Growth, Inequality, Politics, and Poverty Reduction in the Philippines

This paper examines the interaction among economic growth, inequality in land distribution, and poverty reduction. Following the familiar neoclassical growth model approach, it attempts to explain the variations in mean income growth rates, as well as in rates of poverty reduction, accross provinces in the 1980s and 1990s. Regression results show that lower initial income, higher initial human capital, higher initial land inequality, and greater implementation of CARP tend to result in higher rates of both mean income growth and poverty reduction. In addition, terms of trade more favorable to agriculture tend to facilitate poverty reduction. The dominance of oligarchic political regime inhibits growth and, through lower growth, hurts poverty reduction. Quite disturbing from a policy perspective is an implication of the evidence that there may be some trade-off between growth and equity.