 0.56 in 1992 to 0.66 in 2012 and further to 0.791 in 2016.

“These show that before the Duterte administration, GRDP per capita of the poor regions lagged behind those of the rich regions,” he said.

The DOF chief economist said the reversal of the trend in 2018 was due to the “convergence of regional growth rates.”

 “From 2017 to 2018, the coefficient of variation of regional growth rates declined from 0.421 to 0.246. In 2018, for instance, lower income regions like Bicol, MIMAROPA and ARMM grew faster than the national average at 8.9 percent, 8.6 percent and 7.2 percent, respectively,” he said.

To further reverse regional inequality, Beltran listed some programs and strategies that the government should implement.

“The government should do more to reverse regional inequality. Infrastructure expenditures in the poorer regions should be increased to support the development of these regions’ resource endowments,” the DOF official said.

 “Irrigation facilities that will allow farmers in poor regions to plant more than one crop per year, farm-to-market roads to allow them to fetch better prices for their produce and use of better seeds to enhance agricultural yield will be helpful. The ADB’s study in 2008 that showed that no microfinance lending is being done in eight poor villages due to absence of a farm-to-market roads should be put to good use,” he added.

Moreover, Beltran said the government should link microfinance providers and livelihood development centers of the Technical Education and Skills Development Authority with conditional cash transfer beneficiaries who are potential entrepreneurs.