Urban Poverty in the Philippines: Nature, Causes and Policy Measures

As in other less developed countries (LDCs), urbanization and urban poverty have increasingly become major development policy concerns in the Philippines. The accelerating pace of urbanization is shifting the burden of poverty from rural to urban areas. The proportion of the population living in urban areas rose from 30 per cent in 1960 to 38 per cent in 1980 and 49 per cent in 1990. However, unlike in many LDCs where high levels of urbanization reflect a shift in the economy’s dynamic comparative advantage from one initially based on agriculture to one based on industry and services, the country’s high urbanization level has not been matched by a correspondingly high per capita income as well as by a significant shift in labor employment from low to high productivity areas. Its gross domestic product (GDP) per capita at the beginning of the 1990s was not much different from that in the late 1970s. The share of the industry sector in total employment remained virtually unchanged at about 16 per cent during the last three-and-a-half decades. The employment share of the manufacturing sector, which is the hub of dynamic growth in fast-growing neighboring countries, even contracted from 12 per cent in the mid-1950s to 10 per cent in the early 1990s…