Wednesday, August 27, 2008

23 million Filipinos living below Asia-Pacific poverty line


23 million Filipinos living below Asia-Pacific poverty line
MANILA, Philippines— The new poverty line for Asia-Pacific is $1.35 a day and about 23 million Filipinos, or 27 percent of the Philippine population, are living below it.
Using the regional poverty threshold of the Asian Development Bank, the Philippines is is next to Pakistan and worse than Vietnam when it comes to the percentage of its population living on less than $1.35 a day.
In a report released on Wednesday, the ADB offered a new way to gauge poverty incidence using price data specific to the Asia and Pacific region, and, critically, to the poor. The report was contained in a special chapter of Key Indicators 2008, its flagship annual statistical publication.
Using 2006 data, the ADB study estimated that about 27 percent of the Philippine population would have consumed less than the new Asian poverty line.
This new measure suggested a higher poverty incidence in the Philippines using the regional benchmark. Based on the $1-per day globally used threshold of extreme poverty, the ratio in the Philippines as of the previous estimate was lower at about 13.6 percent.
“This is a landmark study for two reasons,” ADB chief economist Ifzal Ali said in a statement. “For the first time, a thorough sensitivity analysis of internationally comparable poverty estimates has been carried out. Second, a poverty line that is relevant specifically to the Asia and Pacific region has been adopted.”
The ADB thus came up with the new poverty line of roughly $1.35 a day for the region.
The report showed that the ratio of the population consuming less than this amount each day was highest in India at 65.3 percent.
Other countries with high ratios living below the Asian poverty line were Nepal (59.2 percent), Bangladesh (58.2), Laos (48.8 percent), Mongolia (40 percent), Indonesia (39.2 percent) Cambodia (35.4 percent) and Pakistan (32 percent).
The Philippines' ratio was worse than Vietnam's 25.6 percent, Sri Lanka's 18.4 percent and Thailand's 0.1 percent.
The report estimated that in the 16 countries that participated in the study, 1.042 billion people would have been living below $1.35 a day in 2005.
“While the $1-a-day poverty line remains an appropriate benchmark for counting the extent of extreme poverty in Asia, and the developing world more generally, in a region that has witnessed rapid economic growth it might also be time to evaluate poverty incidence using a benchmark that reflects the region’s dynamism,” Ali said.
A major contribution of the report is to examine the sensitivity of poverty estimates to different methods for evaluating purchasing power parities (PPP) -- or conversion factors that ensure a common purchasing power across countries over a given set of goods and services.
“PPPs are one of the most vital ingredients in generating internationally comparable estimates of poverty,” Ali said.
The report noted that the World Bank’s $1-a-day poverty estimates are based on PPPs developed for comparing household consumption across countries, known as consumption PPPs. From the perspective of poverty comparisons, however, it was considered more appropriate to use a set of PPPs that are based on comparisons of prices of goods and services that the poor purchase.
The report, using original data collected specifically for its study, examined where the poor shop, what they buy, in what quantity, as well as the quality of the products they purchase. The report noted, for example, a considerable difference in quality and price between packaged rice bought in a supermarket and rice bought by the scoop in a wet market -- where the poor traditionally shop. The prices paid for the products purchased by the poor are used to generate a new set of PPPs, called poverty PPPs.
Poverty-specific PPPs were also computed using an International Comparison Program (ICP) price data with weights representing the expenditure patterns of the poor.
Even using this ICP measure, Filipinos living below the Asian poverty line were also estimated to be over 20 million.
“Our aim in this study was to shed light on how alternative approaches to compiling purchasing power parities can influence internationally comparable estimates of poverty,” Ali said.
“Clearly, the choice of PPP used matters a lot to the final estimates of poverty and it is therefore critical that we price the most appropriate set of goods and services. This report shows that the collection of poverty-specific prices -- the feasibility of which has been demonstrated by 16 developing Asian countries -- is possible,” he said.

1 comment:

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