Philippines - The challenge of poverty

Report No. 714W-H The Philippines The Challenge of Poverty October 17,1918 Country Department II Asia Region FC)R OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and mav be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIV4LENTS Average 1987 - US$1.0 = P20.568 P1.0 = US$0.05 Average 1986 - US$1.0 - P20.4 P1.0 = US$0.05 Average 1985 - US$1.0 = P18.6 P1.0 - US$0.05 ARI........................ Acute Respiratory Infections BHS ........ Barangay Health Station BIR. .... Bureau of Internal Revenue BNS .......... Barangay Nutrition Scholar BSP. ........ Barangay Supply Point BSPO.... ...... . Barangay Service Point Officer CARP.. * ........... . Comprehensive Agrarian Reform Program CEDP .........t........... Community Employment Development Program CHMS ....... .............. Community Health ?aintenance System CPO ...................... City Population Officer DAR ............. . Department of Agrarian Reform DOH ........................ Department of Health DPO .......**se............. District Population Officer DPWH. .... Department of Public Works and Highways FIES....................... Family Income and Expenditure Survey FNRI........ses............ Food and Nutrition Research Institute FTOW... .................., Full-time outreach worker HMO**... ................. Health Maintenance Organization HSMS ...................see. Household and School Matching Survey (HSMS) ISH ......... see,.....0... Integrated Survey of Households MCH-s. ................... Maternal and Child Health Care MW'. ................o..... Married women of reproductive age NCEE.... ................. National College Entrance Examination MEC*.. ................. . Ministry of Education and Culture NCR... ......... M National Capital Region NCk9........................ National Census and Statistics Office NGO... ............oo.... Non-governmental organization NEDA. .................... National Economic Development Authority POPCOM..... ..... *.. -... Poptlation Commission PPO... ......... . Provincial Population Officer PRODED,.. ........... Program for Decentralized Educational Development RDA ....................... Recommended Daily Allowance RHU .......- *. ......... *9. Rural Health Unit SUC .................... State Universities and Colleges TTR . ......... Total Fertility Rate TWG ......stes............ Technical Working Group VHW ... . .. .....Voluntary health worker  FOR OMCIAL USE ONLY PHILIPPINES: THE POVERTY CHALLENGE Table of Contents Page No. SUMMABY AND CONCLUSIONS I. WHO ARE THE POOR AND WAY ARE THEY POOR?........................ 1 Ao The Poverty Probleme................................... .....- 1 1. The Incidence of 1...................................... 1 2. Unequal Income Distributione........................... 5 3. The Core Poor.......................................... 8 B. Why are they Poor?.... ..................................... 12 1. Unequal Ownership of Assets...o....o..o................ 12 2. Population Growtho...........0......0..0...00..0...000...0.....0.000. 13 3. Lack of Employment Generation.......................... 13 II. PUBLIC POLICY AND POVERTY ALLEVIATIONoo....ooo................. 16 A. The Impact of Macroeconomic Management..................... 16 1. Growth and the Incentive Framework .....................o 16 2. The Philippines Stabilization Experience............... 17 3. The Impact of the Adjustment on the Poor............... 19 B. Tax and Expenditure Policieso... oooo....................... 22 1. Tax Iniec .........................--22 2. The Composition of Government Expenditures ............. 25 C. Land Reform and Rural Development............................ 31 Do Population Plc ............................ 35 E. The Social Sectors............................... ... ...... . 36 1. Health and Nutritional Policies........................ 36 2. The Education System and Poverty......................-- 38 This report is based on the findings of a mission which visited the Philippines in September 1987. The report was prepared by Isabel Guerrero (mission leader), Guillermo Hakim, Ruth Klinov, and Luis Riveros, from the Bank; Mario Blejer (IMF); Jose Pablo Arellano and Alex Herrin (consultants). Contributions were also made by Albert Berry, David Rosenberg, Je-Pee Tang, and Vic Paqueo. The report was prepared under the general supervision of Norman Hicks. Background papers were prepared in the Philippines by Manuel Montes and Orville Solon ftom the University of the Philippines. r This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - Page No. III EWPLOYMENT AND POVERTY......................................... 40 A. Labor Market ........... ................................... 40 1. Labor Supply and Unemployment......................... 40 B. Poverty Implications of Existing Unemployment and Underemployment .................. Sees...... ............ 44 C. Characteristics of Labor Etenings .......................... 46 1. Evolution of Real Wages and Von-Wage Costs.............--- 46 2. Determinants of Wagesg... . ...... ..................... 49 3. Labor Earnings and Poverty v e r ty........................ 5o D. Employment Prospects and Directions........................ 51 ANNEX 1: The Empirical Data ...54 IV. POPULATION POLICIES IN THE PHILIPPINES................. 57 1. Recent Treends. 57 2. Family Planning Service Delivery...**.*.*.*e***.*. . -*** 61 3. Alternative Population Futures.......... e.e.. ...... 63 4. Issues and Recammendations...-...--.*.o --.. *-.......- -e 65 V. EQUITY ASPECTS OF THE PHILIPPINE EDUCATIONAL SYSTEME............ 6q A. The Incidence of Educational Services......................** 68 1. Characteristics of the Educational System.............. 68 2. The Incidence of Attendance Rates*.********............ 70 3. The Quality of Schooling...........................e.***. 72 4. The Incidence of Tuition............................. 75 B. Returns on Investment in Education........................ 76 C. Policy Implications of the Incidence Analysis.............. 78 Do Financing .............. 79 1. Public Expenditures .............. *. *..e..*-****.****** 79 2. Privatization.... *---0- - v **-- - - - *- 80 VI. HEALTH AND NUTRITION POLICIES ...................... 81 A. Health and Health Care...................... 81 1. Health Status ........................... 81 2. The Health Care System...........................--.- 87 3. Current Approach of DOH and Recommendawtons............ 94  -iii. - Page No. 1. Current Situation..................................e 101 2. Nutrition Policies and Progrlaog........................ 109 3. Recommendations ..........................e-*eeo e*--e*-oo log STATISTICAL APPENDIX ........... ...................... ......... o 112 MAP  PREFACE This report looks at the poverty problem in the Philippines, based on the findings of a mission which visited the country in September 1987. The report finds that the number of poor families has increased since 1971 while poverty incidence has remained unchanged. The main areas for policy action identified in this report are land reform, family planning, productivity improvements, taz policies, and education, health and nutrition expenditures. The analysis in this report is limited to the 1971-85 period since most of the data available at the time of the ,ission, particularly the Faaily Income and Expenditure Survey, only covered that period. The National Census and Statistics Office (NCSO) is currently preparing a new household survey which will be a valuable source of information on changes in poverty and income distribution since 1985. A number of developments have taken place after the mission visited the Philippines in September 1987. The government has prepared an Updated Medium Term Plan for the 1988-89 period. This plan addresses many of the issues discussed in this report, with particular emphasis on improving local participation through greater decentralization, on expanding social sector programs, and on land reform as a vital means of addressing the poverty problem. The Plan recognizes that the ke!r to human development is employment generation and the provision of social services, with emphasis on the rur.'al and urban poor. Nev policy directions have also begun in the social sectors, particularly in the Department of Health (DOH). The health budget has been expanded in FY89 and a large share of these resources is going to high impact programs which directly benefit the poor. Budgeting and procurement monitoring are now done at the local level and the Department of Health is in the process of establishing link with Non-Governmental Organizations in order to obtain a more effective delivery system to the commnunities. The Executive Branch has placed the population problem on the agenda and a population plan is now under preparation. All these are encouraging developments which lay the basis for tackling the poverty problem in the future. Although the current economic recovery has probably improved the living conditions of some of the poor, continued government action in this aLea will remain a crucial concern in Philippine economic development.  SUMMARY AND CONCLUSIONS Overview With the Philippines on its way to recovery, it is now time to concentrate efforts to address the long standing and growing poverty problem. In 1985 more than 30 million people out of a population of 56 million were living in poverty, in V4e sense of having an income that did not enable them to satisfy basic needs.._' This represents a worsening of the situation from 1971. Using comparable definitions, in 1971 the incomes of about 3 million families were insufficient to meet basic needs; in 1985 the figure had risen to 5 million families. Although the proportion of poor has remained unchanged, an additional 10 million persons have been recruited into the rcnks of "the poor", Just as a result of the expansion in population during the period. In this context, a larger amount of resources and attention in policy taking shouid be shifted to address the poverty problem. The outlook for the future is equally troubling. Every year over 700,000 new entrants join a labor force that already contains about 6 million underemployed or unemployed workers. This labor force will be expanding even more dramatically in the future because of the failure to adequately addre4s the population problem facing the Philippines. The employment issue cannot be evaded; much of the future labor force has already been born, about 16 million new entrants will join the labor force in the next 15 years and it is not clear where these additional job-seekera will be absorbed. During 1980-86 the largest employment generators, namely agriculture, services, and manufacturing, created jobs for equivalent of less than two years' of new entrants to the labor force. This Report describes some aspects of the poverty problem in the Philippines and analyzes the reasons for its growth. Since poverty has political and sociological dimensions beyond the scope cf this report, the analysis presented here is only a contribution to the formation of an overall poverty strategy. The main theme of the Report can be briefly summarized as follows: (a) in view of the maldistribution of assets, rapid labor force growth, high levels of underemployment and already extensive poverty, the Philippines will have to make major efforts just to keep the poverty problem from worsening; (b) rapid economic growth will help alleviate the poverty problem, but the type of growth and quality of economic management is also of fundamental importance; 1/ Estimated at P5,010 per capita for urban areas and P3,759 per capita for rural in 1978 prices.  - ii - (c) while it is impossible to articulate a strategy that will solve the problem once and for all, there are a number of positive steps that the Government can take to alleviate the worst aspects of poverty; this will require political will, adequate resources, and decisiveness in policy-making. Areas for policy action include: - land reform and rural development; - population policy and family planning; - productivity improvements; - public expenditure and tax policies; and - the education, health and nutrition expenditures. The Poverty Problem Characteristics of the Poor. About 702 of all poor families live in rural areas, the majority of these are small farmers involved in corn, rice or coconut production, with corn farmers being the poorest. However, even among families that derive most of their income from farming, wage income is an important complementary source: around one million of the poorest farm fami- lies derive most of their income from wages. Low-income agricultural families are characterized by high levels of underemployment, small farm size, large family size, limited use of modern technology, and low levels of education. The majority of poor farm families do not own the land they till, or cultivate other farms as tenants or leasors in addition to their own. Most poor farmers do not use fertilizers and pesticides, dtc not have access to irrigation, nor have access to credit. More than one-third of the rural poor ha-we not com- pleted elementary school, while another tenth have never attended schools. Although the largest concentration of poor families is in the rural areas, the urban areas also suffer from widespread poverty, especially in metro Manila. Low income urban families live in precarious housing and in congested conditions, and lack basic facilities such as water and electricity. More than half of the urban poor in metro Manila are employed in the informal sector, with a high participation of women and children, and a relatively smaller proportion of their income coming from the household head. Most of these workers meet their capital requirements through self-financing or infor- mal lending. A high incidence of squattiag results from the poorer families having to live closer to work centers, since transport costs are an important proportion of their expenditures. The situation of the urban poor is worse outside Manila in terms of income, open unemployment, educational attainment, health care, and access to housing facilities. Poverty Group Identification. The methodology for identifying po- verty groups suffers from both conceptual ambiguities and data problems. It is therefore not surprising that differences should appear in statistical exercises to estimate the proportion of the population in "poverty". Absolute poverty measures take a basket of goods and services as the means of estab- lishing an income minimum. Secular comparisons require precise price tracking  - iii - of this bundle over time. Official stitistics show a rise in those below the poverty line between 1971 and 1985. Bank estimates show this proportion to be roughly constant, but in either case between 521 and 581 of the Philippine population is identified as belonging to the poverty group using this broad definition of minimum purchasing power. For policy purposes, and to facilitate international comparisons, a more restrictive poverty measure, a subsistence income line, was estimated, taking minimal food intake as the main indicator. This more restrictive definition yields a core poverty group of 281 of the populotion in 1985 (com- pared to 351 in 1971). The interesting finding using this measure is that the proportion of core poor although higher in rural areas has been reduced much more rapidly in rural areas compared to urban areas. While this finding could be a result of the urban-rural definition, migration, or more likely the greater needs of the urban population to purchase food, the statistics show a 2 percentage point reduction in the urban poverty incidence (from 20% to 181) and a 7 percentage point reduction in the rural inciden;ce (from 421 to 35%). Policymakers may wish to use the bottom three deciles of the national income distribution as a possible working definition of the core poor. This roughly coincides with the proportion fully below subsistence. The core poor would number 15 million - 4 million urban and 11 million rural. Their number is rising in line with population growth trends. Given an eetimated population growth rate of 2.51 tor the lowest income groups, the core poverty will be expanding by 400,000 people every year. This would require significant real national income growth, substantial employmect gene- ration, and increases in transfers to the core group. Income Distribution. The Philippines has one of the most unequal income distributions among middle-income countries; in 1985 the top 10% of the population had more than fifteen times the income of the poorest 101. The Philippine income distribution appears particulaly unequal when compared with some other developing countries in the region. Inequality of income after taxes is also much worse when compared with similar indicators in other coun- tries, since revenue collections in the Philippines are regressive. There are also major disparities in incomes between rural and urban areas. The absolute level of rural income is, on average, less than half the average urban income. The disparity has remained virtualy unchanged over the last 25 years; rural incomes are now 471 of average urban incomes as compared with 40% in 1961. While there is some evidence of a small aggregate improvement in the distribu- tion of income over the 1971-85 period, the gains are modest and are oversha- dowed by the large absolute additions to the core poor group. Why are They Poor? The growing number of poot and the persistence of income inequality is a result of three structural factors: unequal asset ownership, particular- ly land, population growth, and the lack of productivity growth. In addition, economic policies had an anti-poverty bias in areas such as price policies, credit allocation, fiscal policy and government intervention in productive activities. Such policies were also detrimental to sustainable growth and led the Philippines into a debt crisis by 1983, when the need of adjustment could  - iv - not be postponed anv longer. The adjustment program had an additional nega- tive impact on poverty, since by 1985 personal income had dropped below 1971 levels. The distribution of land is more skewed than the distribution of income in the Philippines. More than half o0 the farms in 1980 occupied 16% of farm area, while less than 4% occupy over one fourth of the land. In addi- tion, a very high proportion of land operators are tenants and not landowners. One of the major factors explaining the increase in poverty in the Philippines has been the failure to decrease fertility rates. The rapid growth of the labor force has had a depressive effect on real wages; in the rural areas the growing population pressure on land haa resulted in the impoverishment of a large proportion of the population. At the household level, the presence of more children in poor households has lowered the family's capacity to save. Since higher income families not only have fewer children but also invest heavily in their human capital, population growth has also been translated into increasing income inequality. The trends in the labor market show the weak contribution of past growth strategies to poverty alleviation. Higher underemployment and unem- ployment, combined with declining real wages and labor earnings have resulted in a larger number of poor. Underemployment in the 1980's more than doubled with respect to the previous decade, and real wages have been constantly falling since 1960 Aor both skilled and unskilled workers. The developments in the labor market are a reflection of both under- lying produ-.ivity trsnds and the rapid growth in the labor force. Total fac- tor productivity growth in manufacturing was negative throughout the seven- ties, and output labor ratios for the whole economy increased only slightly in the 1971-83 period. The small increase in overall labor productivity, how- ever, did not increase labor's share of output. The combination of fast growth labor supply and small productivity gains, explains why real wages fell throughout the 1971-83 period. After 1983, there was an additional increase in unemployment and underemployment a, a result of the drop in economic acti- vity and the cut in investment that -t place during the government's stabi- lization program. Framework of Policj Intervention The past fifteen years show that poverty needs to be attacked in its structural basis and that an outward-looking growth strategy is a critical component of a sustainable program to reduce poverty. The government must re- distribute land, provide an effective program of family planning, and facili- tate the development of human capital among the poor. Any strategy that ig- nores these elements will fail to get to the core of the poverty problem in the Philippines. The Government can also take steps that have an immediate impact on the poor through expanding expenditures on poverty-oriented social sectors, reforming the tax system to become less regressive dnd to generate more resources, and promoting an employment-oriented, more productive pattern of growth.  - v - Macroeconomic Management and Policies with a Short Term Impact A number of the government policies which led to the 1983 crisis were also contributing to the poverty probelm. Some affected the poor through providing incentives to transfer resources out of agriculture, the main income isource for most poor families in the Dhilippiens. Returns to agriculture were badly battered by price controls, export taxes and levies, and an overvalued peso. The resulting decline in a&ricultural terms of trade was especially prejudicial to the incomes of small farmers. Other policies affected the poor through introducting a bias against the use of labor. Regulated interest *ates and subsidized credit programs, for example, favored capital intensive projects and higher-income groups with greater access to rationed credit. The eventual need to deal with the debt crisis also had a serious impact on the poor. The 1983-85 stabilization process led to a sharp incrase in underemployment and a drop in real GDP per capita to 1975 levels. If the adjustment had been accomplished through a greater reliance on the exchange rate and supply enhancing policies, and if fiscal adjustment had been achieved by increasing tax collection and changing the composition of public expendi- tures, the incomes of the poor could have been sheltered more successfully during this period of severe adjustment. The poor were mainly affected by increasing underemployment and in- flation. Increases in underemployment have the strongest effect on those workers that have the least specific skills and, therefore, are the first ones to become underemployed when aggregate employmen; falls. In the Philippines, underemployment had the largest negative impact on the share in total income of the lowest two quintiles in the Philippine economy. The poor also suffered from the surge in inflation since they pay most of the inflation tax. Both the urban and rural poor cannot protect their incnme from inflation bec.ause they do not have indexed wages, and they seldom iicwe assets that keep their real value in times of inflation. Inflation was found to be a regressive tax since it lowered the incomes of the lowest six deciles, while increasing the incomes of the highest two deciles. In the future, the large social cost of output contraction and grow- ing underemployment should be kept in mind by policymakers. Poverty can be reduced both through higher growth and by increasing the employment content of such growth. Increases in productivity appear, in fact, as the most pro- gressive way of achieving higher employment and potentially raising the income share of the poor. Cautious macroeconomic policy will also help in that it will make large adjustments unnecessary. However, whenever adjustments are required they should be planned keeping both the medium term and employment objectives in mind. In the past, for example, real devaluations have had a positive impact on the income share of the lowest four deciles of the popu- lation, since the poor are mostly involved in the production of tradables. Policies with Medium Term Impact One of the most urgent task for policymakers is to increase the employment content of growth, since this is the basic mechanism by which the benefits of good economic performance reach the poor. The government has  - vi - already implemented a number of reforms which will have a positive impact on employment generation in the medium term. The completion of the removal of trade restrictions will, increase net employment generation through the expan- sion of exports and agricultural activity. The removal of price controls on agricultural products will also have a positive impact on agricultural produc- tion. The bias against labor intensive activities has also been substantially removed through the interest rate liberalization and the removal of fiscal incentives for capital use. Fast productivity growth is the only way for new entrants to the labor force to be absorbed without further drops in real wages. There seems to be ample room to improve productivity through interindustry shifts. The elimination of the Major Industrial Projects is one important step which has already been taken by the new government. Further steps in trade liberaliza- tion are also crucial, specialiy given the fact that in the past the largest protection was provided to inefficient industries with low total factor pro- ductivity growth. The privatization of government corporations involved in production is another potentially significant step in helping to improve pro- ductivity in manufacturing. Support to research and development, and adapta- tion of technology, are the best ways for the government to contribute to long term productivity improvements. In the short run, tie government's major contribution could be in the area of training. Tax and Expenditure Policies For the most part, the system of government expenditures and taxa- tion has tn regressive. Because the tax system relies heavily on regressive indirect taxes, it has a particularly pernious effect on income distribu- tion. While nominal tax rates are high, actual collections are low, so that the overall tax effort on the Philippines is low in comparison with other countries. Taxes on income are widely evaded, there is no effective capital gains tax, and collection of taxes on real property are extremely low. The result is a regressive taxation structure in which poor families pay 272 of their income in taxes while higher income families pay only 18X. Legal steps should be taken to increase compliance. In addition, tax administration and enforcement should be improved, particularly in the area of income taxation. In the medium term, the Philippines could gain more in terms of revenue and equity from steps towards better compliance than from modification of the tax rates. The poor have not been the major beneficiaries of government expen- diture programs in the past. In fact, the type of government spending that took place in the seventies mainly benefited the rich through large capital intensive industrial projects, and through a social service system that did not reach a large proportion of the poor. The benefits of public education have been greater for higher income students. In health, most public resources have been devoted to expensive urban-based curative services. Housing subsidies, both in financing loans and in providing shelter, have mainly benefitted the upper half of the income ladder. Family planning programs, too, have failed to reach a large portion of lower income women.  - vii - Public expenditures on poverty-related areas such as agriculture and rural development, the social sectors, and basic infrastructure need to be expanded. The Philippines spends less than half of what other countries at comparative levels of development spend on social services. In some cases, Government programs already have extensive coverage (e.g. primary education), but there is a need to improve the quality of services. In areas such as nutrition, health care and family planning, there is a need to expand both the quality and coverage of services offered. Within the public investment pro- gram, more resources should be directed at expanding rural infrastructure, particularly rural roads, small-scale irrigation works, and rurai electrifica- tion, as well as programs designed to upgrade public facilities in squatter developments in urban areas. The efforts at developing labor-intensive public works under the Community Employment Development Program should be incorporated into the on-going programs of Government departments. The Social Sectors A major task is to increase the human capital, and thus the earning capac;ty, of the poor. The long run productivity of the poor can be increased through improving the delivery system of health care, preschool and infant nutrition, education and improving environmental conditions. Nutrition and health care are the most urgent programs where additional resources should be directed. In order to reach the level of government spending of other countries at comparable level of development, expenditures in these two sectors should double as a proportion of GNP. In contrast, in housing and social security, the resources to meet the needs of the poor should come from internal redistribution of existing resources, and the increase in resources should be limited to CNP growth. Nutrition programs need to be expanded both in quality and coverage, particularly to high riak groups. International experience shows that a sub- stantial nutritional impact can be achieved by a program of a limited number of components, rtat can be successfully delivered to a well defined target group. To provise better coverage of Food and Nutrition Progtam, nutri- tionally at risk households should be identified at the barangay level. Education p-ogrammes for mothers in nutrition, breastfeeding, and childrearing practices should be implemented together with early nutrition intervention at the preschool age. In the Philippines, the poor students have lower performance in ability tests, partly due to conditions related to their nutritional status combined with environmental deprivation. The current Food and Nutrition Plan need to be coordinated among its various implementing agencies, aad commonly defined targets need to be adopted. Currently, food assistance to preschoolers misses a large proportion of children in need while covering t large number of preschoolers that do not need such assistance. Furthermore, food assistance to school children should be reconsidered since it might have a higher impact if allocated to malnourished preschoolers. The budget for health needs to be doub.ed and the composition of its expenditures radically changed. The disease pattern among the poor in the Philippines nalls for promotive and preventive health care, and basic curative services in tnie rural areas. Although the Government supports this approach,  - viii - expenditures in preventive medicine represented only 0.2X of GNP in 1985 as most of the health budget goes to curative care. The Government should continue to actively pursue a policy which links both public and private sectors in developing new mechanisms for health financing. Such policies coild include recovering costs from the nontarget population using public hospitals and financing lower income patients so as to allow them to use the existing excess capacity in private hospitals. On delivery el health services the Department of Health (DOH) should be supported in its plan to strengthen community-based services, including empowering the communities to take a more active role in their own health care. However, the generation of effective demand for services such as immu- nization, prenatal and post-natal services, should be emphasized for the suc- cess of these programs. In this context, the Government may wish to expand substantially the number of midwives to help provide these services. The Government could also seek agreement with NGO's and local governments to help identify high risk households, and to diagnose or refer cases requiring more complicated health interventions. Additional resources will be required to train and supervise health workers, and to increase facilities, drugs and supplies to the health units. These resources should be allocated on the basis of poverty incidence at least to the level of municipalities. Increased reliance on non-budgetary resources will also be necessary including higher user charges from higher income pa- tients. Additional resources could be mobilized through upgrading the capa- bilities of traditional health practitioners and volunteer workers which would also strengthen the referral system at the village level. External support on favorable terms should be sought to finance the cost of implementing the re- forms in the delivery of health services and in health financing. Education. Although the majority of the poor have access to elemen- tary education, the educaticnal system in the Philippines is regressive at all levels. The regressivity of education at the elementary level stems from the variance in quality, where poorer students receive lower quality services. In secondary education, there is not only inequality within public schools, but also lack of access to the higher quality private system. The regressivity becomes more acute in tertiary education where subsidies are larger and go mostly to higher income students. While the share of GNP spent for education is largely adequate, che composition of educational expenditures should change. Although government expenditures in education are only 2.42 of GNP, the private sector plays a much more significant role than in other lower middle income countries. The priority within education is to improve the quality of elementary and secon- dary public schools, and increase the attendance rates of low income children of ages 11-14. Since low income is a leading cause of low attendance, directed expenditures which raise the poor children's real income--such as food and textbooks-might help retain children at school. Public school quality should be improved tLrough the provision of desks, books, and on-the-job triaing for teachers in the poorer communities. Academic achievement at the primary level is influenced significantly by non-  - ix - wage expenditures in the school. These expenditures are now distributed regressively and should be increased and redirected to schools catering to lower income children. Moreover, minimal standard of facilities, now applied to private schools should be also specified for public schools. School costs which are unrelated to quality should be cut in favor of more cost effective resources. Experience in previous Bank financed projects in the Philippines shows that school quality interventions had the most pronounced effect among the poorest children. The children who benefitted the most from the nation- wide Textbook Project, were those coming from the most impoverished backgrounds. Overall tuition subsidies which benefit the rich should be redirect- ed towards lower income students. Expenditures on tertiary education should be devoted to scholarships for the lower income students, while the tuition for high income student should reflect the cost of attending private schools. The Government should absorb the cost of the barangay high schools, which provide poor quality service at high cost. Given the limitations of a housing policy to reach the poorest in the Philippines, the resources devoted to this sector should be limited. The government should focus on promoting the generation of long term loans in the banking system. This would take care of the middle income families that need financing in order to get a house. As for the poor, the units constructed should be much cheaper than in the past and subsidies on the cost of loans should be avoided. For most of the poor, since they live in rural areas, their housing problem is not so acute as the lack of other facilities. Policies with Longer Run Impact Land Reform and Rural Development. The most fundamental interven- tion is land reform. In the Philippines, over half the farms occupy only 16% of the land area; two-thirds of all poor farmers are full or partial tenants. In addition, there is a growing body of landless agricultural workers who lack accese to land. The problem is particularly acute in sugarland areas, where large estates are operated with landless wage labor. The Government's Comprehensive Agrarian Reform Program could do much to alleviate this problem. A fully implemented program could benefit as many as 1.5 million landless agricultural families, in addition to giving clear title to 800,000 small farmers. While such a program is large, it is similar in scope to that undertaken by other governments. In addition to the more obvious social and equity benefits, it might also raise overall productivity. The land reform bill was approved by Congress in June 1988, under Republic Act No. 6657, providing the basis for the implementation of a Comprehensive Agrarian Reform Program (CARP). The land reform on rice and corn lands is to be completed in the next four years under Phase I; Public lands over 50 ha are to be completed in the following four years under coconut plantations: holdings between 4 and 10 ha will be affected in years 4 to 10, holdings between 5 to 24 ha in years 6 to 10. With the exception of commercial lands, like orchards, fish ponds, poultry, and coffee, land reform is to be completed in the next 10 years. A substantial support program for the farmers getting new land is currently being designed by the Department of Agrarian Reform.  - X - Other steps need to be accelerated to improve the level of rural development. Public investment can increase the productivity of small farmers if it is directed at high priority activit;es. Probably the most useful intervention is the development of better rural roads, particularly those linking rural areass to markets. Investments in small-scale, communal irrigation and rural electrification are also beneficial. The system of research and extension needs to be improved, 94 that extension workers can reach poor farmers in remote areas and provide appropriate technological packages suited to their environment. The adaptation of modern technologies by small farmers will require some forther improvements in the system of rural credit as well. Population. Population growth currently adds over 1.5 million persons to the population of the Philippines each year. Between 1975 and 1985, 13 million people were added to the population and 10 million to the labor force. The persistent swelling of the labor supply coupled with a moderate-to-poor record of economic growth has led to a substantial increase in the rate of underemployment. These conditions have adversely impacted labor's earnings, and real wages have constantly declined since 1960. For the future, projections indicate that even a 4 to 5% growth rate of GDP will barely provide enough jobs so as to keep underemployment from increasing further. A substantial growth in real wages will be difficult to attain unless there is a significant drop in population and labor force growth rates. The government's aim should be fertility reduction so that the population growth rate does not exceed 2.0X by the year 2000. Information by income categories shows that the poor have higher fertility and lower contraceptive rates than higher income groups. At the same time, the largest unmet demand for contraceptives is found among lower income women. Part of this discrepancy appears to be due to the lack of access to family planning services by lower income households. Overall, the level of Government expenditures on family planning should be increased and the delivery of services made more effective. While the existing clinic and community based network is an effective delivery mechanism, it should be expanded so as to reach more families, and integrated with the delivery of nutrition and health care. In addition non-government organizations should be encouraged since they have been the most effective in delivering family planning services. Financing Basic Needs. Given the limited resource availability and the large number of poor families, the Government can only afford to provide basic services to the poorest. The cost of expanding social programs can be reduced by insuring full cost recovery from the non-poor, in terms of higher levels of fees and better collection efforts. In addition, access to services should be limited to the very poor wherever possible. One way achieving this goal is through the provision of only basic services which are not attractive to the non-poor, or through selective targeting of beneficiaries. Even then, selective targeting of government basic services needs be implemented down to the community level. The provision of services to the non-poor by the private sector should be supported in the areas of health, education and housing. In addition, NGOs should be encouraged to expand services, since they have proven to be effective in reaching the poor in such areas as health, family planning and nutrition.  - xi - User charges are more important in reducing the leakage of benefits than in financing the expansion of social programs. Cost recovery should be improved in hospital and housing programs and in higher education. From the equity point of view, cost recovery should be focused on screening the provision of subsidies so that they only reach those in need. "Free for all" services tend to be the most regressive formula si 'ce higher income groups will benefit the most. However, since cost recovery nas a limited potential as a source of finance, most of the resources will have to come from improved tax collection. Reducing the scope of government programs to the lower income groups could release resources for the most needy. This cculd be done partly through reallocation of subsidies between differext components within each sector. The poor could also be reached through reducing the quality of sometimes expensive services that mainly benefit higher income groups. In health care and housing, the services provided are, in general too expensive. Quality has to be sacrificed in order to reach the large unserved population. Subsidies to public hospitals and higLer education have to be reallocated to finance the needs of the poorest groups within each sector. Inadequate use has been made of the private sector in the delivery of some basic services. Overall, the case for financing basic needs must be based on the efficacy of the intervention and on its clearly targetted group of beneficiaries.  PART I POVERTY IN THE PHILIPPINES: ANI OVERVIEW  I, WHO ARE THE POOR AND WHY ARE THEY POOR? 1.1 There are more poor people in the Philippines today than at any time in recent history. The situation has worsened during the past three decades, and the stagnation and decline of the 1980's has only made matters worse. While there is now evidence that an economic recovery is taking place, even a long period of output growth will be insufficient to substantially reduce poverty, particularly in the face of rapid population growth. Well-focused programs are therefore needed to address this problem, particularly in the rural areas where the impoverishment of subsistence farmers and the growing numbers of landless workers remains one of the most serious problems. If positive results cannot be achieved in these areas, we are likely to see an acceleratioa of political and social unrest, which could undermine the entire development effort. This chapter briefly surveys the nature and causes of the poverty/employment problem. The following chapters (in Part I) discuss in more detail the employment problem, and the role of public policy. Part II gives a more detailed discussion of the issues in the social sectors: population, health, nutrition and education. A. The Poverty Problem The Incidence of Poverty 1/ 1.2 The number of poor people in the Philippines has significantly in- creased over the last decade specially in rural areas. This has happened despite slight improvements in the real average incomes for the lower deciles of the population (Table 1.4). Although poverty incidence did not change during the period, in 1985 there were around 10 million additional individuals in poverty as compared to 1971 just as a result of population growth (Table 1.1). Furthermore, the number of people below subsistence conditions in- creased by around 2 million in sRite of the fact that the proportion of people below subsistence has decreased._ 1/ The 1971 poverty line was derived using the least cost consumption basket needed by the lowest quintile in order to meet their minimum needs, specified in terms of 2,016 calories and 50 grams of protein per day. The estimates of non-food needs are based on the actual expenditure pattern of the lowest family income group in 1971 PIES. The procedure followed World Bank Guidelines which assume that such a diet "generally provides an adequate balance of carbohydrates, proteins and other nutrients". The 1985 poverty line was updated from the 1971 base using the food price index. 2/ The subsistence level is defined as an income level that provides for the minimum food requirements, as opposed to the poverty level which includes non-food items. The official subsistence lines for 1985, in per capita terms, are 2,904 pesos for the urban areas and 2,414 pesos for the rural areas. This lines have been deflated using the national food price index to obtain the corresponding 1971 levels of 351 pesos for the urban areas and 292 pesos for the rural areas.  Table 1.1: POVERTY FAMILIES AND POPULATION, 1971-1985 Average Population Families family size (000'ws) - (Z) (000's) (Z) 1985 Poor 30,622 57 5,115 52 5.99 Non-poor 23,435 43 4,732 48 4.95 Total 54,057 100 9,487 100 5.49 1971 Poor 20,485 57 3,322 52 6.2 Non-poor 15,454 43 3,066 48 5.0 35,939 100 6,388 100 5.6 Source: PIES and Staff Calculations. 1.3 A systematic study of changes in absolute poverty incidence faces a number of methodological problems which introduce considerable arbitrareness into the measurement of poverty and its trends. First, to identify the poor a poverty line based on minimum needs has to be idintified yet needs vary among individuals, regions, and countries. Second, the income and expenditure data collected in the past decade is only comparable for 1971 and 1985. Finally, changes in relative prices and consumption patterns introduce further compli- cations into the assessment of time trends. Keeping in mind these difficul- ties, this section examines the evolution of poverty by analyzing other income and welfare indicators in conjunction with the official estimates and Bank adjustments to the poverty line. For policy purposes however, the report focus is on the lowest three deciles which are approximately equivalent to those people living below subsistence conditions. 1.4 Our findings for the 1971-85 period are the following: (a) the percentage of people below the poverty line has not changed, but there are a larger number of poor in the Philippines as a result of population growth; (b) the percentage of people below subsistence is lower, but, again, the number of people living with lower incomes than those required for minimum food requirements is higher; (c) the balance between urban and rural poor has slightly changed since poverty incidence increased in urban areas and did not chaage in rural areas. However, the majority of the poor are still living in rural areas; and (d) income distribution has slightly improved as a result of the increase in average real incomes of the lowest five deci.es of the population.  - 3 - -3. Box 12 The Poverty Line In 1985 poverty incidence was as high, or even higher, than in 1971 as hown by both Bank and official estimates in the table below. Bank estimates how an increase in urban poverty incidence, and no change in the rural areas. overty incidence for the country as a whole remains unchanged, due to the hift of population from rural to urban areas. The official estimates show an ncrease in urban, rural and overall poverty incidence since the official zovety line is higher by 15 percent in 1985. The different gaps between poverty .ines over time suggests two different consumption baskets were used n 1971 and 1985. In fact, when the 1985 official poverty line is deflated by he food price index to get a 1971 equivalent, there is no change in poverty ncidence, which is the same trend observed in our estimates of the period: overty incidence remains virtually unchanged in rural areas and in the ountry as a whole, and increases in urban areas from 48 to 501. POVERTY LINES AND POVERTY INCIDENCEt 1971-85 (1978 pesos) Poverty Line Poverty Incidenc 1971 1985 1971 198! Staff Calculations Urban 605 5,010 38 4 Rural 454 3,759 58 5 Total 500 4,140 52 5 fficial Estimates Urban 485 6,042 (48.0) 37 5 Rural 363 4,132 (63.0) 56 6 Total 400 4,764 (58.0) 49 5 Source: Medium Term Plan, NEDA; World Bank 2984-PH; staff calculations. lotes: (a) Numbers in parentheses use the official 1985 poverty line and deflates them back to 1971 using the food price index. (b) Population weights change during the period: in 1971, urban families represented 30.14 percent of the total; in 1985 this proportion had increased to 37.84 percent.  - 4 - 1.5 Although no income and expenditure surveys could be used to analyze the trends within the 1971-85 period, there are good reasons to believe that poverty inuidence decreased during the seventies and increased thereafter. First, CNP growth was not matched by personal income growth throughout the period. During the 1971-79 period personal income did grow, showing that some output growth war translated into higher household incomes. Unless there was a deterioration in income distribution, poverty incidence must have declined during the 1971-79 period. As we will see in in the next section, income distribution improved slightly during the period. After 1979, personal income starts a downward trend in spite of the fact that GNP continues to grow until 1981 (Table 1.2). This is the time when poverty incidence might have started to increase as average household incomes were dropping. It also coincides with the stepping up of government investments in construction and the Major Industrial Projects (MIP's), and with the expansion of lending activities of the Government Financial Institutions (GFI's). Poverty got even worse after 1981 when there was a sharp decline in both personal income and GNP per capita. By 1985, GNP per capita had fallen back to its 1975 level, and personal income back to its 1972 level. Table 1.2: AVERAGE ANWJAL RATES OF GROWTH OF PER CAPITA AGGREGATES (in pE centages) 71-79 79-81 81-85 71-85 GNP 3.92 -.10 -4.63 1.00 Indirect Taxes (net) 7.40 -7.33 -5.94 1.25 Depreciation 3.90 8.80 -2.08 2.84 Corporate Income 13.11 -1.88 -43.12 -8.92 Personal Income 1.43 -0.90 -3.85 -0.44 1.6 Second, during the seventies some welfare indicators improved substantially on average, probably in correlation with the high growth of the period. Crude death rates dropped from 11.6 per 1000 to 8.4 per 1000, life expectancy increased from 59 to 62.8 years, and households with safe water supply services increased from 22% in 1970 to 43% in 1979. Furthermore, infant mortality decreased from 62 per 1000 in 1971 to 42 per 1000 in 1982. These indicators are average for the country and obscure the fact that they widely range across regions and provinces (see Part II). 1.7 After 1983, the limited evidence available suggests an increase in poverty in the form of lower energy intake and higher malnutrition rates. For example, in Metro Manila the adequacy of mean one-day per capita intake of energy declined from 88% in 1982 to 85% in 1985; for protein it declined from 101% to 95%. This was more pronounced in depressed areas. Similarly, the proportion of children below weight-for-height standards, which had declined in the seventies, increased from 10% in 1982 to 14% in 1985. 1.8 The proportion of people living below subsistence decreased during the 1971-85 period to around 30% of the population, which will be the focus of the analysis in the next section (Table 1.3). Subsistence incidence has dropped in both, urban and rural areas. This coincides with the fact that income distribution slightly improved during the period. Although average  - 5 - family income fell in real terms from 1971 to 1985, it increased for the lowest five deciles, and declined for the top five decit is. While some families in the bottom 50 percent moved out from the poverty group, new entrants increased .he absolute number of poor. Table 1.3: PEOPLE LIVING BELOW SUBSISTENCE CONDITIONS 1971-1985 (In percentages) Proportion of families Proportion of Individuals 1971 1985 1971 1985 Urban 17.33 15.13 19.94 17.76 Rural 38.51 30.00 42.13 35.04 Total 32.13 24.37 35.39 28.38 Source: NEDA 1987. Philippine Statistical Yearbook. Unequal Income Distribution 31 1.9 Poverty in the Philippines is uot only a reflection of low average incomes but it is also a result of a very unequal distribution of income with- in the population. Although income distribution has improved over the 1971-8S period, the Philippines is still among the most unequal of middle income coun- tries. The average real incomes of the lowest five oeciles has slightly increased over the period, while there was a drop in the average income of the highest deciles (Table 1.4). However, in 1985, the top decile of the population had more than 15 times the income of the lowest decile. Table 1.4: AVERAGE REAL FAMILY INCOME IN PESOS, 1961-85 (1978 - 100) 1961 1971 1985 Deciles Total Urban Rural Total Urban Rural Total Urban Rural I 1,565 2,086 1,292 1,596 2,358 1,204 2,020 2,837 1,626 II 1,938 1,963 1,640 2,159 3,832 1,841 2.970 4,296 2,495 III 2,459 4,049 2,187 3,192 5,748 2,761 3,733 5,470 3,086 IV 3,130 5,154 2,634 4,131 7,369 3,398 4,553 6,719 3,714 V 3,875 6,5i3 3,230 5,257 9,137 4,318 5,537 8,179 4,337 VI 4,918 8,344 3,876 6,571 11,201 5,380 6,465 9,927 5,057 VII 6,185 10,552 4,820 8,543 14,001 6,726 7,933 11,984 6,035 VIII 8,346 13,865 6,112 11,265 17,833 8,708 10,032 15,064 7,371 IX 11,923 19,755 8,249 16,147 24,465 12,03; 13,590 20,786 9,576 X 30,181 50,063 15,654 35,016 50,992 24,424 30,784 45,3'3 18,823 Average 7,454 12,273 4,971 9,387 14,741 7,080 M280 13,081 6,204 3/ A comparison with National accounts and NSCO income distribution estimates is presented in the Statistical Appendix.  1.10 Partly as a result of past policies, there are significant income disparities between rural and urban areas. The absolute level of rural income is, on average, less than half the average urban income. This disparity has remained almost unchanged over the last 25 years, and rural incomes are now 471 of average urban incomes, compared to 401 in 1961 (Table 1.5). The relatively lower income in rural areas reflects the concentration of skilled occupations in urban areas, as well as the policy bias in favor of industrial- ization in the last two decades. The low abs'lute level of rural incomes, however, results from a higher ratio of people to natural resources and capital, and the lack of human skills. 1.11 Income disparities are greater in urban than in rural areas. As shown in Table 1.5, the top 20% of the rural population has 46% of rural income, while the bottom 301 receives only 121. However, in urban areas the top quintile controls half of the income, while the bottom 30% earns only 101 of income in urban ireas. As shown in Figure 1.1, rural income distribution has improved betv' - 1971 and 1985. This improvement however, may be due to the fact that 18 sc landlords, who were previously surveyed in the r,ral areas, have now moved into the cities because of the insurgency situation. Table 1.5: INCOME DISTRIBUTION 1961-1985 1961 /a 1971 1985 lb Urban Top 201 56.9 51.2 50.5 Bottom 30% 6.6 8.1 9.7 Gini Coefficient /c 0.52 0.46 0.43 Rural Top 201 48.1 51.5 45.7 Bottom 301 10.3 8.2 11.6 Gini Coefficient /c 0.42 0.46 0.37 Total Top 20% 56.5 54.5 51.1 Bottom 30% 8.0 7.4 9.9 Gini Coefficient /c 0.51 0.49 0.43 Memo: Rural/urban ratio (1) 40.5 48.0 47.4 /a UN (1981). 7i gtaff calculations. 7- The Gini coefficients measures income inequality, with zero representing perfect equality and one representing perfect inequality. Source. Family Income and Expenditure Survey.  Figure 1. 1 PHIUPPINES Income Dlsttbi4tion, 1961-1985 Rural 35 20 1961 EJi97i 30 19785 25 0 I II W IV V VI vn VIN IX X Dedbs WoVd 8ank - 408 73  The Core Poor 1.12 The majority of the core poor, defined as the lowest 30, live in rural areas or are involved in agricultural activities. Of some 3 million families in the lower three deciles, 2.5 million live in rural areas and about 2 million work in agriculture. Among the poorest households, those headed by farmers had the lowest per capita income, with an average annual income of less than US$85 compared to the ave. ge of US$580 per capita for the whole country. The proportion of the population dependent on very small farms or with no land at all has increased in the last decades, and is one of the main tactors contributing to increasing poverty in the rural areas. 1.13 About 302 of rural familiss were living below subsistence in 1985 .- A predominant majoritj of them were dependent on rice and corn farming. Other poverty groups, though less numerous, were coconut farmers, sugarcane workers and small farmers, municipal fishermen, and marginal upland farmers. Variations in poverty incidence acrc.s subsectors/crops or across occupations such as farmers, tenants and laborers were relatively small. However, rural poverty incidence varied considerably across regions, the highest poverty incidence being in the Visayas and Bicol. 1.14 Most of the poor farmers are involved in corn and rice production and have historically been the focus of the government's land tenure and reform programs. Almost half of the poorest rural farm households are rice farmers. This group earns approximately $100 per capita based on 1985 data and includes some 626,000 households, located across regions, w. .h less importance in the corn areas. As seen in Table 1.6, the second largest group of poor farmers are the 412,000 corn farming households, with the lowest per capita income estimated at U.S.$90 per head. More than half of these house- holds are located in Mindanao. In spite of falling international prices, producers of the two export crops, sugar and coconut, are less in number and have, in the case of sugars relatively higher incomes than the other poor farmers. However, this data does not incltde those households who work for wage income on farms owned by others; these landless workers are quite common, particularly in sugar areas, and are among the country's poorest. 1.15 After farming, wages are the second most important Igurce of income among the poorest, followed by family subsistence activities.- Even among families deriving most of their income from farming, wage income is an impor- tant complementary source. Around one million of the poorest families derive most of their income from wages. The most important occupations among these wage earners are agricultural workers (24Z of the total), farmers (162) and production workers (102). In general, agricultural labor markets are more important for the poor than are ncnagricultural markets. The better off poor farmers have the most diversified sources of income, as in the case of livestock and poultry raisers (Table 1.7). 4/ About 352 of the rural population live below-subsistence because rural poor families have more members than non-poor (5.9 vs. 4.9 members). 5/ "Sustenance activities" included in Table 1.3 have been defined in the FIES as income coming from non-market, subsistence activities.  - 9 - Table 1.6: CHARACTERISTICS OF FARMERS IN THE BOTTOM 302 OF INCOME DISTRIBUTION, 1985 Income X of entre- Annual No. of X of total 2 of preneurial per capita families poor farmers wages activities income (P) Rice 625,961 43.3 12.48 58.99 1,995 Corn 412,333 28.5 13.73 58.53 1,770 Sugar 7,985 0.6 22.43 46.72 2,041 Other crops 145,771 10.1 12.76 54.71 1,816 Coconut 224,603 15.5 10.90 58.82 1,958 Fruit 6,098 0.4 36.57 37.14 1,882 Livestock 10,659 0.7 10.89 52.67 1,899 Poultry 3,613 0.2 8.19 62.60 2,486 Not classified 8,982 0.6 6.24 66.55 1,964 Total 1i4604 100 12.70 58.30 Source: Staff calculations and FIES. Table 1.7: MAIN SOURCE OF INCOME BY FARMING ACTIVITY, BOTTOM 30%, 1985 (in 2) Wages Net Agri- Nonagri- Sustenance share Other Total Farming culture culture Total activities crops sources income Rice 69.85 6.80 3.85 10.65 6.82 1.40 11.28 100.00 Corn 62.85 6.65 6.04 12.69 7.65 2.34 14.47 100.00 Sugar 48.53 16.53 0.00 16.53 26.27 0.00 8.67 100.00 Other crops 55.66 9.82 4.01 13.83 11.87 2.89 15.74 100.00 Coconut 66.20 5.99 3.07 9.06 7.81 2.89 14.04 100.00 Fruit 33.77 47.98 0.00 47.98 0.00 0.00 18.25 100.00 Livestock 19.93 12.37 0.00 12.37 0.00 0.00 67.70 100.00 Poultry 35.40 0.00 0.00 0.00 0.00 17.19 47.41 100.00 Others 72.61 4.79 0."' 4.79 7.23 0.00 15.38 100.00 Total 65.15 7.18 4.27 11.45 7.74 2.06 13.61 100.00  - 10 - 1.16 Although farmers in marginal rainfed and upland areas are not separately identified by FIESs and micro studies, they form a large group among the rural poor. These farmers are found in most regions and grow a range of different crops. Many of them are farmers who have migrated and settled in marginal, remote areas; some are minority tribes who follow traditional cultural activities, including shifting cultivation and destruc- tive slash and burn practices. Specific factors which contribute to the poverty in tl -ae areas are: (a) low productivity due to high slope, poor quality of soil, or soil erosion; (b) inadequate support services; (c) limited opportunities for off-farm employment; and (c) largely subsistence farm operations which are sometimes inappropriate or even destructive to soil conditions in the area. The farm size threshold necessary to provide adequate incomes to families in these areas is thus much higher than in others. Most of this land is suitable only for permanent crops (such as coconut and abaca) or for grazing. With the available tecnnology and the present cropping sys- tems, it will be difficult to raise the income of many upland farms above poverty levels. 1.17 Absolute poverty in the Philippines not only means low incomes but also malnutrition and poor health. Discounting for differences in per capita incomes social indicators in the Philippines are not out of line with the ASEAN region (see Table 1.8). It haa, however, a much higher level of poverty and the lowest calorie supply per capita. Like most countries in the region, the Philippines scores below China in terms of progress in infant mortality, life expectancy and other social indicators, despite having a higher per capita income. Furthermore, health and nutrition indicators show a large variance among regions and provinces within the Philippines. Table 1.8: COMPARATIVE BASIC INDICATORS, 1985 Li