ADB urges Philippines to address income inequalityBy Michelle V. Remo
Philippine Daily Inquirer
The Asian Development Bank has challenged the Philippines and other developing countries in the region to address the serious problem of income inequality, noting that while Asia has become a driver of global growth, the benefits of expansion have only been felt by a few.
The ADB said that income inequality comes with adverse social effects that could eventually dampen favorable growth rates of Asian economies.
“High and rising inequality can curb medium-term growth by reducing social cohesion, undermining the quality of governance, and increasing pressure for inefficient populist policies,” the ADB said in a recent report.
ADB noted that income inequality in some Asian countries, led by those with the biggest populations, had increased since the 1990s.
The average income inequality in Asia, as measured by the Gini coefficient, rose from 39 in the early 1990s to 46 in late 2000s.
Gini coefficient is the main measure of income inequality and ranges from 1 to 100.
A Gini Coefficient of 1 shows perfect equality where individuals have an equal share in an economy’s income, while 100 shows perfect inequality where only one accounts for the entire income.
China, India and Indonesia led the increase in income inequality in Asia.
In the same period, China’s Gini coefficient jumped from 32 to 43, India’s increased from 33 to 37, while Indonesia’s rose from 29 to 39.
In the case of the Philippines, data from the National Statistical Coordination Board (NSCB) showed that income inequality had declined, but remained relatively high, even exceeding those of many Asian countries.
The Philippines’ Gini Coefficient decreased from 49 in the late 1990s to 45 in 2009.
To address income inequality, ADB said governments must implement measures that will help low-income earners have more access to assets like land and financing, and to public services like education and health.
Improved access will give them the opportunity to raise their standards of living, thereby addressing income inequality within an economy, the ADB said.
“Unequal access to public services, especially education and health, is central to generating inequality of [income] opportunity,” the developmental institution also said.
Measures suggested to improve access of poor to financing include government loan programs for the farm and fisheries sector, and initiatives that will encourage private banks to lend more to micro-enterprises.
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