A case for rural development

Lately, there has been so much passionate discussion on the RH Bill. The bottom of this issue seems to lie on how to solve the poverty problem in the country.

Does the problem really have to do with the number of people? Are people liabilities in our quest for economic development? This seems to be the argument for pro-RH people.

In any business organization, people are its real assets. And if we are to treat the country as a single business entity (that is why its productive capability is measured by the gross domestic product, or GDP), then people are truly assets. They are the producing units behind each peso that is counted as gross value added in agriculture, industry or services. Then why is it that some people see them as liabilities and want to cut down their number? Their logic seems to be just not right.

From the consumption side, it is people who are the markets. Thus, the more people there are, the bigger the market. The bigger the market, the higher GDP a country could have. And this is the kicker. The higher the proportion of young people there are in a country, the bigger is the market because young people tend to consume more than retirees. This partly explains why European, Japanese and, of late, US economies are struggling because they now have a higher proportion of old people in their population. This is the problem that economists call the “greying economies.”

Basic economics and politics

Lessons in economic development tell us that the bigger proportion of younger population is in a country, the more productive it is since there are more young people to support a portion of the population that are not anymore as productive (i.e., retired). Again, from a market perspective, younger people tend to buy more and thus a bigger market than those who are already old. This is what economists refer to as the demographic dividend. As a result, economies with a younger population grow much faster than those that are already greying economies.

World geopolitics also tells us that the bigger the economy and the bigger their population, the more important they are in shaping the future in economics and politics. This is the reason why of late, countries labelled as BRICS [Brazil, Russia, India, China and South Africa] have been given some weight in discussions as an association of leading emerging economies distinguished by large population and fast-growing economies. Recently, countries like Indonesia and the Philippines have been touted to be the “Next Eleven” (N-11) group of economies identified by Goldman Sachs to watch because of the size of their population as having a high potential of becoming, along with the BRICS, the world’s largest economies in the 21st century.

Developing the rural areas

The London Summer Olympics opening ceremony showed us that Great Britain became a world power because it ushered in the industrial revolution. But more than the coal mines, factories and manufactured products, the industrial revolution was ignited because of the invention of the cotton gin that revolutionized textile manufacturing. The cotton gin, after all, had its origins in agriculture. Prior to its invention, cotton cloth at that time was too expensive because it was too laborious to process raw cotton, make it into a yarn, and finally weave it to a cloth.

Thanks to the London Olympics, we were reminded of an important lesson in economic development—we need to develop agriculture and the rural sectors to make our path to prosperity rest on solid ground. Economists also use a simile to illustrate this. You need to develop agriculture to propel the economy for a takeoff just as a plane needs thrust to fly.

Unfortunately, our policymakers for the past 50 years did not seem to learn this lesson. They have been glamorized by industrialization and an export-led growth strategy and forgot about agriculture. Today, this has been replaced by business process outsourcing (BPO) and the likes that have very little industry linkages domestically.

As soon as the Olympics took its curtain down, floods inundated Metro Manila. It opened our eyes again to the problem of informal settlers along rivers, creeks, esteros and low-lying areas. But the question to ask is: Why are these people from the rural areas flocking to Metro Manila?

The answer is obvious. They are here to seek greener pastures because of limited opportunities in the provinces, especially the rural areas. So the real problem that needs to be addressed by P-Noy, his Cabinet and our lawmakers is how to develop the rural areas.

Failed promises

One of the key programs to do this is the implementation of the agrarian reform. The Philippines has the longest-running land reform program, since President Macapagal. And until now, this agenda is unfinished. Countries like Japan, Korea and Taiwan finished their land reform in less than 10 years. The Comprehensive Land Reform Program is 25 years old and it is still an unfinished business. The question then is: Did the Philippines achieve its objectives?

Obviously, not. The great majority of Filipino farmers still belong to the poorest of the poor. Overall, the Philippine poverty statistics is one of the highest in Southeast Asia.

President Cory Aquino is remembered as the one that instituted the Comprehensive Agrarian Reform Program 25 years ago. Four presidents hence, not much has really changed for the Filipino farmer. Will the son finish the agenda that his mother started and fulfill the promise that she gave to the Filipino farmers to emancipate them from the bondage of poverty?

It is really P-Noy who holds the answer to this question now. But so far, his articulation for a “walang corrupt” government still has to filter down the bureaucracy. But aside from this, he has to tackle with firm resolve to attack rural poverty.

It’s the rural sector that P-Noy now needs to focus his energy on. If he can improve the lives of people in the rural areas, then there will be fewer informal settlers in the cities, less insurgency in the hinterlands. It will also mean more economic activity, more productive pursuits, and more employment opportunities. Finally, it will mean more poor people graduating and joining the ranks of the middle class and given the chance to live their lives more in keeping with their dignity as human beings.

Mr. President, it’s about time you heed the call of your bosses in the rural areas.

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is vice chairman of MAP Agribusiness and Countryside Development committee, and dean of MFI Farm Business School. Feedback at [email protected]. For previous articles, visit www.map.org.ph.)