Thursday, August 30, 2007


The newspapers today report the fastest ever increase in our GDP. A GDP growth is indeed remarkable compared to an increase in GNP figures. It is because the former pertains to the overall output of the economy (including the income of various Philippine companies abroad and OFW remittances) while the latter includes only the money generated within the political boundaries of the country. Therefore, if the GDP increases significantly, a number of people residing inside the country should have benefited.

For the past several few years, we have often heard people complain that all the GNP and GDP increases seemed to have benefited only a handful and were not felt by the citizens of this country. People seem to have become poorer, prices continue to rise and increases in income seem to be insignificant. This is even confirmed by some of the country's economists who reported that the poverty incidence in the countryside have even increased.

Here's what most of us fail to see. Simply put, a GDP increase means that local businesses increased their sales and the people's total income increased . Therefore, it is most probable that more suppliers, production, warehousing, delivery and other personnel were employed. Furthermore, a continuation of such trend over time will result to a spillover effect of benefits until it reaches the farthest points within the country.

If more people are actually getting hungry in the provinces, it means that the production growth has been limited to some localities or wasn't considerable enough to effect a spillover of benefits. The government should therefore invest more in the provinces so that the residents in those areas will be able to ride the prosperity tide. That should mean the building of more farm to market roads, better and more post harvest and port facilities, etc.

At this point, a lot of businesses are being established in the far provinces even without the encouragement of the national government. BPO firms in search of qualified talent have started to locate in areas away from the main cities. An example of which is the establishment of a large call center facility in Tanjay, Negros and the possibility of a big BPO company being started in a municipality in Nueva Ecija. The establishment of such business will give rise to a creation of other industries such as food, clothing, housing, etc.

Taking such a wonderful phenomena as an inspiration, the government should encourgage large investments in the far away provinces. Tax breaks and other incentives should be a good start. It results to a faster growth of the economy and more importantly, a better distribution of wealth.


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